In pharmacy, how big is big enough?


builder's tape measure

How many square metres is the right size for a retail pharmacy? wonders Mal Scrymgeour

Hot Chocolate. Whenever you have hot chocolate you are usually presented with three choices for your take away cup size. Almost predictably they are categorised as small, medium or large.

You might bravely venture into a Starbucks one day and you’ll be delightedly perplexed at the four options they have for you to select from.

In ascending order of size you can select from: Short, Tall, Venti and the Grande. Sometimes it’s tough to decide just what the correct size is—it’s almost occasion dependent. On some days just a taste is enough (order a Short), on a cold winters’ day when you’ve skipped lunch the Grande has much to commend it.

If you have other people with you, going the Short option seems inappropriate if they are having a larger sized vessel, while going the Grande means you are fat and greedy, so you’ll opt for a mid-sized offering. There’s always a right size, but it depends on the situation.

It’s not just beverages—as a nation we seem to have upsized on most things. We are generally taller and generally wider than we were 30 years ago.

We drive cars that have upsized. The original Mini was, well, small and because it was so small, after months of careful thought, they decided to call it Mini. The Mini of today is vastly bigger than what was originally presented.

Another automotive example is the Toyota Camry which allegedly has the same sort of space inside as a Holden Commodore has.

Essentially everything has moved up a size. Small cars are now mid-sized, mid-sized cars are now large and so it goes.

About the only thing that defies this trend is clothing. For me, it seems clothing has gone the other way. Almost insultingly, I often have to buy XXX sized T-shirts and some European brands of clothing just don’t fit me at all. I think it’s just me they pick on. No one else seems to mention it.

All of this got me thinking about what is the “right size.” Not just for hot chocolates and cars, but pharmacies.

How many square metres is the “right” size for a pharmacy? It’s a question I am asked reasonably frequently. It’s frustrating because like hot chocolates, it is almost occasion dependent.

These days, more often the answer appears be: smaller rather than larger.

Recently, I was working with a client who has reduced the size of their mall-based pharmacy from 700 sqm down to 320 sqm.

Interestingly, we don’t really expect the sales to drop while the costs will drop dramatically. In this case, they are currently a business heading south rapidly who with the stroke of a new wall (and another tenant) will suddenly find themselves to be a highly efficient, large format pharmacy.

Another pharmacy we’ve been working with is dropping from 300 sqm to 120 sqm. It’s adjoining a medical centre and the numbers will correct themselves rapidly in this case too. So smaller seems to be the case for these two pharmacies at least.

Having said that and from all the clients we work with, there are probably three sizes (just like most hot chocolates), that really work well in most cases for most pharmacies.

  1. Medical centre pharmacy – that is with doctors hooked up beside them, of around 120 square metres really seem to work well.
  2. Strip shops of the community pharmacy variety focused on medicines at around 200 – 230 square metres really seem to kick along nicely too.
  3. Discount pharmacies and the Priceline model seem to be very happy at around 350 – 400 square metres.

 

Of course there are many successfully exceptions to this rule, some of which I could name right now just to contradict myself, notably a couple of pharmacies around 300 square metres with four or five doctors beside them. They storm along brilliantly, as you’d expect.

So it doesn’t mean that other sizes don’t work. It just means that the pharmacies that we see of the sizes noted above tend to be the most successful.

It’s also worth having a gentle stab at what factors influence a successfully pharmacy. Anecdotal evidence would suggest that for a community pharmacy the key factors are – in no particular order – doctors, close to where consumers live/on the way home, a supermarket (or other major drawcard) and ease of parking. These factors differ for a Priceline or large format discounter, as you’d expect.

Above all else, it’s what consumer offer you make in the space you have: the offer you make to differentiate the business and make it appealing.

Starbucks make their offer different enough for me to consider them as a hot chocolate venue (I’m told their coffee is awful).

When a pharmacy reduces space it is forced to exit the poorer-performing categories which by default, means it is left with the better performing categories.

And hey presto, the entire pharmacy performs better.

The focus for using space should always be on what your customer wants. How can you tell what they want? Check the sales per square metre performance as a guide. Get it right and the sales per square metre go up.

Just like hot chocolate, the amount of space needed for a pharmacy is occasion-specific. There’s always a right size, but it depends on the situation. Generally smaller seems to be more efficient and more productive.

But, it’s not the size that counts. It’s what you do with it.

 

Mal Scrymgeour is the founder of retail consultancy Zumo Retail Ltd.

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