Cutting stores to counter competition

Co-owner Chin Loh’s Antidote pharmacy group will consolidate stores and focus on its loyal...
Co-owner Chin Loh’s Antidote pharmacy group will consolidate stores and focus on its loyal customers. PHOTO: PETER MCINTOSH
Discount pharmacy chains are shaking up the industry — and they’re coming South. 
Bruce Quirey reports on how Dunedin community pharmacies will face the challenges.

Pharmacy group Antidote is likely to cut some of its nine Otago stores and consolidate to counter economic challenges from Covid-19 and discount pharmacy chains.

The independent group was looking at focusing on its better-performing stores, co-owner Chin Loh said.

"We will be most likely going to consolidate," Mr Loh said.

Stores which could be put on the market included those less frequented by regular customers and one where the lease was due to expire, he said.

Mr Loh did not wish to identify which ones, or how many, could be offloaded so as to not frighten customers.

"But consolidation is the easiest thing we can do."

The group had grown to nine pharmacies, mostly in Dunedin, since Mr Loh formed a business partnership with Lorealle Lam about 2008.

Its pharmacies included one in North East Valley, one in the Dunedin campus area, four in the CBD, two in South Dunedin and one in Queenstown.

The partnership also operates Marbecks Cafe and other hospitality businesses in the Wall Street Mall.

"The name of the game is now preserving cashflow and making sure that we sustain and are able to keep serving the community from the strongest stores," he said.

Dunedin’s established pharmacies are bracing for the arrival of discount pharmacy stores in the city.

Bargain Chemist opens in the city on February 26 and Australian-owned Chemist Warehouse is looking for sites to open two stores in the city.

"We have talking about the impact Bargain Chemist or any discount chemist will have," Mr Loh said.

The impact would differ depending on where pharmacies were located.

It would be greater on city pharmacies which had a higher ratio of casual customers, he said.

Suburban pharmacies tended to have more loyal customers.

"To fight [discount pharmacies] on price is not really a financially viable strategy for a lot of us being individually operated businesses," he said.

"We need to be smart about how we are going to counter it."

The group needed to identify, recognise and reward its loyal customers, rather than those people who shopped around for discounts, he said.

"I think that is a far better strategy.

"A lot of our pharmacies have a big chunk of loyal customers."

But health was not a commodity that should be discounted.

"Health is more important than that."

Competition from discount pharmacies meant the group could not become complacent and needed to keep improving, he said.

"We need to look at it from the positive side.

"It’s just business."

Mr Loh did not believe discount pharmacies were cutting corners on service, he said.

"I don’t think I can say that.

"They are professionals and colleagues and they can run the business on a different model to us."

Antidote would roll out new strategies this year that hopefully would be lot better.

"Sometimes competition does bring out the best out of you," he said.

bruce.quirey@odt.co.nz

 

Comments

Big industry, apothecarianism, and commercially unregulated.