PHILADELPHIA — While the COVID-19 pandemic is by no means a thing of the past, its profound impact over the last 18 months on so many different aspects of life has naturally raised the question of what lies ahead, what comes next for the retail industry and the supplier community that supports it.
To explore some possible answers during its annual Industry Day, the Emerson Group assembled, both virtually and in person, a number of the leading players in the food, drug and mass channels and the consumer packaged goods industry, as well as speakers from outside the industry, including Jennifer Doudna, a Nobel Prize co-winner and biochemist at the University of California, Berkeley, and Jocko Willink, retired U.S. Navy Seal, author and podcaster.
Co-host Ed Morgan, president and partner of Emerson Group, described the three goals of the event: first, to expand and reframe participants’ thinking; second, to envision the future; and third, to build for success in the COVID and post-COVID world.
Several speakers felt that community pharmacy has ample reason to be upbeat about the future.
“I truly do believe we are the front doors of health care; we have been for quite some time,” said Colleen Lindholz, president of Kroger Health and current chair of the National Association of Chain Drug Stores. “And as we expand our scope of practice we can do more. Immunizations are an example. We’re going to be more integral, and a lot of that is because of our access points and the trust — we are often the No. 1 or No. 2 most trusted health care professionals — so I’m excited about what the future holds.”
Steve Anderson, president and chief executive officer of NACDS, was similarly upbeat. “I think the future is going to be great,” he said. “It’s all going to be driven by technology, obviously. Telehealth is huge and moving forward, and that plays right into pharmacy’s strengths. The future is going to be really exciting.”
Neela Montgomery, president of CVS Pharmacy and executive vice president of CVS Health, pointed out that the drug chain’s role in administering first tests and then vaccines in the pandemic has facilitated its transition to a consumer-focused digital health care company and, in effect, a health care destination.
“We’ve always been synonymous with health, but clearly our role in the pandemic, in testing and vaccine — we’ve administered over 30 million vaccinations — that kind of pivot to becoming a community health destination has been quite remarkable,” she said. “Just in the last eight months we’ve invited more than 8 million new customers — those who haven’t filled scripts at CVS — to come and get a vaccination in our stores. I think this has really been a pivotal moment for people to rethink what CVS means to them.”
The pandemic has created opportunity for all of community pharmacy, according to John Standley, president of Walgreens and executive vice president of Walgreens Boots Alliance. The role pharmacy has played over the past year has highlighted its relevance as never before.
Standley said that Walgreens’ abundant resources have enabled it to invest in technology and infrastructure that are giving the company more insights and capabilities related to customers and patients. “I think the challenge is on us to bring all that to bear in a way that really differentiates us,” he said. “We have everything we need to be successful, so if we’re not, it’s on us. So we really need to just get after it and make it happen.”
All three of the largest drug chains are developing new business models for retail pharmacy, models that are less vulnerable to the reimbursement pressures that now threaten the industry’s viability. Rite Aid Corp. launched its drive, dubbed RxEvolution, to create a new drug store concept, one that is focused on an expanded, customer-facing role for the pharmacist, before the pandemic struck.
RxEvolution, explained president and CEO Heyward Donigan, has three core pillars, starting with elevating the role of the pharmacists by having them practice at the top of their license and engaging with the customer. In addition, the company is recreating the customer’s in-store and digital experience by moving into the modern era of omnichannel customer interactions. The third pillar involves establishing Elixir, the company’s own PBM, as a clearly differentiated market leader.
Dr. Cheryl Pegus, executive vice president of health and wellness at Walmart U.S., observed that the pandemic revealed that people are prepared to take control of their health, a fact that intersects perfectly with the expanded, patient-facing role of the pharmacist.
“What they need is information and multiple access points for their health and wellness,” she said. “We call that omnichannel access for health and wellness. We’re seeing people get a lot of services in-home. One of the ways we look at that is through telehealth, which is not having to wait three months to see a physician. It really allows a person who thinks they may have an acute problem not to go to the emergency room but to get that care right now through a video visit.”
While health care issues dominated much of the discussion throughout the day, other topics, such as e-commerce, retailer-supplier partnerships and leadership, also were explored. In addition, an interview with Todd Vasos, CEO of Dollar General Corp., shed light on the factors that have driven the extraordinary success of perhaps the best-performing company in mass retail.
Vasos attributed that performance to a number of factors, including a heightened emphasis on strategic planning that looks as far as 10 years out. The management ranks were also strengthened with talent from other trade classes. Those changes enabled Dollar General to recreate itself as a general store offering unbeatable prices to underserved rural communities.
One of the most stunning aspects of Dollar General’s success has been its rapid growth, for which Vasos credited the company’s outstanding real estate team and processes. When he arrived at Dollar General, it had approximately 8,000 stores, was under private equity ownership, and was not growing. Now the store count is over 18,000 and the chain is opening approximately 1,000 new stores a year, in addition to constant remodels on a large scale.
“We see 17,000 more opportunities in the continental U.S.,” he remarked. “We won’t get all those sites, but we feel very comfortable about [projecting] 6% square footage growth, and that will land us in that 1,000 to 1,100 stores a year on average.”