Fast Five Shorts | Pro Or Con: Clinics Inside Of Retail Stores?
In the latest edition of Omni Talk’s Retail Fast Five, sponsored by the A&M Consumer and Retail Group, Mirakl, Simbe, Ocampo Capital and Scratch Event DJs Chris Walton and Anne Mezzenga are joined by special co-host and Shoptalk and Groceryshop’s VP of Original Content and Strategy Ben Miller. In this clip, the group discusses: The Pros Or Cons of Clinics Inside Of Retail Stores
For the full episode head here: https://youtu.be/ySon4C9S-hQ
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Transcript
Walgreens is shuttering its health clinics at 47 Illinois locations.
Speaker A:According to Progressive Grocer.
Speaker A: nced that it is closing up to: Speaker A:The clinics combine patient care from in store health professionals with video counsel from Advocate clinicians.
Speaker A:The question here is, what does Walgreens closing 47 Illinois clinics say about the potential of in store clinics within retail settings?
Speaker A:Chris, I want to go to you first because we heard a lot of chatter about this over the course of the last couple days at fmi.
Speaker A:What, what are your thoughts on the closure here of these 47 locations?
Speaker B:Yeah, I don't know how to compute this given the information that we received at smi.
Speaker B:Fmi, smi, fmi.
Speaker B:I think, you know, I think this story potentially says a lot.
Speaker B:You know, following the industry like we do, it doesn't seem like this concept of putting clinics in a retail setting is working.
Speaker B:Walgreens is not making it work.
Speaker B:Based on this headline, Walmart shut theirs down.
Speaker B:Now, the issues could be unique to the Illinois market.
Speaker B:I'll take that.
Speaker B:You know, take that with a grain of salt.
Speaker B:But again, Walgreens operates out of Illinois, so if they should be able to make it work anyway, they should be able to make it work in Illinois.
Speaker B:So that's curious.
Speaker B:But what you're alluding to with FMI is it this also flies in the face of what Oliver Wyman's Bobby Gibbs told us at FMI this past week, that he thinks we're going to start seeing more clinics pop up inside of grocery stores.
Speaker B:And for me, I just ask, why do I want my clinic where I'm doing my grocery shopping?
Speaker B:Like, I can see it in the same strip mall, maybe, like, you know, it's the same idea of like sprouts drafting off another grocery store for their own traffic.
Speaker B:But I just don't get the customer, fundamental customer value of putting clinics inside of spaces run and operated by grocers, particularly so.
Speaker B:But maybe I'm missing something.
Speaker B:I don't know.
Speaker B:And, but I, I'm not buying what, what we were told at fmi.
Speaker B:I'm sorry.
Speaker A:Oh, man, I totally disagree.
Speaker B:The clinic side of it, the, the health care benefits side that he was talking about too, in terms of like, like health insurance companies partnering with grocers, that makes sense.
Speaker B:But the clinic side, I don't see that being the primary outlet for people in the long run.
Speaker A:I just don't oh man, I, I disagree.
Speaker A:I think that that's, I think that's the option value here.
Speaker A:I mean, I think this is really bad news for Walgreens actually.
Speaker A:Like, I'll start there.
Speaker A:I think this is terrible news for Walgreens because if they lose the clinic business, and especially we're going to talk about another headline later on about other mass merchants getting into 30 minute prescription delivery, I.
Speaker A:What's the reason for Walgreens to exist anymore?
Speaker A:Like, that's my bigger question.
Speaker A:If there's no clinics and there's no like, you know, if there's better deals or, or better availability for getting prescriptions delivered to my house, what you're going in there for overpriced product, I mean that's really what it is.
Speaker A:At the end of the day, you're paying more for over the counter medications there in most cases than you can at a mass retailer.
Speaker A:You're paying more for beauty products.
Speaker A:Like, I don't know why I'm going to a Walgreens anymore.
Speaker A:So I think that's the bigger question here.
Speaker A:But Ben, I don't see my pharmacies.
Speaker B:At my clinic actually.
Speaker B:I mean if I flip this on its head, like that seems like the better user experience to me.
Speaker A:Yeah.
Speaker A:I don't know though.
Speaker A:I think like the mass retailers, like there's, you're already going there.
Speaker A:The grocery store, you're already going there.
