The April price cuts continue the downward spiral on medicine prices and the gross profit return to pharmacy. Since PBS reforms began, the known goal is that dispensary contribution can only be arrested by volume. As the GP$ per prescription falls, pharmacy owners need more scripts to provide the same GP$ which are used to pay the overhead and provide a profit. 

So pharmacy owners should have in place a clear strategy for growing the customer base and increase prescription numbers. You do, don’t you? And what is Plan B?

The complementary strategy

There are two ways of increasing revenue, find more customers or find more ways to get more GP$ out of existing customers. Oddly, most owners are sometimes focused on the first approach and but rarely on the second, and the second is easier because you already have the customer.

‘Bigger share of wallet’ is a phrase you may have heard.  It means just that, getting a bigger share of your customer’s wallet. In this case, the wallet is your customer’s spend on healthcare. If you simply continue to offer the standard fare of ‘quick scripts’ and little retail offer and nothing else, you stand a chance of facing a dwindling customer base. What is not happening is that you aren’t ‘engaging the customer’.

Audit your customer’s experience

One way to assess how to engage the customer is to consider what an ‘ultimate health store’ might provide to a patient. It is the proverbial ‘start with a blank piece of paper’ thing and map out what the offer should be if you are to be seen as meeting all of your customer’s health needs and not just filling their prescription.

What is a day, a week or a month like for the customer? For different customers (young, old, single, parents, retired) their day, week or month will be different. What type of customers make up the visitors to your pharmacy? Using your training, imagine what solutions and services you could provide to help them through their day, week or month. Then with a new blank piece of paper, redesign your pharmacy.

It is easy to go back to the same old way doing things but something some clear FACTS from the performance of your existing pharmacy should be what is guiding your decision-making, not ‘Dave the chemist’, your mate up the road.

Let the experts do their job

Recently I have been working with some designers and retail experts around a new store and some of the approaches and the resulting ideas have been great. Pharmacy is a retail business with a niche focus. There are designers out there who can bring ideas from other industries to help owners lift the retail presence of their stores. Pharmacists can tent to think their business is ‘special’ but the stock turns that are achieved by some tell me that this is not the case. Most often the culprit is the owner who may have bought stock on a whim and not on the facts. End result is that there is a lot of stock in the pharmacy with a stock turn of less than 2 or 3 times. That means it takes more than 4 or 6 months to sell.

Have a serious go at this

The definition of ‘insanity’ is continuing to do the same thing but expecting a different result. Poor retail returns are a factor of many things. If you don’t change those influential factors you will NOT get improvement. If you are going to think about changing your offer, engaging the customer more and providing a different level of service, then do it well. It is actually more confusing if you just tinker at the edges and only half get it right.

Change management has two components, ‘change’ and ‘management’. So the store needs to change and that change needs to be managed. If you put in place good processes and good people and then maybe just get out of the way and let it happen, the change might begin to take effect.

Where do I start?

Well, we need a plan.  How about:

  1. analyse store performance in some detail
  2. examine our data to see just what type of customers we get in
  3. audit your customer experience
  4. sit and brain storm what the perfect pharmacy might look like to your customers now that you are focused on their needs and not yours
  5. review your pharmacy layout and presentation and consider how you might change it to make it look like the pharmacy your customers need
  6. share all of this with your team and together work up the ‘ideal presentation’ of your store
  7. get designers involved early so that they guide your thinking and make suggestions at the right time
  8. create different options
  9. look at your stock mix and ensure your stock reflects the outcomes you are wanting to achieve with the customers
  10. identify the resources you need – stock, staff and space – and what funding is required
  11. plan out the implementation and resourcing, including lots of TRAINING
  12. identify KPIs that will show you how it’s going and put in place a measurement system

 

Recently a health plan for Australians was released by the government that was centred on the GP and pharmacies did not get a mention. 
Pharmacists have been slow to claim the professional services space. If they leave it vacant for too long, it will be filled by others.  Health innovation within pharmacy must continue if their claim to be part of the community care team is to be recognised.