Pharmacist or retailer – does it have to be one or the other?

Topics: Channel / Retail, Pharmacy

Where’s the line between being a pharmacist and a retailer? Why does it matter? ShopAbility looks at the big picture, for Retail Pharmacy Magazine.

I read with interest in the November issue of Retail Pharmacy my colleague Chris Cormack’s article on why pharmacies shouldn’t go too far down the ‘variety store’ route. What he’s ultimately talking about is channel blurring.

I agree with a number of Chris’ points around not losing pharmacy’s point of difference. Reasons that shoppers visit pharmacies are different to other retailer types (see Figure 1). But some of the trip types are also the same, and this is where the line gets blurred between pharmacy and other retail channels.

 

 

Supermarket

 

Mass Merchant/

Discount Department Store

 

Convenience

 

 

Liquor

Offpremise

 

Pharmacy

Stock up Leisure Browse Fuel Stock up Script fill
Destination Destination Destination (snack, beverage, newspaper) Destination(replace my regular tipple) Destination(eg cosmetics, weight loss)
Top Up Gifting Service(atm, trailer hire) Gifting Services(tests, checks)
Entertaining Entertaining Entertaining Entertaining(at my or someone else’s home) Distress(in pain/ fix my problem)
Dinner Tonight Quick meal With/after dinner Travel needs

Figure 1: Main Trip Types by Retail Channel. © ShopAbility 2011

Back in June 2010 we discussed how pharmacies are retail stores and thus in competition with other retail types. Ultimately I think it’s a question of balance and degree. I’m not advocating that the Australian pharmacy channel go the blurred route of the USA, as Australian pharmacies have maintained a distinct channel difference for quite a long time.

This is illustrated when you look at what has happened over the past decade or so in the USA in the drugstore channel:

  • Walmart is now one of the USA’ biggest pharmacists
  • Target (mass merchant) in the USA has both a substantial pharmacy and grocery offer
  • Walgreens, CVS and RiteAid drugstore chains range non-food centre store grocery categories and more recently grocery food categories, as well as photos, passports etc. Basically drugstore chains are now where you go when you don’t know where else to get it, particularly for services.

In Australia some pharmacies have been driving channel blur by loss-leading in tertiary/non-core products (for pharmacies) such as washing powder to compete for grocery (or ‘I forgot to get it in grocery’) traffic.

But as the value of scripts/dispensary decreases, the role of ‘front of store’ in profit generation becomes more important. And that’s where being a ‘retailer’ comes in. So how do you retain what you’re known for as a pharmacy but capitalise on retail opportunities?

Your range, as Chris pointed out, is the key indicator of what kind of retailer you are. The question then is around what retail categories you are going to range and why, based on your understanding of why shoppers visit you (trip types) and what for (occasions). And these vary by type of pharmacy and type of shopper.

We’ve talked about this a bit in previous articles but I think it’s worth reiterating here. There is a difference between local pharmacies (more likely to be empty nesters/elderly and young mums, where the pharmacist relationship is important) vs shopping centre pharmacies and discounters which are more about front of store categories (with script dropoff rather than hang-around-and-wait).

If you’re a local community pharmacy you can specialise in categories for the elderly (ie incontinence, arthritis) and mums (ie baby, nits).

If you’re a shopping centre pharmacy or discounter then it’s more about categories like cosmetics, skincare, vitamins.

But there are roles for other categories. Chris questioned hats and sunglasses in his article, but along with suncream and suntan lotions these are a seasonal opportunity for summer, and can be linked to skin cancer prevention messaging – slip slop slap. Shoppers expect to buy suncream from pharmacies.

If you want to be a Destination for something (eg gifting, photographics, jewellery) then you need to shout about the fact that you now range those categories (and have a think about whether they make sense for shoppers of your pharmacy type). It’s no good ordering in a whole bunch of inventory and not telling anyone it’s there, considering in most pharmacies front of store is 20-40% of sales and much of that is core categories like vitamins and skincare. It’s extra inventory that won’t move unless you’re prepared to shout about the fact it’s there and what its relevance to shoppers is. That’s not to say that gifts wouldn’t make sense in a community pharmacy where other retail gifting options are limited, but you would struggle with gifting items if you’re a shopping centre based pharmacy where there are  a whole bunch of other specialist and generalist retailers in close proximity.

Understanding trip types for your type of site is key to understanding not only what you should be ranging but what products and occasions you should be shouting about.