Five Opportunities and Challenges for Retail Healthcare in 2023

“We’re comfortable with pharmacies being more or less everywhere. Consumers expect their prescriptions from their closest retailer or shipped directly to their house.” - Pete Groves, senior managing director at Publicis Sapient.

The opportunity: More than 2/3 of Americans take at least one prescription drug, which accounts for 12% of personal health care spend nationwide. Yet prescription access, and the prescription purchase experience itself, is fragmented. Whether it’s disjointed fulfillment experiences across channels or pharmacist and drug shortages in both rural and urban areas, an omnichannel digital pharmacy experience is becoming a necessity for consumers.

Consumers are searching for cheaper and more convenient options to fill their prescriptions — either through subscription services or digital pharmacies. From Amazon’s RxPass to Rite Aid’s partnership with Google Cloud technologies, retailers are branching out to create more personalized and consistent prescription purchase experiences that match all-around heightened e-commerce expectations for on-time, on-demand retail healthcare.

The challenge: Successful mail-order pharmacy solves a customer need but reduces foot traffic and visits, changing the nature of the in-store path consumers walk. A critical component of a successful omnichannel experience is replicating the cross-sell and data-gathering possibilities typically presented in-store with a digital experience that replicates the feeling of connection and care that many shoppers appreciate with their local pharmacist.

“Grocers have a dedicated customer base going to the store every week because they need food. Traditional healthcare providers have the opportunity to take advantage of this massive physical store footprint.” - Pete Groves

The opportunity: The acceleration of healthcare workers leaving front-line roles, adding to an already understaffed industry, has created care settings that are intolerable for consumers. Long scheduling loops, long wait times on the day of visits and overall adverse experiences are pushing consumers to reconsider a range of services.

Historically, medical appointment operating hours have conflicted with major work schedules. Now, pharmacies in many communities are also cutting hours, leaving more families less likely to get the support they need. Additionally, rural residents live an average of 10.5 miles, or 17 minutes, away from the nearest hospital.

Yet 3/4 of all Americans live within five miles of a Dollar General, and even more live within 10 miles of a Walmart, two established retailers that are already utilizing their massive store footprints to create healthcare partnerships.

Retailers, especially those with the ability to provide great digital experiences, are in a prime position to fill a growing care gap with “last-mile” healthcare services. These wellness visits encompass anything from minor injuries to blood tests to physical exams or vaccinations. There’s a huge bracket of younger consumers open to convenience options (only 55% of Gen Z has a primary care doctor), and parents and older adults alike are seeking the convenience of in-person and telehealth services.

The challenge: Many physical retail spaces are not created with this kind of care in mind; even the huge vaccination surge during COVID-19 had many make-shift corners turned into care settings that now need to be redesigned. Delivering care onsite requires a wide range of new capabilities and workflows not native to all players. But with a clear strategy and experience-design approach to expand care settings, retail health can play a major role in a consumer-oriented transformation of the sector.

“So much attention is paid to healthy eating, and the level of conversation has risen – mass grocers are natural leaders to take this ‘back’ from higher-end specialty grocers and to make this a holistic part of the shopping experience, in every community.” - Pete Groves

The opportunity: More consumers than ever before are factoring their health and wellness into their diets and their overall food purchasing decisions. Research shows that most grocery shoppers actively seek out food and beverage products that will support their overall health. However, many consumers can’t tell which products are healthy and which are not, often conflating “pretty” food products as nutritious or misinterpreting food nutrition labels.

Food retailers should provide educational content and professional advice around meal planning and overall nutrition. This support has a significant impact on consumer choices, whether the consumer is highly educated about nutrition or not. In fact, a recent study showed that customers who engaged with a Kroger health dietician at a physical grocery store for in-aisle education and shopping practice had a greater adherence to a prescribed diet than the control group.

