Try­ing its hand at phar­ma­cies

Trial will be in part­ner­ship with Net­care

Finweek English Edition - - Companies & markets - ANA MON­TEIRO

SOUTH AFRICAN food, cloth­ing, home and beauty re­tailer Wool­worths is well on its way to be­com­ing a one-stop shop for all con­sumers.

Its latest foray into pro­vid­ing its cus­tomers with the whole con­sumer ca­boo­dle is phar­ma­ceu­ti­cals, fol­low­ing in the steps of other listed food and beauty re­tail­ers Pick ’n Pay, New Clicks and Sho­prite.

Wool­worths says that pend­ing the ap­proval of its cur­rent li­cens­ing sub­mis­sion, it will of­fer a phar­macy on a trial ba­sis at two of its stores.

To be known as Wool­worths Phar­macy+, the first will open at the Wool­worths store in Kloof Street, Cape Town, in early May. This will be fol­lowed by a sec­ond in a lo­ca­tion still to be con­firmed.

Phar­macy is a de­vi­a­tion from the type of re­tail­ing that Wool­worths knows and does well, and with the reg­u­la­tory back­drop con­cern­ing the pric­ing of medicines throw­ing the sec­tor into flux un­til very re­cently, the com­pany will have to approach cau­tiously.

Wool­worths is part­ner­ing hospi­tal and health group Net­care for the trial, with the dis- pens­ing as­pect of the Phar­macy+ of­fer be­ing man­aged and staffed by Net­care.

De­spite part­ner­ing ex­perts, Woolies will just be test­ing the wa­ters for now. It says the tri­als will be eval­u­ated quar­terly and that any fur­ther com­mit­ment will be based on the vi­a­bil­ity of the two tri­als.

The move into medicine dis­pens­ing is not an easy one, ev­i­denced by New Clicks’s in­tended to of­fer cus­tomers “a com­plete health and well­ness des­ti­na­tion, un­der­pin­ning the Wool­worths good-food strat­egy and of­fer­ing cus­tomers an even more com­plete shop­ping des­ti­na­tion at their lo­cal Wool­worths store”.

An­a­lysts Fin­week spoke to re­garded the move as a strat­egy to get more cus­tomers through its doors, say­ing it was un­likely that Wool­worths would view the low-mar­gin phar- ini­tial ex­pe­ri­ence with its ven­ture. Fol­low­ing Clicks’s ac­qui­si­tion of 81 Pur­chase Mil­ton & As­so­ciates phar­ma­cies, it posted a R12,6m net loss at­trib­ut­able to or­di­nary share­hold­ers af­ter the com­pany was whacked by a R270m good­will write-off re­lat­ing to the pur­chase.

New Clicks’s en­try was ham­pered by the dif­fi­cult con­di­tions cre­ated by the un­cer­tain reg­u­la­tory en­vi­ron­ment, and per­for­mance has sub­se­quently im­proved. In the 2006 fi­nan­cial year to end-Au­gust, 110 Clicks stores had dis­pen­saries within them, with 45 be­ing opened in that year. Op­er­at­ing profit from the Clicks di­vi­sion in­creased 13% to R207m.

Wool­worths says the trial of Phar­macy+ is

An­a­lysts re­garded the move as a strat­egy to get more

cus­tomers through its doors.

macy busi­ness as a gen­er­ous profit cen­tre in it­self.

Other listed re­tail­ers such as Pick ’n Pay, Sho­prite (with its MediRite brand) and New Clicks have also en­tered the phar­macy space (since laws were amended al­low­ing non-phar­ma­cists to own phar­ma­cies), which has tra­di­tion­ally been the do­main of in­de­pen­dent op­er­a­tors. Ex­pan­sion plans, how­ever, have been hin­dered by the dearth of phar­ma­cists in the coun­try.

Other re­cent ini­tia­tives un­der­taken by Wool­worths to pro­vide a more com­plete of­fer­ing for cus­tomers in­clude the in­tro­duc­tion of high-end branded make-up, skin care, and bath & body ranges at some of its stores, to­gether with in-store beauty treat­ments – known as “ther­apy.bar” – at eight of its flag­ship stores na­tion­wide.

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