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As we consider the evolving landscape of retail, drug stores are at a crossroads. Drug retailers and product manufacturers must adapt to meet consumer expectations and stay relevant amidst the industry’s ongoing store consolidation, expanding in-store health services, and shifts in traffic and consumer behavior. One important consumer to consider is the Hispanic shopper, a demographic that can and will have a significant impact on the future of the drug channel.
Intersection of Hispanic growth, technology and health services
Jim Sleightholm
Now is the time to build out the drug channel’s future strategy and product or service offerings. Important to note, Hispanic consumers are the fastest-growing population in the U.S., quadrupling in size for the past 40 years. They have significant buying power estimated to reach $2.8 trillion by 2026, as shared by the Department of Health and Human Services Office of Minority Health. This consumer needs to be considered in short- and long-term planning across all retail, including drug, for merchandise selection, in-store services, and total shopper experience.
According to the Centers for Disease Control and Prevention (CDC) and the Census Bureau, Hispanic consumers generally have less access to preventative care, less health insurance coverage and higher obesity rates than non-Hispanic consumers. This means that drug retailers need to understand the importance of health-related products and services in their merchandise mix. We expect that GLP-1 receptor drugs will dramatically expand the drug channel opportunity when they become more affordable and readily available, and competition across all retail will be swift and fierce.
A recent study conducted by Acosta Group with its proprietary shopper community provides insights into three important Hispanic shopper behaviors: digital engagement, a focus on family and high-indexing categories.
Digital engagement
While in-store shopping occurs most frequently, Hispanic consumers are more digitally engaged than non-Hispanic consumers across all parts of the shopping journey. Pre-trip, these consumers use more store apps, online recipes and social media to inform their product and store choices. When shopping in-store, the study reflects that they also more actively use retailer apps for a variety of shopping needs. In addition, there is a higher likelihood for these consumers to make impromptu purchases during their shopping trips. Lastly, they are more likely to utilize repeat order functionality post-trip for items they like and find value in, according to the study.
These insight examples from Acosta Group’s “2023 Hispanic Shopper Study” clearly illustrate the high digital engagement of this shopper, with additional learnings from food and household item purchases extending to HBC, general merchandise and drug shopping trips.
A focus on family
Hispanic shoppers place “taking care of family first” near the top of their shopping mindset. These consumers enjoy grocery shopping more than non-Hispanic consumers, listing as primary reasons the planning and consideration of family meals, being creative, treasure-hunting, and browsing.
In addition, Hispanic consumers are more likely to be caregivers. In a March 2024 online seminar, Kantar Retail shared that while 17% of all shoppers report being caregivers to family members or friends with a chronic condition, disability or special needs, that percent jumps to 25% for Hispanic Shoppers. Caregivers are much more likely to use health and wellness-related services or be interested in doing so. They are also more interested in retailers with broader assortments.
AARP estimates that there are 38 million caregivers in the United States. This number will increase as the population ages. Drug retailers and manufacturers have a clear opportunity to link high-indexing family and caregiver roles in the Hispanic community to creative solutions that solve for these unique need states. These solutions can come to life by updating strategies with segmented levers for the Hispanic consumer in shopper marketing, personalization, product development, assortment and services.
Optimizing high-indexing Hispanic categories
While the penetration of Hispanic households in drug is on par with other channels, the drug store annual spend is higher per household for this consumer than for non-Hispanic consumers. This additional value comes from both more frequent trips and higher spend per trip.
This valuable shopper is already engaged in drug, and their household disposable income is growing faster than that of non-Hispanics.
A 2023 Acosta Group drug shopper study shows that Hispanic consumers are more likely to shop the perimeter of the store and the checkout areas versus other shopper segments. In fact, according to a NIQ Panel Analysis, the Hispanic shopper over-indexes in dollar spend versus total shoppers in the following categories in drug stores: cosmetics, diapers, hair care, bath and shower, feminine care, deodorant, fragrances, laundry, dish care, and pet.
The road ahead
As the Hispanic population and spending power continue to grow, drug store retailers and product manufacturers must adjust and adapt their strategies for successful consumer engagement. Continued learning about this influential audience via insightful research is important, to ensure targeted messaging is on point. These efforts will ensure that these customers’ preferences and needs are met and help to secure drug stores’ competitive place in an ever-evolving and challenging retail landscape.
Jim Sleightholm is vice president of business intelligence at Acosta Group.
