Saturday, May 24, 2008

Get me some amoxicillin and yogurt, stat

Who doesn’t want fast, convenient, inexpensive healthcare?

So what a great idea in-store health clinics are. Big benefit to consumers/patients. Perfect sales alignment for retailers between their pharmacy counters and OTC aisles.

The number of clinics boomed in the last three years from 125 clinics to 963.

In the cosmetic business, you count distribution by how many doors you are in. The more doors, the more sales potential, filling the rack and offering access.

Think about that for health clinics. More access for sore throats, colds, rashes, blood pressure monitoring, diabetes supplies. With great convenience.

But now growth is slowing. The Wall Street Journal reports that Shopko, Meijer, and Wal-Mart and Cardinal Health’s Medicine Shoppe is actually closing units. Maybe as much as 70 clinics. And CVS is talking about scaling back their expansion plans.

Why?

Oh, it something as simple as estimating the break-even on your investment.

According to Tom Charland, for VP for Strategy at Minute Clinic, “The big mistake was for people to think they could break-even in six months. People are learning this is an 18-24-month process to get to break-even.”

Now how many product launches do you know of that break-even in six months?

Now think of how many capital-based retail fixture-based store-based assets break-even in six months?

Maybe those hard plastic theft prevention boxes that protect Gillette’s Fusion razor blades from thieves with wide and deep-sleeved coats, but not much else.

Now reality is settling in. The financial teams are making their lists and checking them twice trying to figure out what clinics have been naughty and which have been nice.

Business reality and metrics here are necessary and good.

However, they will not ultimately slow down the need for people to have access to fast and easy health care.

Compare these clinics to the current distribution of general medical practice:

  • Call for the appointment
  • Set in the waiting room for thirty minutes
  • Speak to the doctor for 20 minutes
  • Drive to the drug store to get the prescription filled
  • Wait for the prescription.

One stop health care for minor ailments is a need that is here and will continue to grow.

The challenge for the retailers is to get their economics right and for drug and consumer healthcare manufacturers to get their targeting and merchandising right to help their retail partners succeed.

The patient is waiting.

Saturday, May 03, 2008

The Other Guy Blinked, Part IIA

It is just a matter of time before the Rice Riots affecting developing markets turn into the Water Riots. Though I expect that that was something Noah already knew.

Those “bad” guys keep banging on the doors of the ark, seeking imitative ways to profitable salvation.

Last week, PepsiCo acquired Britain's V water to protect its European flank from Coke.

V water states that it is made from spring water, comes in different flavors and includes additives like vitamin C, zinc and ginseng.

Can anybody spell vitaminwater? The same US brand that Coca-Cola paid $4 billion to Glaceau for last year and is planning to launch overseas in such countries as, surprise, surprise, the UK.

After all, when you buy a regional brand, the easiest way to make money on your shiny new brand asset is to launch it in new geographies. The launch pipelines are pure incremental money and whatever sales you get are gravy against that expensive roast beef you purchased.

How rare is success? Actually quite frequent as long as you get the local temperature right.

The main challenge? Of yeah, when the competition is there ahead of you. Like what Pepsi just did to Coke. Nothing like landing on a foreign shore and seeing that someone was there before, like the Vikings welcoming Christopher Columbus to the new world.

This kind of strategy/counter-strategy cuts across consumer categories. Reckitt-Benckiser buys Mucinex in the US and is “banking” on rolling it out globally. What they really bought was not a unique decongestant (as guaifenesin is as old as the hills) but an advertising property called Mr. Mucinex that they better hope will play as well in Sao Paulo as it does in San Diego.

In the mean time both Coca-Cola and Pepsico are trying to defend their “water substitutes” against contamination and resource defoliation in India, as Nestle tries to gain control of new water access points in the US Pacific Northwest.

Pepsi, already owns SoBe Life Water, Gatorade sports drink and Aquafina bottled water.

The question will be do they truly believe that they can grow V water or are they just trying to pick Coke’s pocket, leaving the company with less money to invest.

Water polo anyone?