Tough challenges continue to face pharmacists
The threat of deregulation of pharmacy may have receded for the time being, and there hasn't been much talk of supermarkets getting into pharmacy recently either, but a gathering of pharmacists in Queensland last month showed that there are still plenty of things to cause concern to pharmacy owners and those wanting to get into ownership in the industry.
Number one concern at this particular gathering - and this may be specific to Queensland - seemed to be the impact of discount pharmacy and the challenge of rising above price-focused competition. Number two concern was finding staff and affording to pay them in a marketplace again driven by price. Another major concern was rent and landlord pressure to impose large rent increases, especially in large shopping centre locations.
There are no 'magic bullet' solutions to these issues, but at the same time there are pharmacy businesses out there that are less affected than others.
For example, although the arrival of a discount pharmacy operation in an area would be expected to affect the turnover of all the other pharmacies in that area, there are some examples of pharmacies that have not been affected at all. Why is that?
One of the pharmacies within the HIP group was affected when a large discount warehouse opened in the area. Turnover and customer numbers decreased, but gross profit increased in absolute dollar terms. This meant the pharmacy was servicing fewer customers and making more money! The HIP service orientated offering attracted customers who were interested in the benefits of the HIP offer (and by definition were willing to pay more for this), and those customers who were shopping on price alone went elsewhere. Price shoppers are by definition not loyal customers - they will move on as soon as they see a lower price somewhere else.
What about staff issues? How can you get the right staff and keep them? This issue doesn't just affect pharmacy (ask an accountant!). Again there are examples outside pharmacy that show the way. Some businesses have people queuing outside the door to work for them and this often has little to do with how much they are paying. Businesses that are known to be good places to work, where work is fun and where the employees really value the contribution they are making, not just to the business, but also to the customers, generally have no problem finding staff. At the moment the pharmacy industry is too 'generic' - working in one pharmacy is much like working in any other pharmacy. To attract the right people you have to be doing things that people really identify with and you have to make the work interesting and rewarding.
Finally - rent. This is mainly a large shopping centre issue and HIP stores are generally not located in large shopping centres. This is because the HIP model is not simply a 'retail' offer and because it is the HIP marketing approach that brings customers into the pharmacy. In a shopping centre you're already paying for the foot traffic in your rent. We believe a pharmacy is much better off if it is located near a small cluster of retailers and perhaps a medical centre.
HIP holds regular seminars and web-based 'webinars' on the HIP approach to pharmacy. If you would like to attend one of these click here to register.
10.10.07
