Prescription for pharmacy’s future
OPINION | Peter Sheppard
Independent Pharmacy has been under siege for as long as I can remember from various angles including significant reduction in PBS payments, discounters, supermarkets, on-line…. all resulting in sales and margin pressure, along with rising costs in rent, wages and other expenses. This of course, has and will, put our typical pharmacies under pressure on the bottom line. Many have seen their bottom line disappear! Many are wondering what to do to survive!
The powerful Pharmacy Guild has always been able to provide some protection for its members with strong lobbying on the regulatory front. However, with the purchase of PillPack by Amazon recently, does this remove that protection? Can they defend the registration laws forever? Is the current system of filling scripts still good going forward? Is it the best solution for time poor customers? What about AI in the future?
Competition in this category as we know it today is only going to get fiercer. Price will always be a strong driver of sales, but there are other important considerations in this ever-changing world that can be capitalised on. Saving time along with ‘free’ reliable information and advice are aspects of society that are important factors to many that pharmacists have in their favour.
With private doctors consultations becoming more expensive, with less people remaining on health care funds, and the public system being overloaded, pharmacists are able to provide an important point of call between ‘googling’ the symptoms and making a visit to the doctor. This not only saves time, but also money, making the price paid for the OTC solution unimportant, relatively.
84% of people trust Pharmacists. Roy Morgan. 2017
So what is a typical pharmacy’s contingent plan against this and the inevitability of pharmacy going ‘open’?
Currently, most Pharmacists are so busy filling scripts behind the counter, that they are generally ‘unavailable’ to prospective customers to provide advice. If they were to make themselves more readily available to the public, by coming out from behind the counter, being on the floor and ‘offering their service and knowledge’ would improve the experience and value for the customer. It would increase immensely the reason to visit the pharmacy and the customer would feel appreciated in a less and less face-to-face shopping world. This would have multiple benefits.
Among these benefits would be increased traffic seeking the readily available advice from a trust-worthy source, (Pharmacists are regarded as the 3rd most trustworthy of all professions, behind only doctors and nurses) but also provide an opportunity to build relationships with customers while they wait for the script to be filled. During this time the would be many opportunities to on sell such as ‘you will need vitamins with that script’, ‘ now is a good time to take xxx as a preventative’, to talk about weight loss remedies where appropriate, etc etc.
Fit for Business™ retailers will also see it as an opportunity to increase front of store sales at higher than average margins. In a recent extensive survey, 8 out of 10 people were willing to try an OTC remedy, before attending a doctor’s rooms.
What a wonderful retail opportunity!
However, the biggest gain will be the building of a loyal customer base that regards the establishment as ‘MY trusted chemist’. The figures can vary significantly, but the lifetime value of a loyal customer and family to a pharmacy is 10’s of thousands of dollars.
In addition, the financial consideration is significant. By spending more time as a retailer talking to customers, assisting them with their decisions, up selling and adding on where appropriate, can make a huge difference to the bottom line. If ‘front of house’ sales increase by just 5%, GP by 2% through more appropriate mix of stock, in many cases that would go close to doubling the bottom line of the business. This both increases the ‘take home’ for the pharmacist, but significantly increases the value of the business.
So in terms of building a sustainable pharmacy, your accessibility and willingness to advise clients, not only a smart move to strengthen the business, adds value to the business. Good pharmacists can build on the considerable goodwill in the community and presenting themselves and their business as the first point of call for solid advice and help by a professional. Do not leave that role to juniors or under trained sales personnel whose credibility is not what is being sought. It is the pharmacist’s expertise; it is the point of difference that people will seek out.
Make it count by providing the care customers are so desperately seeking.
As in the words of many retail experts “Differentiate or Die”. If you can’t do it with product, do it with service!
Peter Sheppard is senior consultant and head of implementation division at Retail Doctor Group.