How was your Christmas 2009 trade? For many clients I have spoken to it has been flat and some are down about 5% to 10% on same month last year. The main reasons of course are the recent consecutive interest rate rises and no Federal Government funding this year for the general public compared to last December. Nevertheless the greater public are still spending.
The Australian retail sector has shown mixed results over the last year as customers have become more aware of how and where they shop. The “pharmaceutical, toiletry and cosmetic” retail category (which includes the PBS, and supermarket data) grew near double digit every month of last calendar year. Certainly the increase in the number of the warehouse and discount pharmacy models has allowed traditional pharmacy customers to have choice on where they spend their money. However, what is becoming more common is the ability and reality of consumers researching and buying on-line. The worst part of this is that you don’t even know when the customer does it and does not return to the pharmacy.
While the Australian data is somewhat delayed, the American and European data suggested that on-line sales would increase by about 10% over the Christmas period. I think it is safe to assume Australia may have less growth but I do believe it would be positive growth which defies the in-store sales experience of many pharmacies during December.
Research has shown that price is not the main driver for people shopping on-line. According to Robert Kinkade, partner at 6ONE5 Retail Consulting Group, customers shop on line because:
- 83% want to save time;
- 70% want to avoid crowds;
- 62% sought different products on-line.
Interestingly, the first two reasons relate solely to convenience. In other words, no longer will customers put up with long queues and waiting times because the internet gives them the ability to shop at home with choice.
Many pharmacies believe they have an on-line offer but often it boils down to a bannered web-site which provides little more than a good store locator. The point is that this has nothing to do with the individual pharmacies represented unless of course full compliance with the brand/banner is achieved.
A website must be individualised to each pharmacy (or group of pharmacies if that is how they operate) so that the on-line offer mirrors the in-store offer to customers.
At a basic level the pharmacy’s website must have the ability for the customer to order on-line with the option to either pick up in-store or have it delivered. Information on products and importantly the services offered in-store should also be present on the site. Pictures are a great way to tie “clicks and mortar” together so the customer receives the same interaction on-line or in-store.
All of this of course is impossible to achieve without an overarching plan of how to compete against the warehouse/discount operators and even the local community competition.
Our data and my experience is that those pharmacies with a defined customer centric plan which defines how they compete which includes both in-store and on-line offer are winning against the competition. They are getting growth in customers and the average sale per customer. In fact the average sale is closer to $20 which is about 50% more than the JR averages.
You can take on the task of creating a website yourself or you could use an existing service provider to facilitate the customisation of a website for you. Make sure it is updated regularly just as you would change the store layout to stimulate the customer (based on seasonality, monthly condition promotion etc etc).
The cost should not be exorbitant for the traction achieved in reconnecting with lost customers or connecting with existing customers in a different way. Make sure you offer and incentive for them to visit and buy off the website.
Becoming just operationally efficient (cutting overheads and maximising script throughput) in today’s retail world will not guarantee additional customers nor sales. Connecting with customers you used to have and existing customers via the web is a powerful too with amazing reach. Start by looking at what the competition sites offer, differentiate and remember your site does not need to be based around price alone.
Norman Thurecht JR Pharmacy Services – Johnston Rorke Chartered Accountants l
Level 30, Central Plaza One, 345 Queen Street Brisbane l
GPO Box 1144 Brisbane QLD 4001 l
t 07 3222 8444 l d 07 3222 8316 l f 07 3222 8496 m 0411 159 388 l