Trends and predictions for retail pharmacies in 2023

It has been another very challenging year for most pharmacies with pressure on dispensary teams due to the complexity of receiving scripts electronically coupled with a shortage of qualified staff.

The ongoing spread of discount and supermarket pharmacies continued. This has created a two-tier pharmacy market with opportunities for community pharmacies providing full-service to differentiate themselves from the low/no service big-box stores.

The growth plans of corporate pharmacy groups is now threatened by staff shortages plus the ICPG High Court challenge to the issuing of pharmacy licenses and the meaning of “effective control” in the Medicine Act.

Here’s the big trends I’ve seen in retail pharmacy in 2022 along with my predictions for the year ahead:

2022 Trends	2023 Predictions
1. Staff shortages led to increased stress and burnout, reduced trading hours and some closures.	Wages in the shop and dispensary will continue to increase. A number of pharmacies will close on Sundays and/or Saturdays. Pharmacy owners will be forced to re-think the viability of multiple-pharmacy ownership – especially smaller pharmacies with a sole pharmacist. Te Whatu Ora will need to fund some rural businesses to remain open.
2. Pharmacies made significant one-off profits from COVID vaccinations, RAT tests and face mask sales.	Successful pharmacies will re-invest in their business to improve, modernise and change focus (see points 8, 9 and 10.)
​3. Vaccinations pushed some customers from GPs into pharmacy.	In April 2023 vaccinations in pharmacy will surge again to record levels.
4. Cough & Cold sales boomed in winter and continued to remain high all year.	Next winter we will see high demand due to higher than normal viral infections and raised awareness.
5. Cosmetics and beauty sales continue to decline.	The franchise beauty market has disappeared from 90% of pharmacies - with the exception of small brands (e.g. Natio and Thin Lizzy) and specialist skincare ranges (e.g. Avene and La Roche-Posay).
6. Sales of the health supplement commodity brands continued to move to the discounters.	Pharmacies with trained staff will replace these sales with higher-priced specialty brands such as BePure and Solgar.
7. NZ’s Inflation rate (+7%) was higher than pharmacy retail price increases (+3%).	Pharmacies will put prices up to remain viable. Owner operators that try to compete with the discounters will put their business at risk by providing lower service levels to customers and therefore becoming less attractive to employees.
8. Services in pharmacy were a growth area for those that had enough trained staff to provide them.	Pharmacies will increase the number of consulting rooms (from 1 to 2 and from 2 to 3). More pharmacies will create new specialist areas for tasks like ear piercing, passport photos, sleep consultations, health checks and pharmacist-only consultations. Staff training will become more sought after by pharmacies wanting a point-of-difference from the discounters.
9. The most critical factor for dispensing is workstations that are fit-for-purpose at peak times.	Dispensaries will get larger with specialised areas for different tasks. Successful pharmacies will invest more in their dispensary fixtures, computer systems and automation so that they can cope with increased workloads.
10. The most critical factor for pharmacy success is staff retention.	Pharmacy owners will offer improved conditions, training opportunities, incentives and shareholdings to key staff.

Here are links to my most popular articles from the last 12 months.

• Pharmacy sector in crisis

• Less is More – the benefits of range rationalisation

Get in touch with any questions, and I look forward to visiting your pharmacy in 2023.

Happy New Year

John Saywell

john.saywell@rpmretail.com

Ph: 0274 359848