Expect pharmacies to continue to grow their health care services and for grocers like Walmart and Kroger to outpace traditional pharmacy retailers over the coming months.
Coresight Research released its Market Navigator: U.S. Drugstore and Pharmacy Retailers — A Strong Focus on Healthcare Expansion in 2024 and Beyond report which shows positive but slow growth for the market.
The drugstore and pharmacy sector revenue is projected to grow 4.7% year over year in 2024 at almost $374 billion. That’s a slowdown compared to 2023 when the estimated year-over-year growth was 7.3%.
There will be a strong demand for prescription medication and over-the-counter products along with health and wellness products, and as shoppers continue to gravitate towards prioritizing health and wellness there should be increased sales of healthy foods, supplements, and fitness-related products.
CVS Health has produced strong revenue growth over the last five years — high single digit revenue compound annual growth rate (CAGR) for fiscal 2018-2022 — but Walgreens and Rite Aid both recorded low single-digit revenue CAGR over the same time period. Walmart, however, topped them all with a 6.8% CAGR for 2018-2022, while other grocery pharmacies like Ahold Delhaize, Albertsons, and Kroger outperformed the traditional chains.
The lack of affordable health care has led to drugstores and pharmacies filling a void in the health care segment, which is expected to be a key driver for the retailers in 2024.
Private label products and prescriptions of GLP-1 drugs will continue to increase in 2024 and beyond, and the consumerization of health care, 3-D printed medicine, and generative artificial intelligence will continue to emerge in the marketplace.
Overall, consumer sentiment is likely to remain cautious in 2024, and as a result the U.S. drugstore and pharmacy sector is expected to see slow but positive growth with private label products providing a boost.
