“Creating the Future of Retail…Together.”
NEW YORK — The COVID-19 pandemic has left few major business sectors untouched, and retail — as well as the supplier community that serves it — is adapting to a landscape transformed by profound changes in consumer behavior and priorities.
To help the industry navigate these uncharted waters, Chain Drug Review and Mass Market Retailers partnered with the National Association of Chain Drug Stores, WSL Marketing Inc. and the Emerson Group to bring together in a virtual setting executives of leading chains in food, drug and mass to share their insights, experiences and outlook for the future during a daylong event on the theme of “Creating the Future of Retail … Together.” The Industry Day program combined interviews, presentations and a lively roundtable discussion, as well as some inspiring reflections by Michael Strahan, former New York Giants defensive great and NFL Hall of Famer turned broadcaster, television host and entrepreneur, on what he terms “an improbable life.” The innovative, highly interactive format of the program allowed participants to interact with presenters in real time.
According to Ed Morgan, president and partner of Emerson Group and cohost of the event, the program had three goals: First, to expand and reframe participants’ thinking; second, to embrace people and relationships; and third, to envision the future and “boldly build for success in the post-COVID world.”
Looking back on the pandemic’s initial impact, Larry Merlo, chief executive officer of CVS Health, pointed out that COVID-19 posed a very different kind of crisis than other natural events for which plans can be formulated. Unlike hurricanes, fires or floods, COVID-19 was not limited by geography or duration.
“I spent a lot of time thinking about how do we make sure we’re solving for the right problem,” he recalled. “There was a period of time when there was tremendous uncertainty and we were learning every day. There were times that we were meeting twice a day to assess when had we learned that we didn’t know about that morning.”
However, Merlo said, CVS’ leadership team was clear that its first guiding principle had to be ensuring the health and safety of the company’s 300,000 employees and its millions of customers. “Those guiding principles served us well in terms of the things we knew we had to do to become part of the solution,” he said.
Scott Galloway, professor of marketing at the Stern School of Business of New York University, highlighted COVID’s role as a catalyst of change in the industry, noting that it has effectively spurred the industry to leapfrog several years into the future, particularly in terms of e-commerce growth.
“E-commerce has garnered about one percentage point of total retail sales every year from 2000 to 2020,” he remarked. “In March, 18% of all retail was through digital channels. Now fast forward just eight weeks, and it has jumped to 28%. We’ve literally had a decade of acceleration in eight weeks. And it doesn’t look as if we’re going back.”
Galloway also touched on the growth momentum Amazon.com has received from the pandemic, and issued a sobering prediction about the online behemoth’s future role in health care. “Amazon will be one of the fastest-growing health care companies,” he said. “Telemedicine has taken off, and Amazon is positioned best here.”
While the explosive growth of e-commerce has been a major result of the outbreak, most Industry Day participants were upbeat about the future of brick-and-mortar retailing in a post-COVID world. Alex Gourlay, co-chief operating officer of Walgreens Boots Alliance, made the case for retail pharmacy.
“We still think two things are really important in retail,” he said. “No. 1 is your physical store and, No. 2, you buy things from people you trust. We believe at Walgreens that the pharmacist is at the heart of the business, and that all pharmacies will always be trusted for that reason. So we believe that digitalization will be important, but the core of retail is about the people you trust and your position in the marketplace. Physical locations will still be really important.”
Steve Anderson, president and CEO of NACDS, agreed, contending that the pandemic has demonstrated that the chain drug industry is nothing less than essential. “This is a time when pharmacy is going to shine — it’s a major inflection point for pharmacy,” he said. “Our polling data shows that people feel our industry is more interested in people than profit, and that speaks volumes. We’re going to have a very bright future.”
Several participants pointed to a key trend that supports that conclusion and actually predates by several years the COVID outbreak: growing consumer interest in health and wellness.
“Wellness is now everything,” commented Wendy Liebmann, CEO and chief shopper of WSL Marketing Inc. “This is the underpinning of our lives.”
Liebmann added that consumer research conducted by WSL shows that physical stores still have a place in the market. “The love of the store hasn’t gone away,” she pointed out. “Three-quarters of shoppers want to get back to browsing and buying in nonessential retail stores. It’s not that the store doesn’t matter; it’s just that it has to be very, very different. If you don’t deliver easy, safe and fast, they’re not going to show up.”
Another theme that emerged was the importance of collaboration and partnership between retailers and suppliers in a world where face-to-face meetings are largely a thing of the past. George Coleman, senior vice president of merchandising and chief merchant at CVS Health, stressed the need to be proactive and transparent in communication.
“Those have always been important, but COVID has made them more important,” he noted. “We’re not seeing each other at the shows or at the office, so we have to be more intentional. The value I place on dialogue and transparency is even higher now than it was.”
Julie Barber, senior vice president of health and wellness merchandising at Walmart, agreed on the importance of clear and frequent communication. In addition, she stressed, suppliers need to share the retailer’s primary focus on the customer.
“It’s important to be nimble, agile, and to collaborate with our merchants,” she said. “It’s not business as usual; we want creativity. That means offering new and interesting products — not just a new color or flavor, but reimagining how a product can be important to the customer.”
The innovative program, highlighted by an extraordinary lineup of key industry leaders, provided ample insights and value for attendees. According to Scott Emerson, founder and CEO of Emerson Group, no fewer than 3,000 people virtually took part in Industry Day.