Pharmacies: service provider or retailer?

Topics: Pharmacy, Point of Purchase, Shopper marketing

Retail categories and promotion in pharmacies need to be related to a tailored services offering, posits ShopAbility, for Retail Pharmacy magazine.

For some time we’ve been promoting the idea, via this column in Retail Pharmacy, that pharmacy is indeed a retail channel (as the name of this robust publication implies).  About this time last year I wrote a number of articles on how to differentiate yourself as a retailer, based on range, service, price or quality.

Whilst the key tenets of those positionings stand, I’ve started to modify my view of pharmacies as out-and-out retail environments. It’s clear from other articles and stories on best practice in pharmacy in Australia published in RP over the past year or so that the pharmacies who are winning are those who:

a)     Differentiate themselves. They are clear on where and how they are different, who their customers are and what their needs are

b)    Have developed a specific service or set of services that fit with their positioning and their customer base.


As we work on other clients who are in the services industry or who have service type environments it strikes me that many pharmacy types (but not all) are really potentially in the services game, with retail add-ons and a retail ‘shopfront’.


Here’s why.




  • Why they are there (pharmacy trip types): as discussed in previous articles, the primary trip types that pharmacy shoppers are on are script fill (which is actually a service), distress (‘fix my problem now’ … if not a script, then often an otc medication), services such as health checks or tests, or a destination trip for a specific retail category (often vitamins, weight loss, baby, or cosmetics). Aside from ‘destination’, none of these are classic retail trips, which generally tend to be stock up, top up, leisure/browse, dinner tonight, or entertaining. And only one (or possibly two, if you include distress trips for otc products) of the trip types involves retail products. Script and health checks are services.
  • How they shop: as noted previously and as seen in Project RX we completed for Torchmedia late last year, most shoppers head straight for the dispensary and queue there (if there is a queue), because they are after a script fill service. A certain portion wait for script, some browse the rest of the store and some go away to do other chores and come back to pick up the script. Only a small portion of shoppers coming into the average pharmacy (with the exception of big box discounters) are there on destination trips or a sort of pharmacy stock-up shop.





Here are some examples from other channels (really, service providers with retail shopfronts) where a similar queue-for-service is the dominant behaviour (rather than product selection/self serve):

  • Banks
  • Post offices
  • Healthcare shopfronts like Medicare, HCF, MBF
  • Motor vehicle registries eg the RTA, VicRoads, TMR
  • Road service organisation outlets eg the NRMA, RACV, RACQ.


There are probably others/more, but you get the idea.


The difference being, with most of the above list (with the possible exception of Australia Post) the other services don’t really have a retail offer (well, RTA have starting selling customised coloured license plates that they actively promote in their outlets … you have to start somewhere!).


These are all environments and services where people need to DO things or need information and advice, rather than the end result of the purchase being about consuming things or wearing things.





Here’s how this might change by pharmacy channel segment:

  • Community:  services are king here, retail categories more of a nice-to-have. Bundle your retail categories in with services where you can.
  • Generalist/banner (shopping centres, suburban one-stop shops): see Community, in that your retail categories are really competing with other retailers in a close proximity. You need to differentiate them other that price, and a way to do that is via services. The question is more around how to build a relationship with a shopper if you’re located in a shopping centre as they can be promiscuous … loyalty programs and email communications around your services are particularly important to do this
  • Big Box/discounter: these are the stores that are more true retail and less about services. Really these are the segment that community and generalist/banner pharmacies are competing most with … if the big box discounters get into services in a big way, watch out. Best to get in first and create a first mover advantage.
  • Medical centre: are really a script fill for the GPs next door. Retail product relevance is minimal so MUST be related to script (rather than an additional service).




  • They key one: bundle products with the service/s you are promoting as your point of difference
  • NOT to discount. Discounting common product types like toilet paper, toothpaste, hair colour and mouthwash, unless you’re a big box/discounter store type, STILL isn’t going to get you to compete with other retail channels on price. Because shoppers aren’t coming to you for retail categories, a lot of the time. And ‘bin browsers’, the shopping magpies attracted by the shiny things you have at the front of the store, are unlikely to shop what you have instore. Better to promote either a) impulse lines or b) products related to your services at the front of the store.


The key tenets of marketing still apply. Observe who your shopper base is around your store – age, lifestage, household sizes. (We typically find that age, lifestage and household size/type has a greater bearing on shopping behaviour than does gender or income).


If you’re located in a mortgage belt then offer services and product bundles relating to baby and small kids. If you’re in an area with older families (primary and high school kids) you have opportunities for schoolyard and school uniform related services, everything from nits to hairbands. If you’re near a retirement home then target the oldies with appropriate services. If you’re in an area with a lot of empty nesters (as opposed to elderly – empty nesters are generally in their 50s and 60s and their kids have left home but they are cash rich and time poor because they’re still working) then offer heart and diabetes checks and things for travelling, as empty nesters start to travel a lot.


And obviously, as we always say, you need to shout about what your point of difference and your tailored services are to your local constituents.


It’s all still just good retailing, but retailing related to your primary service offer.