Trying its hand at pharmacies
Trial will be in partnership with Netcare
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.