Channel Report: Drugstores

While many of the concerns impacting drugstore P-O-P -- like the quest for effective category management -- remain unchanged, in-store marketers leading these various drug channel brands are facing new issues and questions.Marketers are looking into digital technology as a way to make P-O-P messaging more effective. They're questioning how regulations will affect the way their products are displayed and sold, especially those in pharmaceuticals. And how important is getting that display into Walgreens and CVS?The drugstore channel is a competitive arena with finite footprints, clean-floor policies, limited secondary locations and burgeoning private label selections. Good P-O-P will take a brand far in this challenging environment.The key for brand marketers, then, is knowing how to execute the best in-store support system.Inside CVSIn terms of numbers of stores -- roughly 6,100 -- no other drugstore chain is larger than Woonsocket, RI-based CVS/pharmacy, a company that has grown not only by adding new stores, but also by acquiring other drugstore chains like Eckerd and Albertsons' Osco, freshening the acquired stores, elevating their profitability and successfully consolidating them into the CVS family.We spoke with Wendy Drumm, chief creative director at CVS, whose responsibilities include all creative marketing communications and all "touch points" with the company's patrons -- including P-O-P.One of the most important industry trends currently relates to government regulations, especially those concerning products containing pseudoephedrine, such as Sudafed. When the issue emerged earlier this year, CVS/pharmacy took 20 products featuring that ingredient off its shelves and "out of harm's way" at all its stores, Drumm says. "In the planogram, we created a P-O-P display that enabled customers to understand that the products weren't on the shelf," she says. "Instead, customers found printed cards with photos of the products on the front and a list of all the ingredients on the back."They took those cards to the pharmacist to obtain the product. We were very proactive from the get-go, to make sure those products were safely behind the pharmacy counter."As regulations evolved, she adds, some states allowed the products to be displayed behind the checkout counter. CVS learned the rules in the different states in which it operates, and complies with what each state specifies.At CVS, P-O-P assumes very different roles in the various zones of the store, including at the checkout counter and behind or around the pharmacy counter.In what CVS calls "the checkout zone," the retailer uses 4-foot by 4-foot window banners for behind the counter, communicating specials on such services as photo processing. In "the pharmacy zone," by contrast, banners are used behind the counter or overhead to communicate key messages."If we can find a place to have a banner in back at eye level, or overhead, we will use that space for very, very special occasions," Drumm says, citing the unveiling of the Medicare prescription plan as an example. "Occasionally, we will have messaging on the counter. Right now, there are four prescription drug vendors who have bought promotional space on our counters. It's generally a counter card that includes brochures."Because they now offer an increasingly broad assortment of goods and services, drugstores devote more attention to organizing the stores for efficient shopping. At CVS, the last year has seen the introduction of a new store graphics package, visible in all Eckerd stores converted to CVS Pharmacies and in all CVS Pharmacies that have been freshened, Drumm says."Our strategy was to differentiate our category sections, to make them different from one another, more inviting and easier to navigate," she explains. "My key tools, candidly, were colors. I'm a great believer in building an emotional connection, and in building visual cues and navigation with color ... The first thing I did was have the stores' interiors painted a bright white, which immediately make the stores feel fresh and bright, opening up the feel of the stores and helping them feel modern. The other good news was that it helped mitigate the fluorescent light."Working with CVS's retail agency, Chicago-based Draft Worldwide, Drumm selected colors from the "CVS/pharmacy Rainbow" to differentiate store categories.Pharmacy is denoted by blue, photo by orange, health by lime green, beauty by teal and baby by soft blue, Drumm reports. "It all works together beautifully," she says, adding that 12-foot by 16-foot billboards helped further convey the purpose of each category. For instance, the beauty section features a beautiful model, and the health section a man brushing his teeth."At shelf level, we have what I call 'lollypops,' which are poles with circles higher than eye level, identifying the particular merchandise being sold, such as feminine care, shampoo, oral care or incontinence," Drumm says. "You're seeing this rainbow of colors throughout the store, but it's very organized so you know when you've left one area for another."New Products, Private LabelsWhen it comes to the unveiling of what Drumm terms an "'A' launch," like the new Gillette MP3 razor, CVS relies heavily on promotion in its own circulars, as well as on P-O-P. "We'd do an endcap with a visual of the blade protruding from the aisle, and a 3-D standee, a cardboard column with a large razor on it," Drumm says."In these 'A' launches, we like to make a big deal of it. And that's how the consumer finds the new product, in addition to the circular. The challenge is how to do P-O-P that really breaks through, and we're always learning how to do it better."Part of Drumm's role is to create private label packaging, such as the retailer's Gold Emblem food products, that help those products compete effectively against the national brands. "Our goal is to make our packaging more visually