Insights on Today's Healthcare Consumer

Health Care Solutions and the Shopper: Retail and Reform Part 2

Posted by Brent Walker on Mon, Nov 11, 2013

Understanding the wellness choices of shoppers retailers an advantageThe adage, “The best insurance is to not get sick,” may be truer than ever if physician access diminishes as a number of healthcare researches believe. 

Adopting a healthier lifestyle will also become more of a priority for consumers upon whom healthcare costs are shifting (higher premiums, copays and deductibles).  There are already early adopters of wellness living, but the size of the “fast follower” population will soon begin to grow. 

Retailers who get out in front of this trend stand to build an equity around a key shopper need.

Wellness and Healthy Lifestyle

A focus on providing health care solutions can also be lucrative from a margin standpoint. 

I recently spoke with a marketing executive from P&G’s healthcare business who made some very astute observations about trends in healthcare. 

The executive observed that margins are disappearing on OTC products that simply treat the symptoms of an illness. The ACA will drive further cost cutting across the healthcare industry, as the system will ultimately be based on cost control. 

Wellness is where the dollars are, because this is where shoppers with money (a proactive approach to health) will spend.  In a nutshell, “wellness is backed by money, motivation and intent.”

The retailer who is committed to offering health care solutions will invest in the resources necessary to empower shoppers in exploring the ways they can enhance themselves.  This would span from simple signage and wayfinding tools to a sufficient assortment of wellness products to services such as nutrition, physical fitness or emotional well-being consultations. 

Communication and Education at the Retail Level

Education and intervention efforts for health conditions, such as diabetes and cardiac disease, are a bare minimum. As they still fall in the “treating illness” category, however, wellness education would feature the most current information on alternative or supplemental approaches to traditional medicine. 

Note that “alternative” does not have to mean fringe medicine supported by schlock science or no science at all— there are significant knowledge opportunities for the general public regarding the benefits of certain foods, nutrients, stress reducing techniques, and exercises.

Store layout would facilitate healthy living with appropriate category adjacencies, including food, nutritional products, vitamins/minerals/supplements, OTCs, Rx, and links to Personal Care and Beauty products.  All of these categories fall into the shoppers’ definition of health and wellness. 

In fact, there is a strong link between health and beauty/grooming:

  • 60% of adults polled agree with the statement, “If I look good I feel good”,
  • Nearly 40% agree with the statement, “How a person looks on the outside is a reflection of how healthy they are on the inside.” 

Importantly for retail healthcare, there are specific shopper types that are most likely to exhibit these traits and pursue self-care.

Shopper Segmentation

The P&G executive also claimed that a retailer’s ability to identify the wellness shopper and engage her in a meaningful way is “all about smart targeting.”

Retailers have an abundance of purchase data on their shoppers, and are generally able to incentivize future purchases based on shoppers’ past purchases.  However, shopper data do not provide the why (i.e., the motivation) behind these purchases. 

Psychographic segmentation enables a retailer to understand the shopper types who are most likely to spend money on self-care and wellness.  This is because psychographic segmentation involves a deep knowledge of shoppers’ values, attitudes, emotions, lifestyle, personality and many other traits that are not captured in purchase data.  c2b solutions developed a psychographic segmentation model that is 91.1% predictive, and identifies five distinct shopper types based on their approaches to health and wellness. 

Two of segments – Balance Seekers and Self Achievers – comprise 42% of the consumer population, but are clearly the shoppers who will invest in their wellbeing:

Table of wellness-oriented behaviors

Separately, retailers rely on behavioral data limited to purchases made with that retailer only.  Shoppers do not put their wallets in one basket. 

There are significant gaps between front end and back end market share when it comes to the purchase of prescription and over-the-counter products (including vitamins/minerals/supplements). 

As an example, let’s compare Rx and OTC purchases over the last 12 months by the two psychographic segments of the healthcare consuming population who are dedicated to wellness– Balance Seekers and Self Achievers.

Note, the following data are not normalized for geographic presence; a grocery chain may not have the reach of a national drug chain or mass merchandiser.  The c2b Consumer Diagnostic measures respondents’ self-reported shopping habits for prescriptions, and OTCs across 50 retailers.

Table of shopping habits for over-the-counter and prescription medications 

  • While the drug channel retailer “Drug A” has consistent shares for Rx and OTC among Balance Seekers, there is a 9 point gap among Self Achievers between their OTC and Rx shares.  This major drug chain (with a focus on pharmacy) is losing front-end shoppers to another source for prescriptions.
  • “Grocer B” has +50% greater share for OTC purchases than prescriptions, which is understandable for a grocery chain; however, it highlights a significant opportunity to convert proactive, wellness-oriented shoppers to pharmacy. 
  • “Mass C” has double the share in OTC as it does in pharmacy among Balance Seekers and Self Achievers.  “Mass C” is leaving a lot of money on the table by not converting its OTC shoppers to pharmacy.

In all these cases, the shoppers are in store, but are going elsewhere for their prescription needs. 

The opportunity loss is substantial both in dollars and brand equity as a center for total health and wellness among the shopper segments that are the most willing to spend in these categories. It is incumbent upon retailers to fully understand the needs of these consumers and create a shopping experience that offers health care solutions for the shopper. 

The ACA is giving it the best chance in generations.

Note: This is the second of a two-part article on retail strategies under the ACA, following Part 1 posted on Friday, November 8, 2013.

 

Brent Walker

Written by: Brent Walker

As Chief Marketing Officer, Brent's primary responsibilities include leading marketing strategy and execution for c2b solutions, development of c2b solutions' proprietary consumer segmentation model and insights products, research on healthcare consumers’ motivations and behaviors, and providing marketing guidance to c2b solutions clients.

Tags: Healthcare Innovation

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