Euro/US style supermarket pharmacies inevitable, says expert


pharmacy deregulation: shopping trolley full of pills

European or US-style supermarket pharmacies are inevitable in Australia, says a retailing expert – but customers aren’t necessarily attracted to supermarkets for their health needs.

Dr Gary Mortimer, senior lecturer at the QUT Business School, Advertising, Marketing and Public Relations, wrote a piece in retailing publication Inside FMCG about the supermarket of the future – which will among other innovations include a strong focus on providing convenience to time-poor consumers.

“Just as supermarkets are now offering financial and insurance solutions, health and pharmacy will be a continued focus,” Dr Mortimer wrote.

“Our supermarkets of the future will offer solutions for time poor, health conscious consumers.”

Dr Mortimer told the AJP that while this supermarket of the future may indeed be a win in terms of convenience for the health consumer, there are already signs that current supermarket offers – which have expanded greatly into unscheduled OTCs over recent years – aren’t necessarily seen as a better offer than those provided by pharmacies.

“I think unfortunately it’s inevitable that we will eventually see European or US-style supermarket pharmacy models enter Australia,” he told the AJP.

“There is no change at the moment to the current legislation around ownership of pharmacy, of course, but it will come up for review again and if you go back 10 years or more, supermarkets have been looking at this as an opportunity for growth.

“What they’ve done in the meantime is almost a way around it, to expand their health section into complementary medicines, vitamins, to capture this growing market.

“And the market is growing, as people become more confident to self-medicate and we have an ageing population that requires medicines for indigestion, for coughs and colds, for pain and fever, protein shakes, health foods and dietary supplements… so while supermarkets have remained unable to put pharmacies in supermarkets, what they’ve done is expand into that unscheduled area.”

He says that while some will say this represents a win for convenience—and price, thanks to supermarkets’ buying power—the lack of information provided by supermarkets is a concern, not just for pharmacy stakeholders, but also for consumers.

Dr Mortimer has recently conducted research into shopper behaviour in supermarkets and pharmacies, which he is looking forward to publishing shortly.

“The downside, which has come out in my data, is concern about the lack of expertise in the supermarkets. There’s a lack of information about those products,” he told the AJP.

“What came out was also a sense of social risk. One thing that surprised me a bit in the research is that people are concerned about what their friends and peers might think about them going to supermarkets to buy health care needs, rather than pharmacies.

“I think there’s still an expectation that when dealing with a pharmaceutical medicine, whether OTC or scheduled, that you should go to a. a doctor, or b. a pharmacist.

“Yes, the supermarket can provide you with that product, and people were happy in the knowledge that the supermarkets did have the ability to provide the OTC or unscheduled medicine, but socially it’s considered that you might be seen as cheap if you go there, rather than a more appropriate channel.”

Dr Mortimer says that a supermarket pharmacy would likely be the store-within-a-store style concept seen in other markets.

“I think it’ll be a model very similar to Big W, with its optometry store in store. That’s a good example of a supermarket understanding that there is a need, especially for the ageing community, for this concept.

“They can and do employ qualified optometrists, who can provide the product, and relatively cheaply. The same sort of thing will happen with pharmacy, with suitably qualified pharmacists and a store within a store. Costco have also moved into optometry.

“Shoppers will definitely win out on price and convenience, and having a suitably qualified pharmacist there kind of removes the risk of customers not having access to proper advice, because it’ll be there, whether in that channel or the community pharmacy channel.

“So that’ll be the price proposition. But my research tends to suggest that pharmacy today is not necessarily looking to compete on price, but is more about information and educating consumers away from the idea that OTC and unscheduled medicines are perfectly safe – they may be safe taken by themselves but they still need to understand that whatever else they’re taking can have an effect.

“I think pharmacies can push that information through – not necessarily a scare campaign, but an education campaign.

“Pharmacies can offer the value proposition.”

Dr Mortimer spoke at APP last month on the subject of loyalty, pointing out that low-cost Aldi, while shaking up grocery retailing significantly since it came to Australia, has the lowest customer loyalty of the supermarkets while IGA, which tends to have higher prices, has the highest. This is because IGA commands loyalty through support for stores’ local communities, and are often owned by community members.

“There’s behavioural loyalty, where people shop with a store because there’s no other choice or it’s not worth their time to go elsewhere; and attitudinal loyalty, which comes from genuine benevolent interest in the consumer and expert advice. Price isn’t a driver of attitudinal loyalty.

“They look every five years at ownership, and once supermarkets get pharmacy, community pharmacy will lose the expert advice proposition because it will be available in supermarkets. So the next question is, how do I grow attitudinal loyalty?”

 

The supermarket of the future

According to Dr Mortimer in Inside FMCG, the supermarket of the future will include:

  • “Less range but satisfactory choice” – it saves consumers time.
  • More and better private label products which are no longer seen as a “cheap and nasty” alternative.
  • Entertainment: areas like bakery and butchery will be opened up to be visible by consumers.
  • More advice: butchers will be able to discuss cuts of meat and recommended ways to cook.
  • More easy ready-made meal options and other fresh convenience foods such as sushi.
  • A higher uptake of home delivery for dry groceries, with the in-store experience having a greater focus on fresh food.

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1 Comment

  1. Robert Broadbent
    05/04/2016

    I wonder if the SM profit calculations work an environment where the government controls the price of a large proportion of the items considered ‘pharmacy’ that would be additional to those items already stocked by SMs. And, I really can’t imagine that traffic flow will change, but $generated/m2 will fall where pharmacy is practicing ‘pharmacy’

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