Changing landscape for drugstores
The way consumers shop for prescription drugs, over-the-counter medications and health and beauty care products has fundamentally changed with consumers turning to national drugstore chains, pharmacy counters in supermarkets and supercenters, and online or mail-order outlets. Research by the IBM Institute for Business Value of more than 4,000 pharmacy customers reveals that this competitive market is also plagued by negative attitudes consumers have toward their primary pharmacies, in which only 20 percent of customers are Advocates. Consumers defined as " Advocates," recommend their primary pharmacy to others, buy more from that pharmacy as new products become available and stay with that pharmacy even when new competitors appear. The two other consumer attitude segments are Antagonists, those customers who actively dislike their primary retailer, and Apathetics, those that are indifferent. Advocacy varies by sub-segment. Independent drugstores have the strongest share, with 37 percent while national drugstore chains and supercenters have the lowest, with 20 and 18 percent, respectively. Advocates are not only more loyal customers; they are, in general, more valuable. Our study shows that: - Basket size, or dollars spent per visit, for Advocates is 28 percent more than Antagonists.
- Share of wallet – the percentage of total dollars customers spend with their primary pharmacy – is 20 percent higher for Advocates.
- Spend over time is higher for Advocates; – 33 percent of Advocates increased spending at their primary pharmacy over a two-year period, while twice as many Antagonists decreased their spending.
Creating more Advocates
While only 20 percent of pharmacy customers are Advocates, our survey shows that 81 percent of customers say their primary pharmacy meets their expectations. Hence, building customer advocacy is much more difficult than simply meeting customer expectations. To understand what features are most important to Advocates, we surveyed customers about how they felt about their primary pharmacy across a number of performance attributes (see Figure). 
The top three attributes were: "My drugstore makes it easy to shop," "Pleasant and enjoyable to shop at drugstore" and "Happy with service from store employees." These attributes tell us that convenience, the in-store experience and customer service are three of the critical factors in building advocacy.
By using the top-ranked attributes to create an operational, cross-discipline strategy, pharmacies can work on those capabilities that enable them to provide superior focus on their customers. The effort to transform shoppers into Advocates can be a winning proposition, potentially driving significant financial benefits to the retailer and enhanced experience to the consumer. How can IBM help? - Strategy and Change – Help to address changing customer buying behaviors, organization and customer-centric processes.
- Retail Industry Solutions – Solutions to address multi-channel retailing, merchandising and supply chain, total store, and retail performance analytics.
- Retail Industry Offerings – Innovative and market-leading offerings to support the retail industry, including but not exclusive to Merchandise Operations Strategy, Next Gen e-commerce and Customer Analytics.
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