Our non pharmacy competitors are fast developing stores which in every sense of marketing jargon provide (our) customers a much better "shopping experience" than we do in the average pharmacy environment in Australia.Woolworths (+ Big W) & Wesfarmers (Coles, Target, KMart) have spent an enormous amount of time and money on researching various supermarket models in other countries and consumers' likes and dislikes. The results have been taken into full consideration in redesign and redevelopment projects.
Walk into any newly refurbished Coles or Woolworths, and you can not help but be impressed! Here are some examples why:
1. Fresh food section has been totally overhauled and revamped. Self service fresh healthy foods and salad bars are now on offer (like the David Jones or Myer in the Sydney and Melbourne CBDs respectively)
2. The butcher and seafood sections have been opened up and the "Fish market" style "freshly caught fish on ice buckets" are on display.
3. the width of the isles have been slightly increased for easier maneuvering of trolleys.
4. Ceiling lighting is now brighter and the refrigeration section expanded and lit up to convey freshness
5. Kids shopping trolleys have been introduced in selected outlets. Not only this may increase the time mothers with kids end up spending in the store, but also kids will pick up certain items in their own trolleys which mothers would not have had. Some of these will invariably be purchased as a result.
6. The "self service" checkouts are installed in order to take away the concept of "I don't have time to queue up for what I need so I will go to a pharmacy or other similar store and buy it quickly". Meanwhile we are still trying to educate our staff about the importance of "pleasant and prompt service at cash registers"
7. The process of keeping shelves tidy and full has been given a make over and "messy shelves" are not a major issue at the new Coles and Woolworth's stores.
8. Various online "kids Clubs" & "Mothers Clubs" incentives are being promoted to (every retailer's) primary customers; i.e. mothers
9. Frequent Flier points "Club Cards" have been introduced by Woolworths, and Fly Buys is undergoing a major revamp by Wesfarmers.
10. Needless to say, the range and prices in almost most category directly competing with pharmacy are more attractive than ours.
11. To top it up, Costco, to the 8th biggest retailer in the world has just opened its first store in Melbourne with Sydney to follow. Their target is an eventual 40 stores in Australia (ratio of 1 per 500,000. Whilst Costco and Aldi do not as adversely affect pharmacy, their presence adds more pressure to Woolworths and Westfarmers' (Coles) earning capacity and their desire to invade pharmacy sector.
The strategy does not stop at supermarkets. Woolworths & Wesfarmers are also implementing similar strategies in their variety/discount stores by revamping Big W, Target & Kmart respectively in order to improve the "Shopping Experience" in these stores too.
Getting back to the main point I am trying to make, the overall shopping experience in the eyes and minds of customers has been extensively investigated and considered in redesign & merchandising of the new stores. Meanwhile, the ever escalating shopfitting and rental costs in pharmacy and the rise in market share of warehouse pharmacies have forced many pharmacy operators to downgrade the design and quality of their stores. In many instances the consideration of the "shopping experience" of our customers is taking a backseat in pharmacy to "competing with the discount models" and containing costs.
Woolworths & Wesfarmers have fully realised the imperative differentiating effect of "Shopping Experience" and that is why they are upgrading their stores accordingly. Up to now, due to the absence of differentiation, consumers have been used to choose which supermarket to shop at primarily based on the convenience of location, then price. Aldi, and now Costco have brought back the cost differentiation as their primary weapon.
The crucial factor is that pharmacists must make sure customers do not eliminate "Shopping Experience" as a factor when deciding which pharmacy to visit. The danger is that if consumers end up not enjoying the experience at all due to clutter and/or poor store design and merchandising, they will choose to shop in discount pharmacies purely on the basis of price, or even worse, at supermarkets due to the various points mentioned earlier.
The above point is extremely crucial because most pharmacists tend to confuse customers expectation of "SERVICE" as a differentiation factor by assuming that consumers apply the same uniform set of criteria to all retail channels when defining "service" in their minds. This is clearly evident by the frequent proud announcements of .... "but they do not provide service in Supermarkets or discount chemists the way we do!".
The fact is that customers' definition of "SERVICE" in a Supermarket is markedly different with their definition of "SERVICE" in a Pharmacy, as it is also different in case of discount pharmacies.
In a Supermarket, convenient location and ease of parking, extensive range, "perceived" cheapest prices, clean, wide and easy to navigate aisles with clearly priced and easy to find products and large number of check outs form the basis of definition of good customer service in most customers' minds.The new "shopping Experience" strategy will lift supermarkets' service to the "superior" level based on consumers' definition.
In an average pharmacy, customers definition of service is mainly based on personal interaction with friendly staff and advice. However, compliant core ranging & merchandising, competitive OTC and more recently Rx pricing, bigger range, prompt service at cash registers, competence of staff's advice and easy to navigate aisles are also becoming important factors in forming the basis of service. These factors can and should form the new criteria of "Shopping Experience" in the pharmacy channel in the eyes of our customers. At the moment, their absence is one of the reasons so many commentators rate pharmacy so low in their appraisals.
Similarly, customers expectations of "SERVICE" in deep discounter pharmacies is purely based on cheapest prices around and nothing else. The tidiness of store, friendliness of staff or advice of the pharmacist do not form the basis of the definition of "service" in customers entering such stores.
The majority of pharmacies in Australia do not directly discount as deep as the main discount pharmacy chain does. Therefore the criteria of good service in our customers' minds is much more extensive. As I mentioned earlier, shrinking margins are pushing retail pharmacies towards cheaper shopfits with customers' wants and needs taking a back seat to containing costs. Meanwhile, our major supermarket competitors seem to be much more aware of the customers' definition of "service" than we are! Their research must have shown them that customers enjoy brightly lit wide isles, good range, competitive prices and fast check out service. They have invested heavily in the former, introduced fresh food concepts as part of their overall strategy and self service check outs for faster transaction time, in order to meet all customers' expectations of "SERVICE". All Supermarkets need now is deregulation of scheduled medicines and they will be miles ahead of us in terms of most of the customers' criteria of great service.
And that is the problem that the Guild will not be able to help any of us with, even if it manages to keep the regulated environment till 2015.
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