Major drugstore chains are foundering, and their rapid downfall seems to be nearing critical mass. Rite-Aid, who has been systematically shuttering locations since filing for Chapter 11 bankruptcy in late 2023, just announced their decision to close all Michigan stores by the end of September. CVS and Walgreens aren't doing much better, having also pledged to close hundreds of locations by the end of this year.
Community pharmacies are also facing significant challenges, with declining reimbursement rates forcing many into financial turmoil or out of business entirely. With profit margins spread wafer thin, the threat of pharmacy deserts looming, and competition from online and big box retailers on the rise, independents are more pressed than ever to find creative ways to thrive.
When you're a small business owner and money is tight, investing in change or growth can feel overwhelming. But by capitalizing on the weaknesses that have led to big chain failures and aligning your efforts with your community’s best interests, those investments will position your pharmacy for lasting success.
As you map out your strategy, here are six key opportunities to consider.
1. Revitalize Your Front End
While multifaceted, the drugstore downfall can largely be attributed to declining retail sales. The oversaturated product offerings of traditional drugstore front ends are failing to attract customers due to their wide availability and the undercut pricing strategies of retail giants like Amazon and Walmart.
While stocking OTCs and other typical front-end items can still prove beneficial from a convenience standpoint, independent pharmacies have the unique advantage of being able to offer a more personalized and curated shopping experience that resonates with their communities.
Consider carrying locally made goods, unique health and wellness products, or seasonal items that reflect the tastes and needs of your customers. Utilizing a POS system specifically designed for independent retail pharmacy can help you manage inventory, track sales trends, and create custom promotions that drive foot traffic. Your ability to create a unique shopping experience is something big chains struggle to replicate, giving you a competitive edge.
Need some inspiration? Check out this CLIMB episode with Duran Central Pharmacy's Mona Ghattas to learn how they successfully transformed their front end into a desirable destination.
2. Expand Clinical Services
Offering clinical services is a great way to enhance patient care while simultaneously driving profitability. Services such as medication therapy management (MTM), immunizations, and health screenings not only provide valuable care to your community but also create additional revenue streams. If you want to take your clinical game to the next level, explore offering specialized services like diabetes education, smoking cessation programs, or chronic disease management.
Incorporating clinical services requires investment in training and resources, but the return on investment can be significant. These services not only generate income but also strengthen relationships with patients, increasing their loyalty to your pharmacy.
If you're looking for guidance on how to expand your clinical offerings, check out our clinical services CLIMB playlist full of insightful panel discussions with clinical pharmacy experts.
3. Partner with Local Businesses & Community Groups
In the face of rising corporate greed, there’s strength in numbers. Partnering with other local businesses and community groups can create opportunities for mutual growth. Consider collaborating with nearby health and wellness providers—like gyms, chiropractors, or nutritionists—to create cross-promotional opportunities. You could offer discounts to each other’s customers or host joint health events that draw in the local community.
Community outreach is another area where independents can shine. Sponsoring local events, participating in health fairs, or offering educational seminars can raise your pharmacy’s profile and attract new customers. By positioning your pharmacy as a community hub for health and wellness, you build stronger ties with your customers and increase your visibility.
4. Leverage Technology for Efficiency
Maximizing operational efficiency is a key defense against squeezing profit margins. Investing in technology that streamlines workflows saves time and reduces overhead costs, freeing up cash flow to invest in other areas.
Technology can also help you better understand your business. By analyzing sales data, you can identify high-margin products, optimize inventory levels, and tailor your marketing efforts to target the most profitable segments of your customer base. The more efficient and data-driven your operations are, the better positioned you’ll be to navigate financial pressures.
5. Focus on Personalized Service
In a world where healthcare can often feel impersonal, offering exceptional customer service can be your greatest asset. Train your staff to provide knowledgeable, friendly, and personalized service that makes customers feel valued and understood.
Consider implementing loyalty programs that reward repeat customers or offering personalized health consultations that address individual patient needs. When customers feel a strong connection to your pharmacy, they’re more likely to choose you over larger, less personal options.
6. Explore Niche Markets
Diversifying your offerings by tapping into niche markets can also be a profitable endeavor. Consider offering specialized products like organic or natural health & beauty items, supplements, or homeopathic remedies. You might also explore compounding services, which allow you to create custom medications for patients with specific needs.
Serving niche markets can differentiate your pharmacy from competitors and attract customers looking for products and services that aren’t widely available elsewhere. By catering to specific needs, you can build a loyal customer base that values the unique offerings of your pharmacy.
Have a success story to share?
We'd love to hear all about it! Drop a comment below and let us know how you transformed your pharmacy to become a standout in your community.
