Retail Strategy to Offset Internet Competition

A major regional drugstore chain with an excellent reputation for customer service was concerned about the threat arising from Internet-based competition. The company needed a long-range plan that would take into account the future retailing environment for general merchandise, OTC products, and regulated pharmaceuticals. We offered scenario-based strategic planning as the best approach to this work. Key strategic issues we examined along with the client included the current and future demand for internet-based sales of OTC products and pharmaceuticals; the impact of demographic, social and lifestyle trends on retailing and on demand for health-related products and services; competition in the general merchandise retailing sector; and alternative systems for the distribution of pharmaceuticals (e.g., physician dispensing, direct manufacturer-to-customer sales, etc.).

We split senior executives into five teams, one for each of five future scenarios. Each team explored new business opportunities as well as new ways of doing business in their assigned future world, specifically the impact of consumer lifestyle decisions, the changing demographics of their marketplace, and likely strategic initiatives of competitors. Based on the scenario work, the client made a major investment to build a presence on the Internet, and pursued several other strategic shifts that our work had shown to be critical to their survival.