Publication Date 01/04/2011         Volume. 3 No. 3   
Information to Pharmacists

Editorial

From the desk of the editor

Welcome to the April home page edition of i2P. A lot certainly happens over a month in pharmacy and health-related activities.
When we first started publishing our primary concern was to cover pharmacy issues within Australia, delivered monthly. Eleven years on we now cover global pharmacy and associated health issues on a daily basis, but delivered weekly.
New areas embracing climate change, food growing and processing and information technology are all increasing areas of health concern. Their impacts translate into systems that affect health negatively or positively and for all such contemporary issues, pharmacists need to have a working knowledge and understanding that translates into an effective pharmacy service
This month we are introducing a new column called Pipeline, and you will find it near the top of the centre column of the i2P home page.

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JB Hi-Fi reports sales and profit increase without selling washing powder. How can this be?

Neil Retallick

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Neil Retallick is a former General Manager, Merchandising, for National Pharmacies, the successful community pharmacy model owned by the Friendly Societies. Neil holds a Graduate Diploma of Marketing from Monash University, is a CPM and a graduate of the AICD.He began his career with Myer Stores Ltd and worked for FMCG companies including TIA (Sheridan) and Pacific Dunlop. Prior to these roles Neil worked for Cadbury Schweppes Drinks Division - Grocery, and Trimex Pty Ltd in Victoria in State management roles.

JB Hi-Fi has continued its phenomenal success of the last decade, recently reporting a sales increase of 8.3% for the first half of the F11 year.
EBIT rose an amazing 14%. The question is, how can they do this without selling washing powder? Community pharmacists need to take note.

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There has been much written about the imminent demise of the Dispensary as the primary generator of sales and profits for community pharmacies in Australia. The losses from this revenue and profit stream will need to be replaced by new business. The Pharmacy Guild is working hard on developing a range of programs that will, in fact already have, attracted Government funding. These programs are a logical extension of the role that the Guild has fostered of community pharmacists being healthcare professionals operating at the front line of community health. These programs reinforce the image of community pharmacies as professional healthcare providers. There is a significant dissonance here in the fact that the majority of these community pharmacies also sell washing powder.

JB Hi-Fi started in 1974 selling music. Today it is Australia’s largest home entertainment retailer. It has grown from one small store at East Keilor in suburban Melbourne in 1974 to what it is today by maintaining a relentlessly clear focus on what it is, and what it is not. J B Hi-Fi sells a lot of stuff across a very broad range of product categories. What’s important from the consumer’s perspective is that all these categories are aligned, they are all related, and they all are focussed on the one consumer need – entertainment. Now, thousands of people traffic J B Hi-Fi stores every day but management has steadfastly resisted the temptation to add ‘convenience lines’ that could also be bought by those customers. This is the Japanese concept of ma, where something is defined as much by what it is not as by what it is.

When a consumer in Australia wants to purchase something related to entertainment, J B Hi-Fi wants to be remembered by that consumer at that time as a brand that sells entertainment products and solutions. The best way it can ensure that happens is to make sure that every time it communicates with consumers it does so in a very singular way. After all, the average consumer is exposed to some 4,000 advertisements each day. J B Hi-Fi does this by pushing its brand as an entertainment brand every time it attempts to reach consumers in that cluttered media market. Nobody thinks of washing powder when they think of J B Hi-Fi. That’s the way J B Hi-Fi wants it to be. Empirically, it appears that their strategy seems to be working for them.

So to my letterbox and the impetus for writing this piece. Last weekend I received catalogues from five pharmacies in my area. Pharmacy A had Spree washing powder at $1.99 for 500gm. Pharmacy B had Duo Ultra 500gm at $2.00. Pharmacy C had Fab 500gm at $1.99. Pharmacy D had Radiant 650gm at $1.89 and Pharmacy E had no washing powder at all. My question is this: Do any of these pharmacies really think they had a compelling washing powder offer? One that would make Mum remember not to buy her washing powder from the supermarket and go to the pharmacy to get it in future? Was the fifth pharmacy putting itself at a disadvantage by not advertising washing powder at all?

The most important question is this: Were these pharmacies diminishing their positioning in the minds of their customers as professional healthcare destinations by promoting washing powder? What do these pharmacies want to be remembered as by consumers?

It seems to me that community pharmacies in Australia have a wonderful professional platform upon which to build a reputation as healthcare destinations. Health ought to be the word that community pharmacies in Australia own. Or Health and Beauty would be good. These notions are at least somewhat aligned in consumers’ minds. Thinking health? Think your local community pharmacy. Thinking beauty? Think your local community pharmacy. Think of all the health-related retail stores that exist today in competition with community pharmacy.

I was in Sydney on a Sunday recently and walked past a pharmacy that was closed but appeared to have a pizza shop inside its front door. I’ve heard pharmacy managers suggest selling DVDs would be a good add-on business. Others have invoked Boots in the UK selling sandwiches. At least a claim could be made for healthy fillings. There is no limit to what any retailer can sell. The key is to sell only those things that enhance your reputation for that one thing you want to be remembered for. This is the J B Hi-Fi lesson.

Community pharmacy is looking down the barrel of reduced dispensary income. Now more than ever it needs to be clear about what it wants to stand for in the minds of the average Australian. Now is the time for community pharmacies to take up that position before their competitors beat them to it. Can I suggest that washing powder is not the answer?

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