Why Real Estate Agents Should Pay Attention to the Changing Pharmacy Market

Posted On Tuesday, 19 January 2021 22:06

If you walk into a large chain pharmacy, you’ll likely be met with a series of orderly aisles that would be at home in any large department store. This is not an accident. 

For decades, pharmacies have been working to expand into new markets by offering a one-stop-shopping experience. By stocking a wide range of products like cleaning supplies, stationery, and groceries, they have tried to position themselves somewhere between convenience stores and supermarkets, with healthcare and traditional pharmacy services as something of a sideline.

This is reflected in the physical design of their stores: in most cases, the pharmacy itself is at the back, and in order to reach it customers must walk past row upon row of unrelated products. 

But as e-commerce has dramatically changed the retail business, shoppers are increasingly turning to online delivery services for their household staples. Where expanding into larger premises and offering greater selection once seemed like the future of the pharmacy industry, smaller players in the industry are now starting to wonder whether getting back to basics might not be a better way forward. 

Given the significant presence of independent and chain pharmacies in large cities and small towns alike, it is important for real estate agents to keep up with these changes if they want to be able to effectively serve their clients. 

Understanding the way new pharmacies are marketing themselves gives commercial real estate agents an edge when it comes to working with property managers. To that end, here are a few important points to understand about the evolution of this key market segment in the 21st century.  

Is Smaller Better?

One of the most interesting developments in retail over the past ten years has been the shift toward shops that offer a niche experience. When you can order your staples from Amazon, what you want in a brick-and-mortar shop is something extra, a more curated experience that gives customers a unique experience.  

Smaller companies that carry a carefully-curated, specialized inventory are seeing some success in competing against the big box stores that offer vast selection but a less personalized experience, and this is especially true of businesses like pharmacies that provide essential services. 

Any small store competing against industry behemoths has to deliver something their larger competitors can’t, and the ability to build intimate environments that offer a more boutique experience and personalized service gives independent pharmacies a powerful advantage. 

For example, in large cities some high-end pharmacies are choosing to move into older buildings that have a more classic look and feel in order to communicate a sense of exclusivity and class that may appeal to a more elite clientele. 

Real estate agents who assume that pharmacies are looking for large spaces in new developments overlook this small but vital segment of the market at their peril. 

How Design is Helping Pharmacies Rebrand

This shift back to a more healthcare-centric approach to customer service is already being seen in pharmacy construction that emphasizes the basic purpose of a pharmacy: providing prescription medication and high-quality care. 

The layout of a typical pharmacies is built around maximizing the number of products a customer will pass by in order to reach the pharmacy desk. For those who did not call in their prescription in advance, the time it takes to fill the prescription also encourages shoppers to browse the aisles looking at junk food and cosmetics. 

Pharmacies that want to challenge the supermarket model, on the other hand, are designing spaces that are more intimate and upscale, and are turning to high-end commercial designers like BUILD IT By Design to help them create floorplans and environmental designs that encourage shoppers to view the pharmacy as a place dedicated to meeting their healthcare needs — spaces that have more in common with spas or health treatment centers than supermarket.

While the largest players in the industry are still battling it out to prove who can provide the most comprehensive shopping experience, the past year has shown that this business model may have run its course. The coronavirus pandemic has led millions of shoppers to shift much of their buying online, and the future may of pharmacies likely lies in smaller, boutique spaces that offer something special. 

The brick-and-mortar shops that will survive in the post-COVID era will most likely be those that can rebrand themselves away from the one-stop-shop model and provide shoppers with an experience that centers their actual needs, and for many, a comprehensive redesign is the first step toward doing so.   

Commercial real estate agents who want to get ahead of this trend should start doing more research into how this sea change in pharmacy design might impact their own sales. 

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