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Eloise Odgers
According to the U.S. Census Bureau, the nation’s senior population, consisting of 55.8 million residents age 65 or older, is growing at a rate five times faster than the total population between 1920 and 2020. This dramatic demographic shift holds significant implications, particularly within the health care sector. Understanding the pivotal role of the drug channel in ensuring seniors’ access to necessary medications and health care products is essential for stakeholders aiming for sustained growth across generations. Analyzing drug channel trends from the fourth quarter of 2023 offers valuable insights into how drug stores can better meet the needs of senior shoppers and boost in-store visits throughout 2024.
Seniors, comprising 16.8% of the population, wield significant influence within the drug channel despite their relatively small population share. They represent the highest index in this sector, heavily relying on pharmacies for prescription refills, over-the-counter medications and medical supplies. Consumer surveys reveal that nine out of 10 seniors regularly take prescription medication. However, despite this reliance, recent data trends indicate challenges within the drug channel, particularly the declining number of physical store visits and the financial strain caused by inflation, affecting seniors’ ability to afford necessary medications.
Circana data shows a notable 6.5% decrease in overall visits to drug stores in the fourth quarter of 2023 compared to the previous year, and a 5.7% decline in dollar sales. Factors exacerbating this issue include the rise of online sales, store adaptations for delivery and curbside pickup, and inflationary pressures. Senior shoppers, in particular, are making fewer drug store visits annually (12.6% fewer), amplifying concerns about their accessibility to vital health care products.
Many seniors, particularly those in fair to poor health, struggle to afford their medications amidst rising costs, with 49% expressing that their expenses last year were higher than they expected. While programs like Social Security and Medicare provide some relief, seniors’ fixed income and retirement increasingly limit their ability to make ends meet during inflationary times. Health care spending is typically two times greater in Medicare households, with more than 30% of Medicare households spending 20% of their overall expenses on health care. While Medicare’s ability to negotiate prices on select, frequently used drugs may alleviate financial burdens for some seniors, the broader implications remain to be seen.
To address these challenges, stakeholders in the drug channel must take proactive measures to better cater to seniors.
Get digital — Consistent with trends observed across all CPG categories, the drug channel experienced a shift from in-store purchases to online purchases last year, with online drug channel sales increasing by 8% in terms of dollar sales. Seniors are also embracing this trend, as evidenced by a 4.2% increase in e-commerce product trips among this demographic.
Embracing digitalization and enhancing e-commerce capabilities can make shopping for medications and health care products easier for seniors. Simplifying digital coupons and leveraging mobile apps for medication reminders, virtual consultations with pharmacists, and online prescription refills can greatly improve accessibility and convenience for senior shoppers.
Convenience is key — Surprisingly, the drug channel saw an increase in revenue from seniors migrating from the beauty channel and health and vitamin shops, according to Circana Receipt Panel data, surpassing initial expectations in both instances. This shift indicates that seniors are seeking the convenience of consolidating their specialized shopping trips, avoiding the need to navigate the extensive aisles of larger retail stores.
Because seniors are the cohort encouraged most by doctors to receive flu, COVID-19, and RSV vaccines, there is an increased opportunity for this demographic to make trips to drug stores. As seniors come into stores for their vaccines and cough/cold/flu products, engage them with pharmacy health and wellness programs and retail products to encourage more trips.
Additionally, loyalty programs with benefits tailored to seniors’ needs — like discounted immunizations with a certain number of in-store visits — can foster deeper engagement and incentivize frequent visits. Promoting awareness of retail clinic services and supporting adult children who serve as primary caregivers can further drive foot traffic and enhance the overall customer experience.
Focus on private label — Because promotions remained elevated in the drug channel in 2023, consumers leaned into name-brand products to alleviate spending, and private label performance declined across the majority of drug departments. Deeper discounts on private label products can help the drug channel remain competitive with value channels and retain customer loyalty.
By ensuring a robust selection of private label products in key health and beauty categories, drug stores can provide affordable alternatives to name-brand medications and supplies. Bundled promotions on complementary private label products — like cough and cold medicine with facial tissues or body sunscreen with facial lotions — further enhance the value proposition for seniors, enabling private label products to remain competitive with branded products.
According to McKinsey’s 2024 Future of Wellness Global study, catering to healthy aging emerges as a prime opportunity within the wellness sector, with 70% of consumers expressing increased expenditure on products in this category over time. Moreover, over 60% of consumers emphasized the “very” or “extreme” importance of prioritizing products and services aimed at promoting healthier aging and longevity.
By recognizing the unique needs of seniors, adopting innovative strategies and fostering deeper engagement, stakeholders can navigate this demographic shift effectively and achieve long-term sustainability of the drug channel. As we look toward the future, collaboration and innovation will be vital in ensuring that seniors receive the care and support they need and deserve.
Eloise Odgers, principal of retail services at Circana.