RETAILNETGROUP STRATEGY ALERT No.

2 Issue July 2008

Greetings! In This Issue

Healthcare Services Innovators
Retailers fundamentally understand that the supply of quality healthcare In-Store Health Clinics
and overall wellness support does not meet demand in most markets Specialty Pharmacies
globally. Across Latin America, the US and nations of the world, large scale Health Services Management
retailers can see fairly low hanging fruit to dis-intermediate and re-
organize the way that health and wellness services are provided.

The quality of health services paired with many new emerging business
models will allow them to re-organize their traditional approach. We've
seen the advent and growth of in store health clinics in Europe, North
America (CVS, Walgreens, Loblaw) and now in Latin America (Wal-Mex).
RNG believes that Health Services will be a fundamental growth platform
RNG's Database
on which the intelligent retailer will build both its shopper relationship and
new stores of the future. Today's newsletter calls out some of the early Our retailer database goes
innovation that RNG has observed over the last several months. beyond basic sales and
stores by retailer, banner,
Traditional health services include pharmacy, optical, hearing clinics, dental segment, and country.
and related in-store health related merchandise. Emerging health services
include health insurances (Tesco, Costco), walk in-store specialty clinics RNG's segmentation model
(Tesco, Wal-Mex) homeopathic pharmacies, and many others allows our clients to look
beyond the box to how a
This week we have organized some of the recent news stories and retailer really goes to
companies that we think will be integral to this new health services market.
strategy.
If you would like to learn
If you would like access to any of the stories below please follow the links more about our model or to
on each story or contact us to access them through RNG's website. schedule a web demo
please contact us.
We hope that you find these growth and transformational strategies helpful
as you plan your company's strategies into the future.

Dan O'Connor, President & CEO Meet Our

Retailnetgroup.com
Analysts

Healthcare Services Innovators

There are 10-15 companies RNG has indentified that we are calling the
health services "innovators" - companies who we believe
are leading transformation in health services in a non-
traditional way. Each has its own story. This week we
will feature four of these companies.

Dan W. O'Connor is the

President & CEO of the
Solo Health is an early stage company positioned to RetailNet Group. He also is
capitalize on the growing consumer preference for self- the Founder of Management
directed health care services. Its first product, Ventures, Inc. (MVI), a WPP
EyeSite™, is an automated vision-testing kiosk, which Group company. Dan is a
widely known industry speaker
allows consumers to quickly and efficiently check their vision without and thought leader.
assistance.

Any Lab Test is a healthcare lab testing facility that

provides thousands of standard lab tests to
consumers and employers in a professional,
convenient and cost-effective way. No insurance
needed, no referral, no appointment necessary,
Aaron Chio is a Senior Analyst
most results in 24 hours, completely confidential leading RNG's development of
and anonymous. new research and insights in
Latin America.

Diabetes America health centers are the

first ever facilities built to fulfill the
unique needs of diabetes patients, all
under one roof.

DNAdirect offers genetic

testing offers information that
can help people make
Tim O'Connor is Vice President
informed decisions about
at RNG, currently responsible
medical management and lifestyle choices. In the current healthcare
for RNG's Growth Strategies
model, not everyone has access to genetic testing for a variety of reasons.
Curriculum and European
market insights.
RNG's view: Consumers want privacy, convenience and low cost health
solutions. These stores and services do particularly well in low and
moderate income, urban communities. Think about how long you would
have to wait and the number of forms you would have to fill out to get the
same tests at your local hospital or healthcare provider...

In-Store Health Clinics

Walk in clinics were the rage in North America and Europe for the last 5 - 6 Keith Anderson is a Senior
years. They were viewed as a real threat by the health services industry Analyst and responsible for
(see The Rise of In-Store Clinics - Threat or Opportunity?) RNG's North American research
practice and transformational
While most retailers with pharmacies have rapidly added in-store health capabilities
clinics, most are now taking a more conservative approach and re- curriculum.
calibrating their strategy. See some examples of how this rapidly rising
industry has started to rationalize itself.

• Health Clinics Inside Stores Likely to Slow Their Growth

• SmartCare closes 15 Wal-Mart med clinics

• Walgreen to Slow Pace of Store Openings

• Walgreens plans clinics to rival CVS's

• Kroger to add more in-store health clinics

Homeopathic and Specialty Pharmacies
Retailers have long seen the opportunity to change the in-store experience
and product availability to better meet their patient/consumers needs. A
few real leaders in this respect include:

• Pharmaca Integrative Pharmacy - This is the fastest growing

integrative pharmacy focused on health and wellness. It is the 1st
chain to combine traditional pharmacy services and over-the-
counter medications with natural health and beauty products and
expert consultation in nutrition, naturopathic medicine and safe
body care.
RNG's view: This is the store of the future. Like Whole Foods, City Market
(Mexico) and other highly targeted retail stores it will not appeal to all. But
elements of this business will be brought into the mainstream by the
majors over the next several years.

• Walgreen's subsidiary, OptionCare Enterprises, will acquire a

subsidiary of Express Scripts that provides infusion services to
patients with complex therapies, including anti-viral, immune
deficiency, inotropic, chemotherapy and pain management
treatments
RNG's view: Walgreen's health services have become much more
specialized over the last 5 years. RNG believes it will be forced to move
dramatically if it wants to retain its healthcare position.

Health Services Management

Advancements in digital health records will enable patients to control their
own health care and re-position doctors and clinicians as advisors and
supporters (vs. decision makers). More broadly consumers will be able to
use tools provided by companies such as Google to securely store and
update their records. Imagine the day when you go to a doctor's office and
using your cell phone you upload your medical record to a device that will
receive and organize the data for the doctors use. It is beginning to
happen today - here are some stories.

• Pharmacies to Push E-Prescribing

• Two largest electronic prescription network companies to merge in

the US

• CVS Caremark partners with Google on the launch of Google

Health

• Most Doctors Not Using Electronic Health Records

• Healthcare is moving to drugstores, supermarkets, and

department stores

RetailNet Group is the leading insight and advisory firm focused on

retail growth strategies and consumer-facing transformational
capabilities. We are deeply experienced retail/consumer analysts
and strategists working exclusively to help brand-led businesses
and large-scale retailers grow.

Sincerely,

RetailNet Group
Note: Articles contained in this newsletter are collected from a variety of sources and
links can expire over time.

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