For Retail And Healthcare, The Future Is Now
An oft-cited remark from Jeff Bezos, the Amazon Founder and CEO, is his famous line, “Your margin is my opportunity.” Many retailers and consumer tech companies have seen opportunity in an industry that has been beset by rising costs and low consumer satisfaction: healthcare.
As America continues to shed retail stores and shift to more balanced retail square footage in this country, retailers have set their sights on new markets and healthcare has become a prime target. Companies from Best Buy to Walgreens to Amazon are all making significant pushes to bring customer experience and access to the forefront of healthcare which will reshape the landscape along the way.
Healthcare represents a multi-billion-dollar opportunity for retailers due to high levels of consumer dissatisfaction, growing costs, and a lack of accessibility for many consumers. With such a large opportunity, and the emphasis successful retailers and consumer tech companies place on customer experience, market leaders see a sizable opportunity to enter this space to fill the void for consumers.
Given the Jeff Bezos mantra, it should come as no surprise that Amazon was one of the first to jump into the fray announcing a partnership with Berkshire Hathaway and JP Morgan called Haven that is spearheaded by Dr. Atul Gawande. Haven recently announced its intent to serve 1.2 million employees of Amazon, Berkshire, and JP Morgan, with the intent to “share our innovations and solutions to help others.”
However, Amazon and its partners are not the only ones to pursue the large opportunity. Best Buy announced the acquisition of Great Call, a medical device company, for $800M last year and has announced its intent to expand its focus on electronics to include connected medical devices in the home. The initiative is still in its early stages, but Best Buy is steadily building out its product assortment around health & wellness in select stores as well as doing so online.
Meanwhile, Target has begun to dip its toe in the water selling at-home test kits for medical diagnoses via a partnership with EverlyWell. The company has made nine EverlyWell products available in all 1800 stores.
Perhaps, though, the companies that have gone the furthest so far have been legacy retailers Walgreens and CVS. Walgreens announced a bevy of partnerships to push further into healthcare including with both Humana, to launch new health service offerings in select stores in Kansas, as well as with Microsoft to developed personalized healthcare services. CVS’ acquisition of health insurance company, Aetna, has led to a host of different initiatives from the company as it takes advantage of its newfound vertical integration.
The increasing number of entrants into healthcare in a variety of different forms comes at a time where consumers have increased choice in their healthcare decisions, which many experts believe should result in a more competitive market over time and, thus, reduce medical costs. As consumer choice in healthcare continues to play a larger role, retailers and consumer tech companies are well-positioned to chip away at legacy healthcare businesses that have not had the same focus on customer experience.
For retailers and consumer tech companies, the focus on customer satisfaction is core to their business’ long-term success because of the low barriers of entry in their respective markets. The ability to leverage those strengths to enter a new, large market, coupled with the opportunity to better serve their own customers, is a strategy that will shape many companies over the next five years. The companies that will win will carve out new offerings and create new business models that rely on services, just as much as products, to rein in medical costs while providing greater consumer satisfaction.
Carlos Castelán is the Managing Director of The Navio Group – www.thenaviogroup.com – in Minneapolis, a business management consulting firm that works with brand name retailers to improve customer experience, increase sales, solve marketing and productivity challenges and help them perform better and succeed in today’s competitive business environment.