The challenge: Health and wellness food content, unlike other types of food content, requires some sophisticated messaging personalized to segments and their core needs, especially as the complexity of allergies and aversions has grown so substantially. Moreover, retailer relationships with packaged goods companies can complicate the ability to freely steer preferences or trials of products in a purely consumer-oriented approach. Sector leaders will work to build a strong base in segmentation and targeting, as well as mobile experience pre-shop and in-store as a value-added part of the family diet.

“The U.S. healthcare system is complex and expensive for so many Americans, and traditional healthcare services are leaving many behind. We see a major opening for relevant retailers to be a trusted and straightforward digital ‘access point’ for many communities that are too often overlooked by the major healthcare players.” - Pete Groves

The opportunity: More Americans than ever before report delaying medical treatments for themselves or a family member because of rising costs, according to a recent Gallup poll, but the treatment dollar amount isn’t the only culprit behind the widespread lack of access to healthcare.

A lack of pricing transparency, outdated communication processes and little to no digital patient engagement lead to missed appointments for many Americans. Only half (52%) of Americans believe their doctors prepare them for how much their care will cost. At the same time, many traditional medical providers have no form of personalized digital patient outreach, and patients are required to schedule (or cancel) appointments proactively via phone call during typical workday hours.

This outdated experience contributes to a $150 billion industry cost for missed medical appointments and the almost 1 in 5 Americans (18%) that haven’t seen a doctor in five years or more. Retail health clinics can help patients avoid medical sticker shock and gray areas when it comes to insurance coverage through easy-to-understand, upfront pricing for different health services. Retailers are also well-positioned to create accessible digital experiences that engage historically underserved patient demographics.

The challenge: Building on public interest in-store retail healthcare services, this is a “segment” focus that is massively under-indexed in most strategic plans. There is a clear path to providing simple pediatrics and other wellness services that take traffic and activity away from larger, traditional providers and will benefit immensely from the simple customer orientation and experience design that so many retailers rightfully claim as a strength.

Some more ambitious plans include going “all in” — integrating disparate sources of patient data, building out cohesive omnichannel engagement and implementing complex electronic medical records. But retailers can still serve these segments well with a simple, straightforward care approach that delivers a critical service to communities and a healthy, profitable business.

“Home Depot and Lowe’s have done a great job of creating a specialized experience for contractors, while also serving DIYers, and they have loyalty programs that make their ‘B2B’ play very compelling. Grocers have the opportunity to do the same with a variety of B2B health and wellness segments – from home health aides to nutritionists and other health professionals.” - Pete Groves

The opportunity: So far, grocery retailers have placed their focus on breaking into direct-to-consumer (D2C) health and wellness market opportunities, largely not prioritizing business-to-business (B2B) medical supplies and medical devices markets currently dominated by wholesalers.

But the U.S. home healthcare services market alone, which includes physician care, nursing care, medical social services and physical, occupational and speech services, is massive. A growing demand for at-home items like bed safety rails, commodes or even bandages and disinfectants is being fueled by an increasing geriatric population, as well as a rise in chronic conditions like heart disease, stroke and cancer. The home health market is predicted to expand to 153 billion by 2029, yet it’s still hugely fragmented with small players and largely independent contractor employees.

Grocers are positioned to serve health professionals with a seamless B2B experience that's more digitally mature than those of traditional B2B medical suppliers in the space.

Grocers should also provide loyalty programs for non-professional caregivers, who make up almost ¼ of U.S. adults. As many decide to “age-in-place" and require home health services, grocers can tap in with targeted advertising and recommendations and prioritize messaging to these critical intermediaries much as other sectors have done with skilled, hands-on practitioners walking the aisles.

The challenge: The B2B medical supply segment is fragmented and diverse. Creating loyalty in a brand-new market will require a new e-commerce experience and changes in store operations. Modern data practices can accelerate each retailer’s ability to deliver these services well and stand out among the many players who offer similar wares. A strategic approach will help retailers elevate insights within this market opportunity to help create frictionless, omnichannel shopping experiences that make health professionals feel at home and eager to come back with loyalty.