appealing, with clearer benefits, easier reading and in some cases easier-to-use [packaging] structure than the national brands," she says.Drumm calls her in-house packaging team, which creates all the packaging for CVS private labels, "world class." That team continually audits packaging innovations being introduced around the world, and also asks its vendors that manufacture packaging for their insights.As creative director, Drumm stresses she wants not just the CVS/pharmacy brand, but all brands, to succeed. She doesn't want CVS Pharmacies to look like stores filled with other brands, but seeks to give national brands the best exposure within the context of the CVS brand.For instance, when Hershey's came to CVS/pharmacy with a display recently, it featured what Drumm and her staff felt were too many visuals, type sizes and messages. "The message was still Hershey's, but my team redesigned it so it was in the context of the appropriate color, and it displayed the product better," Drumm says. "It was a cleaner, stronger, more focused display, and it fit within our new store design."Currently, CVS/pharmacy doesn't employ any electronic means of communicating with its customers in the pharmacy. However, Drumm has viewed some of the new technology being introduced and pronounces much of it -- particularly technologies that initiate interaction with customers -- exciting and attractive to the retailer."In terms of P-O-P, it can be very helpful in navigation through the store, assisting us in retaining the customer in-store. There's a huge potential. To this point we haven't availed ourselves of the potential, but as smart marketers, we should be exploring this form of P-O-P." Tech-Driven Marketing DevelopmentsA variety of new approaches to digital P-O-P are available to independent and chain drugstores and other retailers. Among them is New York-based Pharmacy Channel, a U.S. company that is "the biggest in-store media player in Europe," with more than 1,000 locations displaying its screens, according to Kalpesh Vyas, founder and CEO of the company. The company is now entering the U.S. market in earnest, with the installation of its 20-inch branded Pharmacy Channel screens in New York City this past November. Vyas expects Pharmacy Channel to soon have a presence in more than 3,000 independent drugstores in the tri-state area of New York, New Jersey and Connecticut, as well as in California.Each store features one or two screens, generally near pharmacy counters and checkout aisles, though larger stores may receive additional screens. Placement of screens is based on studies Pharmacy Channel conducts of store areas with the longest "dwell times" -- locations where customers are stationary for the longest periods of time. Content, including educational and advertising material, is distributed to the screens through traditional phone lines.Pharmacy Channel's selling proposition is its ability to provide content appropriate to the needs and concerns of various groups of people in the drugstore at different times of the day. When the company signs on with a pharmacy, it studies the distances to schools, hospitals, office buildings, nursing homes, convenience stores and chain food stores. If the pharmacy is near a school, for instance, it would upweight advertising for brands targeting mothers and children during those periods in which parents drop their children off and pick them up from school."Let's take Tylenol," Vyas says. "Every media company is showing a straightforward Tylenol ad throughout the day. We would show [an ad for] Tylenol for seniors in the morning, because the profile of seniors in pharmacies is much greater in the morning. In the afternoon, we would show [an ad for] Tylenol for Children in pharmacies located near schools." Vyas believes screens free up space utilized by traditional P-O-P displays. "Screens are off the floor," he says. "It's a less cluttered and a more professional environment."A Tale of Two BrandsCluttered or not, the P-O-P is necessary. Whether they're manufacturers of light-hearted confections or makers of serious pharmaceutical products, brand marketers deem P-O-P an invaluable tool in getting their messages across within the ultra-competitive drugstore environment.Bethlehem, PA-based Just Born is the maker of popular candies like Mike and Ike, Hot Tamales, Marshmallow Peeps and Peanut Chews. Though those brands are widely recognized, it's still tough to garner space in drugstores, particularly given all the candy brands in the market, the one thousand new candy items introduced yearly and the largely unchanging nature of available drugstore square footage, says John Kerr, brand director of chocolate and new brands.Working with retailers to put together promotional programs to help increase consumer awareness and also motivate consumers to buy the product is one way Just Born has helped ensure placement. "There are a number of things you can do, from participating in the retailer's ad circular to getting involved in drugstore loyalty card programs," Kerr says.Also in some stores, and with some of its brands, Just Born provides separate displays of product tied to brand-awareness-building sponsorships. For instance, in-store displays of Hot Tamales have tied the candy with NASCAR racing. And after the recent relaunch of Peanut Chews in this country, that brand became an associate sponsor of the Dew Action Sports Tour, a professional tour featuring skateboarding, freestyle motocross and other sports, says Peanut Chews brand manager Juv Marchisio.Placing P-O-P displays of candy at checkout counters in drugstores is a natural, Kerr remarks. But placement isn't limited to that setting. "You can put a display back near the refrigerator case selling milk and soda," he says. "And if it's back-to-school time, you could put a display near the school and office supplies. You could conceivably put a seasonal display near the