Speaker A:I think it falls in the trip type.
Speaker A:So I, I don't think seeing Walmart pull some of these clinics out of there like we're talking about.
Speaker A:Sorry, just to clarify, Walgreens is pulling them up, but I'm talking about your point about Walmart pulling out their clinics.
Speaker A:I think it's just, I think it's just a reconfiguration of what the best move is.
Speaker A:Not that they're completely drawing away from this because I think it's, it's one trip type, it's a one stop shop.
Speaker A:And those clinics, especially for the minute clinic type needs are still very valuable.
Speaker A:It's just getting them in the right format and being able to allocate the right amount of space.
Speaker A:But Ben, I want you to be the tiebreaker here.
Speaker A:Where, where do you fall on, on Walmart?
Speaker A:Sorry.
Speaker A:Now Walgreens pulling out hard one to do 40, 47 of their clinic locations.
Speaker C:Yeah, I'm probably more on Chris's side, I'm afraid.
Speaker C:Ann.
Speaker C:I'm sorry.
Speaker A:I think, explain, explain why though.
Speaker A:Tell us more.
Speaker C:I think there's two things.
Speaker C:There's one which is the model, so clinics within a broader retail setting and you know, as in primary care clinics as opposed to Rx.
Speaker C:And I think that's.
Speaker C:Yeah, it's really important because it is very specific.
Speaker C:Your use cases of when you need to access primary care versus on a regular trip that you can, you can factor in.
Speaker C:And then the second beer is about Walgreens.
Speaker C: last year, they were closing: Speaker C:The big picture is they're stripping back.
Speaker C:They're desperately trying to sell Village md, which is losing money for them, was a big spend for them was their primary care move.
Speaker C:So they clearly want to get out that primary care model as part of streamlining their business.
Speaker C:So kind of disclosure in that context feels understandable, I think for primary care clinics.
Speaker C:I went back and looked at the Walmart release when they closed, when they pulled out their business in June and they said it was damning from a position of having been really positive about this as a business model.
Speaker C:They said that they couldn't sustain the financial costs and they did not see a sustainable business model for primary care.
Speaker C:And I know we're going to, I think we're going to go on to talk about Walmart.
Speaker C:If Walmart can't see a sustainable model, I'm kind of, I guess I'm struggling and I notice it's basically just leave CVS and Minute Clinic as the only, as the only player and that's fine.
Speaker C:And they obviously made it, they're making it work, but it feels like the barriers of entry are too high for anybody else to be able to utilize this space.
Speaker C:And I guess ultimately I'd probably fall a little bit more on Chris's side.
Speaker C:It reminds me of some of the conversations you were having about community space.
Speaker C:I love retailers when they run retail stores and I think that's where I'd love to see the focus.
Speaker A:Okay.
Speaker B:Yeah.
Speaker B:The last point I, the last point I would make on this too, and which I think is like the local grocery store is where you see your friends in the local community.
Speaker B:Like I'm always bumping into people at my local grocery store.
Speaker B:The last place I want to see them sit, see, see that, have them see me being sick is in my grocery store.
Speaker B:I just don't, I just don't see how that works.
Speaker B:And so if Walgreens can't make this work, Walmart can't make this work.
Speaker B:I hope there aren't that many grocers jumping feet first into this, but I don't know.
Speaker A:I mean, yeah, I think you have to look at the.
Speaker A:I really think you have to look at this on a case by case basis too.
Speaker A:I mean, Hyvee is making it work, so why is Hy Vee making it work?
Speaker A:And Walmart's not making work and Walgreens isn't making it work, but CVS is making it work.
Speaker A:So I think there's more to it than that.
Speaker A:And I think that primary care is defined differently too.
Speaker A:In some cases, like primary care versus minute clinic care, like I do.
Speaker A:There's, there's nuance in it.
Speaker A:And so I really think it's about, really thinking about who your target demographic is, all of the costs that go into how much you're paying per square foot for these types of things too.
Speaker A:And not just, you know, it's not just one, one solution to serve all people, but points taken.
Speaker A:Points, right?
Speaker B:And what does, and honestly, like we do on the show, what does making it work really mean right now?
Speaker B:Like, it just mean they're successful or they just haven't closed them yet?
Speaker B:We don't know.
Speaker B:We have no idea.
Speaker B:So.
