Community pharmacies are under increasing pressure from multiple competitive threats, including a growing number of discount pharmacies, online pharmacies such as Pilldrop and Zoom, as well the ongoing business challenges of inadequate funding of dispensing, rising costs and the tight labour market.
Front-of-store retailing is also under pressure from the growth of online retailers, supermarkets, department stores and retail specialty stores. The loss of profits from retail sales has exacerbated the challenges associated with workforce shortages and comes on top of the significant extra work involved in adding vaccination services into an already stretched pharmacy workload.
Healthcare opportunities
A number of entrepreneurial pharmacy owners are still finding ways to reinvent their businesses to compete in this environment by adding more clinical services and transforming into broader healthcare destinations. In this way, they are adding convenience by leveraging the trusted pharmacist relationship and providing a more holistic healthcare experience.
While this transformation of the traditional pharmacy model is only in its early stages, there is no doubt that change is needed, and pharmacies that are unable to adapt will struggle to remain viable.
Previous success
NZ Pharmacy owners have a long history of embracing new business opportunities. Over the last 50 years community pharmacies successfully introduced cosmetic franchises, perfumeries, photo processing labs, sunglass shops, postal services, footwear and home healthcare stores. While many of these were successful and profitable retail ventures in the past, they have now been largely lost from pharmacy.
Many pharmacies still operate a gift store, but these too are becoming less viable due to the proliferation of competing gifts, toiletries and homeware outlets. With the decline of beauty counters there is now a significant shortage of experienced retail staff to manage fashion and gift areas in most pharmacies.
New initiatives
Here are some of the new business adaptations that NZ pharmacies are introducing to build a better, more sustainable future for their business:
· Sleep services including sleep apnoea testing and CPAP machine sales and service
· Health supplements specialty shops including naturopath consultations
· Nurse clinics for women’s and children’s health and wound dressings
· Travel vaccination consultations and vaccinations
· Pharmacist consultations for common conditions
· Online doctor consults and prescribing
· Integrative medicine clinics
· Health coaching for lifestyle changes that prevent and reverse chronic diseases
· Genetic testing
· Cardiovascular health screening
· Cafes selling healthy food such as vegan and gluten free options and kombucha
The common thread is that all of these new initiatives build on the core health and wellness position that pharmacists are famous for.
The COVID pandemic has dramatically elevated awareness that community pharmacies are important primary health providers. While it is unlikely that funding of the core dispensing will ever compensate pharmacies enough to restore fair pay for their effort, more pharmacist time will need to be freed up to support the growth of new health services in pharmacy.
In future, it is likely that a successful community pharmacy’s revenue will shift from the current 80:20 Dispensing:Retail mix, to one that has a 60:20:20 mix of Dispensing + Retail + Services.