Retail Pharmacy: Return To The Core

Recently, WSJ and others have written about retail pharmacies. This article caught my eye of course.

As a former executive of both companies, there is a great deal to unpack regarding the transformation of retail pharmacy & customer delight. There are tons that can be said about the current state but two things came to mind. Here are some key thoughts I have always held:

1. Innovation and Transformation: If you think there aren't teams of really smart folks at these organizations thinking about the next generation of retail pharmacy, you're mistaken. I have worked with some of the most brilliant minds in my career, who have developed very innovative approaches. So, why haven't we seen massive transformation? In my opinion, it boils down to two main factors: scale and quarterly expectations. Innovation comes more easily to small startups and mid-sized companies. It's incredibly challenging at a large scale and equally tough to prove. Strategies that seem like common sense can become complex when applied across 14,000 stores. Moreover, there's the risk of disrupting a massive public company's profit and loss if the innovative idea fails or backfires.A key lesson I've learned is the importance of a balanced approach to risk and return, especially in relation to digital health innovation. We were pioneers in launching direct-to-consumer (DTC) telemedicine through a mobile app. This endeavor was meticulously planned, with stage gates set up to test, learn, and ensure we were creating something both useful and financially beneficial without compromising provider relationships. There is much more to this topic, but that's an example of thoughtful innovation that could scale and stand as a complement to the core business.
2. Legacy: I always advise any leader entering the retail pharmacy sector to study the history of retail pharmacy in America before their first day. Why? Because history is humbling. If you think you have a novel idea, you're likely to discover it has been considered before. The concepts we see today are often iterations of ideas that retail pharmacy leaders have had for decades. Same-day delivery? Charles Walgreen offered it in his first store — long before DoorDash. The challenge of scale also applies here. Telemedicine? Indeed, pharmacists and local doctors have been coordinating care since 1901. What we witness now is continuous iteration and evolution, with relatively few brand-new, groundbreaking concepts — and that's acceptable.I believe that the future of retail pharmacy lies in its history. Rather than trying to transform a retail pharmacy into something resembling a health plan, we should revisit the original value proposition that attracted customers and iterate on that to meet their current needs. Did you know children were a significant draw for parents visiting retail pharmacies in the early days? The reason? Toys. As profit margins decreased and toys evolved, this trend vanished. Maybe the key isn't in acquiring more healthcare companies but in rediscovering the fundamental traffic drivers of the past. For instance, why not introduce micro Toys 'R' Us pop-ups?

To reiterate, these ideas aren't complex, and many individuals within these organizations — who are exceptionally intelligent — recognize them. We need to return to our foundational principles, promote experienced operators to executive positions, and drive innovation at the core.

The book I always cite is this one. One read and you will see the true core and the potential future iterations that were born out over 100 years ago.

CVS and Walgreens are iconic brands with promising futures and will forever hold a place of admiration in my professional journey.