For store-based retailers, building destination departments where the products, services and in-store experience can not be disinter-mediated by eCommerce is the biggest strategy for combating the strain and drain of consumers buying online. One of the ways that retailers are attempting to do this is by offering additional services in-store, specifically retail clinics.
54% of the nearly 1,300 retail clinics today in the USA belong to a single operator – CVS’ Minute Clinic. The clinics which were first unveiled in the year 2000, have now had over 11 million visits from people in 26 different US states. With this kind of trial it might be time to ask why the concept has not ramped up more quickly and how is the business model benefitting CVS. Last year CVS added 100 additional clinics to its stores and have announced plans to reach 1,100 Minute Clinics across the United States in 2016. This would put clinic penetration at less than 20% of stores and annual clinic count growth of only 80 new clinics per year.
Retailers offering retail clinics are offering a service that allows them to cater t0 some core shopper needs:
- Aging shoppers need more medical care
- The current medical system does not provide adequate service – long wait times (3-6 months) for health checkup visits, half day waits in Dr’s waiting rooms (if you can even get a same day appointment)
- “No appointment necessary” is far faster and more accessible, but awareness about scope of care and coordination back to your doctor is not yet widespread
Barriers to Entry
It has now been 7 years since CVS opened its first Minute Clinic, and judging by their investor presentations and anemic plans to roll out the clinics over the next five years, while you would be safe in assuming that, while CVS is still committed to the concept, they are holding back for some reason from making this universal as a traffic driver to their stores.
Why has the Minute Clinic not made its way into ALL of CVS’ 7,300 stores in the US? Is there a major barrier to entry for retailers considering the introduction of retail clinics?
While we cannot exactly pinpoint the answers to these questions, I can call out the major hurdles facing clinic operating retailers:
- Awareness – the overall concept and availability regionally has been slow to penetrate consumer awareness beyond for flu shots
- Location/Penetration – Retailers need to focus on areas with a shortage of Primary Care Providers and market the opportunity
- Economics – Investment cost in systems, space, trained/qualified providers (Dr’s in some markets, Nurse Practitioners in others)
- Transference to regular providers when needed, Consumers especially older ones are tradition bound and slower to change.
- Staffing challenges – an additional expertize and qualification to manage. Hiring is reportedly difficult.
CVS expects that there will be a shortage of 45,000 Primary Care Physicians by 2020, up from just 9,000 in 2010, and consumers are already complaining of access to their primary providers. This creates demand for alternatives/substitutes ranging from ER’s to Clinics (both retailer-based and other)
The strategy in-store clinics should therefore have great potential for a retailer like CVS:
- Rising shortage, means rising demand for convenient and affordable medical care options
- Being able to capture or consolidate trips from (1) other stores where shoppers would otherwise go for Rx and OTC needs, and (2) traditional trip to the doctor
- Extending CVS-Caremark’s reach upstream in the healthcare value chain and help the company to position itself as a trusted health-related advisor
- A quality experience should result in higher loyalty, in-store traffic, and therefore sales.
This post is one of several in our quest to completely understand the Retail Clinic offer, and how they compare from retailer-to-retailer. Click Here to see all retail clinic posts to-date.
RetailNet Group web subscribers can see the full photo gallery of the CVS Minute Clinic and its neighboring departments on RetailNet Group’s store tours site