Since the announcement of the 60-day dispensing policy, pharmacy owners have sought my advice on how they should modify their businesses to reduce impacts. Is the answer in a brand’s operating model? Could customer behaviour be influenced to minimise dispensary income loss? Would a concerted effort to upweight front of shop sales be the saving grace?
60DD is just the latest environmental change requiring the retail pharmacy industry to re-think traditional ways of doing things. There was of course COVID before that and cost-of-living pressures aren’t waning. What’s clear is that we must expect the unexpected – the unknown unknowns. While we should address current threats, the questions we need to pose are those robust enough to help plan for the changes we’re yet to encounter.
Whether you’re an independent operator or you benefit from the support of a banner brand, these are the questions I encourage all owners to ask themselves:
- How are you combating industry changes?
- Are you maximising your retail floor space?
- What is the split between your dispensary and front of shop sales?
- How are you diversifying your sales?
- How are you driving customers in store?
- Do you have a strong national promotional program?
- Do you have a loyalty program to drive repeat footfall and repeat visitation?
- How are you increasing visitation to your store?
- What are your digital capabilities and how are you strengthening them?
- Do you have a clear point of difference in the market?
- Do you stock exclusive ranges or private label brands customers can’t get anywhere else?
- What complementary pharmacy services do you offer?
- How are you supporting your local community?
In other words, what is the sustainable competitive advantage of your current business? Diversification of sales, strong trade driving capabilities and a healthy connection to your community are all tools you need in your arsenal to successfully navigate industry impacts you can’t predict.
The businesses most exposed in the current climate are obviously those whose sales skew heavily towards dispensary. If that’s you, you’re not alone – the average, traditional pharmacy in Australia has an 80/20 split across dispensary and front of shop sales.
Priceline Pharmacies on average have a near 50/50 split. This holds them in good stead given script income from many of their regular patients may halve due to 60DD. In fact, Franchise Partners who’ve joined the brand state their desire to increase front of store sales as a key reason for making the switch.
But sales split is one thing; sales volume is another. Priceline Pharmacy has a comprehensive promotional program and extensive list of exclusive brands to attract new customers.
It also has a loyalty program that’s instrumental in driving footfall and repeat visitation. The Priceline Sister Club boasts 8 million members, making it the fifth largest loyalty program in Australia, only behind the big guns in Qantas Frequent Flyer, Woolworths Everyday Rewards, Velocity Frequent Flyer and Flybuys programs. Sister Club members are the golden ticket for Priceline Franchise Partners. They spend 42% more than non-members.
Private label ranges are yet another secret to encouraging repeat visitation while providing greater margin.
It’s important you keep your foot on the pedal for dispensary sales too. Make sure your brand is working for you to find new health revenue streams while managing your cost base. It’s time to expand professional services and scope of practice. And strong digital capabilities are crucial to unlocking this. Priceline Pharmacy has a digital first approach, with a dedicated Digital and Data team that analyses customer behaviour and preferences, to inform their health strategy.
So what’s the bottom line? It’s yours. If you answered “no” to any of the questions above, you’re leaving money on the table. Your brand’s only obligation is to ensure your financial success by offering a product range and level of care other pharmacies and supermarkets just can’t deliver.
If you’re ready to look in the mirror and identify your business growth opportunities with Priceline, register today for a no-obligation appointment. My team looks forward to working with you to develop a free, customised data and insights report for your business.
Peter Lane
National Franchise Development Manager
Priceline Pharmacy
peter.lane@api.net.au
https://www.priceline.com.au/franchise-info