Retailer’s impact on NZ pharmacies
Times are proving tough for pharmacies trading close to Chemist Warehouse stores. The Herald understands small pharmacies located near and around Chemist Warehouse stores in Auckland have been impacted by the Australian retail giant’s booming trade.
This has particularly been the case for pharmacies trading in the Albany and Botany areas.
No pharmacies the Herald approached were willing to talk about the impact.
Chemist Warehouse, known for its large towering rainbow-coloured discount stores, entered the New Zealand market at the end of 2017, opening its first store in St Lukes.
Since then it has opened five stores in Auckland, including in Botany — directly next door to a Unichem Maxx — Manukau, Albany and Westgate.
Chemist Warehouse has not been shy on sharing its expansion plans and has an aggressive strategy to open 70 stores throughout all major cities across the country.
The Australian pharmaceuticals retailer debuted in New Zealand offering free prescriptions and, at the time, said it planned to catch up with the number of store openings it had in Australia. There are now more than 400 Chemist Warehouse stores in Australia and it is considered Australia’s sixth largest retailer.
Green Cross Health, the company which operates chain pharmacies Unichem and Life Pharmacy, would not say whether Chemist Warehouse had impacted its business but acknowledged the competitive market.
“Retail is an increasingly competitive market and over the last 18 months we’ve seen many changes locally including new entrants with pharmacy, grocery and beauty providing more choice for customers,” group manager Debbie Yardley said in a statement.
Green Cross reported a loss in retail sales at the end of the last financial year. In the year ended March 31, 2018, it posted a net profit after tax of $16.8 million, down 15 per cent from $19.6m a year earlier.
The Herald understands Green Cross launched discount pharmacy spin-off Unichem Maxx in a bid to retain market share ahead of Chemist Warehouse launching in New Zealand.
Countdown is also in the midst of opening more pharmacies within its
supermarkets which offer discounted and, in some places, free prescriptions.
Retail analyst Chris Wilkinson said the impacts on small pharmacies in the Albany area demonstrated the extent to which the new market player was having an effect on traditional retail models in the category.
“For smaller businesses affected, there is little they can do in the face of range and price advantage other than focus on improving their own store experiences and connecting closely with their communities,” Wilkinson said.
“What may the future of pharmacy look like? We will likely see smaller, predominantly script-only pharmacies, attached to medical centres.
“The discount model, with larger destination stores, will grow while street-front pharmacies will likely focus more on wellness through categories like natural health, supplements and by offering more services.”
Brand specialist Jill Brinsdon said she was surprised to see change in the pharmacy sector happening so late compared to other industries.
She said the same shake-up happening in the pharmacy market happened when Specsavers entered New Zealand close to a decade ago.
“We’ve seen so many other categories be flipped on their head,” Brinsdon said.
“The healthcare sectors, things like hearing, optometry, pharmacy, they are the last bastions to fall but ultimately they are going to.
“The smart pharmacists were ready for it. The smart pharmacy, whether it is the chain or the individuals, they are already diversified and moving more into the healthcare sector offering all sorts of tests, being more of the health professional.”