greeting card section. Any of these are opportunities for incremental purchases."Successful implementation of programs with shipper displays is dependent on whether retailers have clean-floor policies, Kerr adds. Where retailers allow them, self-standing shipper displays are exceptional at putting Just Born candies in front of more customers. The company strives to create displays that are as easy to execute in-store as possible. Just Born relies mainly on the drugstore staff to handle the setup, Marchisio says.The sell-in of its displays is often a part of the overall trade promotion plan discussed with each drugstore, Kerr notes. When Just Born meets with retailers to discuss plans for the next 12-month window, that plan often includes price reductions and display activity, he says.Though he admits some of the smaller, more regional and localized chains may have greater flexibility to act on locally-generated programs, Kerr says it's crucial for national brands to be in the big national chain drugstores."It's important recognizing those retail chains will have large volumes of consumers shopping in them," he says. "It's important to do everything we can to work with those chains to maximize sales of our products, so that we're meeting or exceeding retailers' expectations."Hot Tamales and Mike and Ike may be fun and carefree impulse items, but they compete for drugstore space with serious over-the-counter products like Delsym, an OTC 12-hour cough suppressant. The brand's pediatric SKU consistently holds its place as the number one selling cough syrup in the pediatric cough syrup category.Among recent marketing changes in the OTC category, one of the most significant is that secondary placements are driving sales. "Normally you have open stock that goes on the shelf," says Priscilla Kaufman, Delsym brand manager for Rochester, NY-based UCB Pharma."A secondary display can be in a number of places: right on the counter next to the pharmacist, or sometimes in endcaps. And some are in PDQs or power wings that hang off the ends of aisles. As a marketing person, you want as much visibility for your product as possible. It's easier to see." UCB Pharma reports that Delsym has seen secondary display volumes increase 500% over prior years. Another trend UCB Pharma has noted is the increasing number of SKUs available from manufacturers. These SKUs not only crowd the category, but spur confusion among consumers."The product is driven by recommendations of pediatricians, nurse practitioners and pharmacists," she says. Delsym provides the patient brochures and dosing charts that pharmacists and practitioners use to educate their patients. Preventing Sweeping, Promoting ProductsShoplifting resulted in $10 billion in losses at the nation's retailers in 2002, according to the most recent University of Florida National Retail Security survey conducted that year.The average dollar loss per shoplifting incident was $207.18, says Tony Kadysewski, marketing communications manager with Wilkes-Barre, PA-based Trion Industries Inc., a producer of locking and metered dispensing fixtures."One of the hardest hit categories is drugstores," he says. "They are killed by people who go in and do this professionally, take very expensive items or a number of items at one time."Among the most heavily shoplifted items are products sold in drugstores that some people are embarrassed to buy, such as hemorrhoid ointments, home pregnancy tests and condoms. But old-fashioned means of keeping such items secure, including glass display cases, burden drugstore chains with additional costs. Sales associates need to unlock the case, and sales are lost when customers can't find an associate to give them access to products. The solution, offered by Trion and other providers, is a locking device that allows retailers to lock away most of the stock, but permits the first one or two items in the shelf to be accessed and handled by the customer."This keeps people from mass theft or sweeping, the act of taking the whole line off the hook," Kadysewski says. "They can take one or two off the shelf, turn it around, read the instructions and learn about products without sales associates' assistance."Another solution is the metered fixture that permits customers to remove only one of the products on a rack at a time. Automatic feed forwards the next product, so the rack is always well-faced and ready for sale.Moreover, the systems permit opportunities for messaging, he adds. On a locking scan hook, drugstores can display just the scanning code and price, or can place signholders and shelf talkers on the end of the scan hook for branding messages. They can also use right angle flags that provide greater visibility to those walking down the aisle. On wall-mount or shelf-mount metered systems, drugstores have the opportunity to offer labeling systems, shelf talker systems and right angle flags. Because they are auto-feed systems, the "pusher" that forwards product can also be imprinted with a promotional, branded or cross-selling message that appears when product has run out. Such a message might appear as a suggestion that customers look to the left or right for similar products, Kadysewski says.The FutureLooking ahead, P-O-P is likely to play a more significant role as drugstores attempt to separate the look of their stores and the shopping experience from other retail channels.For her part, Drumm believes it's very difficult to differentiate the interiors and experience at CVS from those at other retailers. "Starbucks does a great job, but now competitors are copying their style," she says. "P-O-P can be a tremendous friend, a tool for us, to help us differentiate CVS/pharmacy from other drugstores or stores that have a pharmacy. We're just at the tip of the iceberg. It's a very exciting time ahead for CVS/pharmacy and P-O-P."

Channel Report: Drugstores

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