Here’s How Wal-Mart Is Using Technology To Boost Its Pharmacy Business
Through a recent upgrade to its mobile app, Wal-Mart (NYSE:WMT) has made it more convenient for its pharmacy customers to order prescription medicines and pick them up from stores. The upgraded app allows customers to fill prescriptions via the app before they visit the store. The company is also setting up express lanes in its stores where these customers can pick up their prescriptions and pay securely through the app. Wal-Mart estimates that the upgrade and the express lanes will reduce the wait times for pharmacy customers to under a minute from the current 6-11 minutes. This upgrade could also ensure that customers use Wal-Mart’s mobile app more frequently, which could provide some upside with respect to online sales. As the company looks to make its pharmacy transactions paperless through the app and digital payment options, it is likely to see an uptick in this business.
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While Target sold its pharmacy business to CVS last year, Wal-Mart is looking to the segment for growth, as it accounts for more than 10% of its total revenues. Its large store network combined with technological advancements could give Wal-Mart an edge over competitors such as CVS. As some customers value convenience as much as they do price savings, a focus on convenience to reduce wait times and paperwork could draw more customers to Wal-Mart’s pharmacies. Healthcare spending in the U.S. is expected to increase by 5.8% annually from 2014 to 2024 as insurance coverage improves, the population continues to age and the economy improves. While CVS and Walgreens hold a large share of the U.S. pharmacy market, Wal-Mart has a chance to make further inroads in the segment by offering a more convenient experience for customers.
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We expect Wal-Mart’s U.S. revenues per square foot to increase moderately from $446 to $479 over our forecast period.
With technology driving sales, if the number increases more rapidly than we forecast, there could be an upside to our price estimate.
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