By Angus Dowie
Retail media networks have exploded in popularity in recent years, with specialists like Home Depot and Costco joining industry leaders Amazon, Walmart and Target. Retail media networks let advertisers get closer to the point of sale along with better access to first-party data, giving them better insights into the consumer journey. As a result, spending on retail media networks is expected to hit $62.3 billion in 2025.
While retail media networks are dominated by larger players, there is a great opportunity for retail pharmacy brands to introduce their own offerings. Below we’ll explore the best practices for pharmacy players to establish their own retail media network.
Examining the opportunity
Due to the nature of their business, retail pharmacies have a close relationship with their customers. Consumers turn to a pharmacy for their health and wellness needs and often seek out employees on a consultative basis. As such, they’re more open to advertising messages they receive from their pharmacies, such as advertising around a new wellness product or health food.
Additionally, the regionality of a retail pharmacy allows for a more localized approach, which can be valuable for advertisers looking for customers in specific markets. For instance, if an advertiser was looking to reach consumers in the upper New York area, they could turn to a retail media network offering from Kinney Drug.
Whether it’s through their existing loyalty programs or their own sales data, retail pharmacies also have valuable insights to help advertisers streamline their marketing efforts. Looking at past purchase behavior or frequency of visits can help advertisers deliver a less expensive alternative to a wellness product or bundle certain products so a shopper can cut down on their visits. As a result, the pharmacy can deliver a better customer experience, which can help improve upon their already close relationship.
The privacy consideration
Before moving forward with a retail media network, pharmacies have to consider the privacy implications of giving advertisers access to customer data. Consumer trust is important in the retail industry as a whole, but especially when it comes to health care. Pharmacies need to ensure that personally identifiable information (PII) is not being disclosed to advertisers and that they are not disclosing specific health outcomes. Additionally, customers would need to be given the option to opt-in to disclosing certain information such as through loyalty programs or email campaigns.
Protecting supplier relationships
Another consideration is protecting existing supplier relationships. Pharmaceutical companies ultimately supply the products that are improving the well-being of consumers, but they might not be fully on board with the idea of retail media networks. As such, pharmacies need to emphasize how sharing supplier data can help create a stronger retail media network for all involved while also improving the health outcomes of their customer base.
Putting it in place
Pharmacies should leverage any existing product promotion and trade marketing to start building out their retail media networks. These provide a valuable starting point on the advertiser relationship as pharmacies can see whether offering a coupon or an end-cap with a QR code resulted in a sale.
Additionally, pharmacies need to identify the data points that will be most valuable to advertisers without disclosing more information than is needed. As mentioned above, privacy should be paramount for pharmacy retailers, so they need to ensure that they’re following all privacy regulations when it comes to customer health data. By only disclosing information like purchase history and app engagements, they’re maintaining the trust of their customers.
Pharmacies also need to go beyond digital media and ensure that physical campaigns are a focus of their retail media networks. Digital is where most investments are being made for retail media networks, but pharmacies are slightly different from other retailers, as it is a highly physical experience. In-store activations are more noticeable to a consumer, which can help drive sales of higher-margin products. For example, a customer might notice an advertisement in the vitamin aisle over a coupon in the app, which requires them to scroll through a number of other options. As such, it’s important that pharmacies find the right mix of digital and physical offerings when starting their own retail media network.
Given their unique position in the retail industry, pharmacies can work with insurance providers, suppliers and fitness providers to deliver a unique advertiser experience. While retail media networks can provide incremental revenue for pharmacies, it’s essential that they keep the customer at the forefront of the experience. They need to ensure that the network doesn’t overly interfere with the customer journey and that they’re able maintain the trust of their customer base. Transparency should be at the forefront of their offerings, providing customers with as much information as possible while empowering them to make their own decisions.
Angus Dowie is global head of sales at ADvendio.
