Categories AlphaGraphs, Analysis, Retail

Retail space gets busy as firms see opportunity in healthcare

After witnessing a major transformation in recent years, the retail sector is probably entering a new phase with the leading players shifting their focus to healthcare in a big way. With low-cost healthcare and ease of access in the offing, the new trend in the industry will take the battle for market share to the next level.

The idea is to capture a part of the fast-growing healthcare market by offering services at affordable costs. The fact that the retail majors announced their healthcare ventures within a short period of time shows it had remained an untapped opportunity. The demand for healthcare is expected to grow sharply in the coming years due to the rapid increase in the aging population.

Ease of Access

For customers, being able to meet all their healthcare-related needs by visiting the neighborhood store makes the process highly convenient. The market for medical devices and other health-care products is growing fast. Now, the supermarkets are becoming a one-stop destination for the services and products. The community health centers will make available the services of all key professionals, including doctors and nurses.

Total healthcare spending in the US reached $3.6 billion in 2018

Backed by its extensive store-network, Walmart (NYSE: WMT) is offering enhanced healthcare service at Sam’s Club, which has already launched the pilot for members. The retail giant might be looking to expand its network and size of business further amid the mounting competition.

New Biz Model

Best Buy (BBY) expects to use synergies from recent acquisitions in its new venture. Meanwhile, services under the pilot rolled out by Amazon Care (AMZN) will be initially available to employees and their relatives. In all cases, the companies aim to take advantage of their existing partnerships with healthcare providers – such as Humana (HUM) and Anthem (ANTM).

Also Read:  Will cost pressure prevent Costco (COST) from repeating Q4 success?

Currently, the American healthcare industry is estimated to be worth $3.5 trillion. By driving a part of the rapidly growing demand, traditional store operators and e-commerce firms get an opportunity to grow in scale, ultimately turning the sector into the biggest industry.

Crowded Market

While competing for market share among themselves, retailers will also have to face competition from full-fledged healthcare services providers like Walgreens Boots Alliance (WBA) and CVS Health Corp. (CVS). Of late, the retail pharmacy firms have been ramping up their store infrastructure and pursuing strategic deals – the acquisition of Aetna in the case of CVS.

Walmart’s stock reached a new high earlier this week, while Amazon is struggling to regain strength after slipping from the recent peak. Best Buy witnessed significant volatility since the beginning of the year but gained 24% during that period.

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