Consumers spending less on prescriptions

An evaluation of more than 8,000 shoppers indicates that consumers are spending 3% less on prescription drugs now than the same time last year.

Kurt Salmon Associates (KSA), a global retail and consumer goods research firm that conducted the survey, said the decline is likely the result of a continued shift toward lower-cost generic drugs and by “an increasing number of consumers” reducing overall drug consumption.

KSA said Wal-Mart Stores is gaining market share from traditional drug chains because the company is “the most successful at marketing its discount drug offering.” The report also said Target will gain market share because consumers also see the company as a good “price-to-value” provider.

Other results of the KSA study include:
• Prescription drug users are increasingly price sensitive. In January 2009, 20% of prescription drug consumers cited price as a reason for switching retailers, which is up from 16% in 2008.

• Retailers with a value orientation are winning the share war in this economy. Wal-Mart grew its customer base 9% over the past year.

• The share gains for value-based retailers come at the expense of the stores that consumers perceive as having higher prices. Rite Aid lost a disproportionate amount of market share to Wal-Mart, approximately 2% over the past year, because consumers believe it has higher prices.

• Despite the increasing importance of price perception, location remains the no. 1 reason why consumers choose a particular retailer for prescription drug purchases. Walgreens and CVS continue to maintain share based primarily on convenient locations.

• Price-sensitive consumers are responding to discount prescription drugs programs. More than half (57%) of Wal-Mart pharmaceutical shoppers cited the retailer’s $4-generic-drugs program as a main reason for their choice of retailer.