NACDS/American Greetings Council Presents Research to
Increase Drug Store Sales; Drive Loyalty
CLEVELAND, June 29 /PRNewswire/ -- Research findings on new marketing
strategies to increase front-end sales and profitability in chain drug stores,
and methods to build customer loyalty were released today at the National
Association of Chain Drug Stores (NACDS) Marketplace Conference at the
Pennsylvania Convention Center in Philadelphia, PA.
The research involves a three-year study conducted by the NACDS/American
Greetings Research Council.
"In all its formats, chain pharmacy continues to develop innovative
approaches to meeting consumer demand in our rapidly changing marketplace,"
said Ronald L. Ziegler, NACDS President and CEO. "The three-year strategic
research project conducted by the NACDS/American Greetings Research Council
identified meaningful strategies that can further enhance chain pharmacy's
ability to both expand customer services and build customer loyalty."
The Council reported that the strategy of targeting "best customers"
through a consistent, direct mail effort and focused in-store vehicles was a
most effective and affordable method of driving prescription and front-end
sales, reinforcing the drug store's unique image, leveraging its best asset --
the customer's relationship with its pharmacy and building customer loyalty.
According to Bill Parsons, American Greetings Vice President, Corporate
Trade Development and ex officio Council member, "We created the year-long
'Well Worth It' customer loyalty program because our research showed that drug
store customers were not loyal to one store for all their prescription needs
and that more than half did not shop both the Pharmacy and front-end on the
same trip. We developed a program to thank and reward prescription customers
in order to encourage them to be loyal to one store and to buy more front-end
merchandise. Our market test resulted in increased prescription and front-end
sales, increased customer loyalty and more positive perceptions of the store."
Phil Perkins, Council spokesperson and vice president of Marketing,
Snyder's Drug, explains, "Our multi-tiered 'Well Worth It' marketing concept
utilized direct mail, supported by in-store point-of-purchase, to focus on the
stores' best customers, those customers that had a prescription filled in that
store in the last 90 days. The monthly mailing included a card from the
pharmacist thanking them for filling a prescription in that store, a health
advice newsletter, as well as manufacturer and store coupons. Four Council
stores also tested a Valued Shopper punch card offering $5 off after $50 was
spent on front-end. By thanking prescription customers for their business and
rewarding them accordingly, we were able to demonstrate that there are
effective, affordable strategies to drive chain drug sales and profits, as
well as favorably impact loyalty."
Perkins continued, "We use a test vs. control store methodology, and at
the end of the twelve-month period, test stores' core front-end sales
increased 2 percent, compared to flat sales in control stores. Although our
test was designed to drive front-end sales, prescription sales increased as
well; they increased 10 percent over prior year compared to an 8 percent
increase in control stores. In addition, quantitative research at the
conclusion of the test showed that the 'Well Worth It' program drove store
loyalty; 88% of the customers surveyed said they would shop the store again."
"An important element in our 'Well Worth It' program was a 'While You
Wait' coupon, which offered an immediate reward of $1 off on the purchase of
$10 worth of front-end merchandise while the customer waited for a
prescription. This coupon had an 11.4% redemption rate during our test,
increasing incremental sales and favorably impacting gross profit," Perkins
concluded.
The Research Council findings are based on 12-month sales and profit data
from 24 test and 24 control stores in different markets representing all
Council member chains, as well as 600 mid-test and 600 post test telephone
interviews to measure consumer's perceptions of the test.
The Council's preliminary findings from Phase I of the research were
reported at the 1997 Marketplace Convention in San Diego.
The NACDS/American Greetings Research Council membership consists of a
rotating group of senior management from geographically dispersed and non-
competing drug stores.
NACDS/American Greetings Research Council Charter Members
Robert Berman, Vice President, Buying and Merchandising, May's Drug
Stores, Inc.
Mark Griffin, President and Chief Executive Officer, Lewis Drugs, Inc.
Lance Clark, NACDS, Senior Vice President, Non Pharmacy Programs
(formerly First Vice President, Marketing, K&B Services Incorporated)
Jim Harrison, III, formerly President, Sales, Harco Drug, Inc.
Nat Lipsyc, President and Director of Operations, Medic Drug
Steve Oliva, President, Hi-School Pharmacy, Inc.
Phil Perkins, Vice President, Marketing, Snyder's Drug Stores, Inc.
Dan Wilson, Senior Vice President, Marketing, Longs Drug Stores
Ex Officio NACDS/American Greetings Research Council Members
Randy Mason, American Greetings, Senior Vice President, General
Sales Manager
Bill Parsons, American Greetings, Vice President, Corporate Trade
Development
Win Weber, President, and Richard Briscoe, Senior Associate, of Winston
Weber & Associates, Inc. are Council facilitators. Wendy Liebmann, WSL
Strategic Retail, President, conducted the research.
Founded in 1933 and based in Alexandria, Virginia, The National
Association of Chain Drug Stores (NACDS) membership consists of 135 retail
chain community pharmacy companies. Collectively, chain community pharmacy
comprises the largest component of pharmacy practice with over 91,000
pharmacists. The chain community pharmacy industry is comprised of 19,000
traditional chain drug stores, 6,300 supermarket pharmacies and nearly 5,000
mass merchant pharmacies. The NACDS membership base operates more than 30,000
retail community pharmacies with annual sales totaling over $135 billion
including prescription drugs, over-the-counter (OTC) medications and health
and beauty aides (HBA). Chain operated community retail pharmacies fill over
60% of the more than 2.6 billion prescriptions dispensed annually in the
United States. Additionally, NACDS membership includes more than 1,300
suppliers of goods and services to chain community pharmacies. NACDS
international membership has grown to include 76 members from 20 foreign
countries. For more information on NACDS, visit the Web site at
http://www.nacds.org/.
American Greetings (NYSE: AM) is the world's largest publicly owned
creator, manufacturer and distributor of greeting cards and social expression
products sold in approximately 100,000 retail outlets in more than 76
countries throughout the world. The Company, the preferred partner in mass
retail channels, is also a recognized global leader in the use of technology
and distribution logistics. Headquartered in Cleveland, Ohio, American
Greetings employs 21,000 associates, including one of the largest creative
departments in the world that drives more than $2 billion in sales. For more
information, visit the Web site at http://www.americangreetings.com/.
SOURCE American Greetings
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