With well over 30 million seniors, age 65 and older, signing up for prescription insurance through Medicare Part D, the subsequent changes in shopping behaviors are significantly impacting what’s in the shopping basket as well as where seniors are choosing to shop. While the plan has been touted as a resounding success, changes are in store for retailers, particularly supermarkets, as well as for consumer packaged goods (CPG) manufacturers as seniors explore their new options.

Millions of seniors can finally breathe a sigh of relief as their out-of-pocket spending for prescriptions is drastically reduced - saving on average $1,100 per year, per person by government estimates. To assess the impact of these developments, a new study from the Healthcare Solutions Group at Information Resources, Inc (IRI), the leading global provider of enterprise market information solutions for the consumer packaged goods (CPG), retail and healthcare industries, finds that seniors’ good fortune is also benefiting many CPG manufacturers and retailers, while resulting in lost revenue for others. The study was released at the National Association of Chain Drug Stores (NACDS) Marketplace Conference being held in San Diego, June 24-27.

“The impact of Medicare Part D goes well beyond the fundamental goal of ensuring that seniors can obtain the prescriptions they need at a reasonable cost,” said IRI Healthcare Solutions Group Executive Vice President Stephen Johnson. “This program has literally changed where seniors shop and what they buy with respect to food, non-food and prescription purchases. It is absolutely critical that CPG and healthcare manufacturers and retailers understand these changes as well as quickly reflect them in marketing, merchandising and distribution strategies. Marketers and retailers simply cannot afford to lose share or miss out on growth opportunities within this rapidly evolving segment.”

Channel Shifts
The study finds that seniors have shifted both prescription and non-prescription healthcare purchases away from the grocery channel to drug stores, supercenters, and mail order. In fact, during the four-month period following the January 1 Medicare Part D start date, grocers lost 2.2 share points in prescription transactions and 1.1 dollar share points in non-prescription healthcare categories. This is a serious blow to grocers, who had recently made headway in the ongoing share battle with supercenters.

Based upon an analysis of channel preferences among “insured” versus “uninsured” seniors before Medicare Part D took effect, the study concludes that share shifting to mail order and drug stores was to be expected once seniors gained prescription insurance. The supercenter gain and grocery loss, however, were unexpected. Aggressive outreach to seniors by supercenters made the difference. Time will tell if these newly-insured consumers will continue with their current shopping patterns or gravitate towards the behavior of their previously-insured counterparts and reduce their spending at supercenters.

Market Basket Shifts
With budgets loosening as prescription cost savings begin to be felt, seniors are not only changing where they shop, but also what they buy. A number of healthcare and CPG categories have experienced sizable increases in dollars spent per household among seniors relative to the general population. For instance, seniors have significantly increased spending across a number of healthcare necessities, such as home heath care kits, with an increase of 36 percent; foot care, a 13 percent increase; and first aid treatments, a 7 percent increase as well as more discretionary purchases, such as eye cosmetics, which had a 25 percent increase. Several food and beverage categories are also benefiting, including strong senior categories such as frozen pot pies, a 12 percent increase, as well as less-developed senior categories such as sports drinks, up 31 percent, and beer, up 11 percent.

“As four million seniors have yet to enroll in a prescription plan, and millions more will be eligible this fall, retailer Medicare Part D outreach programs should be continued and enhanced, if necessary,” added Johnson. “Manufacturers should explore targeted marketing opportunities now to reach out to seniors as they are deciding how to allocate newly-found funds.”

About the Report
Study findings are available to IRI clients via an in-person presentation entitled, “55+ Consumers: The New Must-Win Market.” Findings will also be summarized in the June issue of the IRI Times & Trends report that will be published later this month. Findings are based upon an extensive analysis of data from the IRI RxPulse(TM) consumer panel.

About the IRI Healthcare Solutions Group
The IRI Healthcare Solutions Group provides pharmaceutical, healthcare, and consumer goods companies as well as retailers with consumer intelligence, targeting, and analytic services for the healthcare marketplace. This group offers a complete suite of retail tracking, consumer panel and analytic-driven products and services to help its clients monitor, comprehend, and compete within the rapidly evolving healthcare space. More information is available at: http://us.infores.com/page/manufacturers/industry_solutions

About Information Resources, Inc.
Information Resources, Inc. (IRI) is the world’s leading provider of enterprise market information solutions and services, empowering its clients to grow their business profitably in a complex marketplace. Driving the transformation of the consumer packaged goods (CPG), retail, and healthcare industries, only IRI provides a unique combination of real-time market content, advanced analytics, enterprise performance management software, and professional services. The company’s portfolio of services, solutions, and technology enable leading retailers and their suppliers around the globe to see what they are missing, act faster with greater confidence and win at the shelf. Ninety-five percent of the FORTUNE Global 500 in CPG and retail leverage IRI to power their business. For more information, visit http://us.infores.com.

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