There are around 14,000 pharmacies in the UK, with a roughly 50/50 split between national chains and the independents & regional multiples. While most pharmacies, large and small, have mostly embraced retail –the focus is growing within the independents. As the Government-backed Self-Care Initiative gains momentum, with people encouraged to seek help to treat minor ailments and access preventive healthcare from pharmacies, customer flow is set to increase further. This creates huge opportunities for both parties: an important income stream for the pharmacy, and a unique channel for manufacturers to go to market.
Chris Clarkson, Pharmacy Sales Director at Ceuta Healthcare, has worked in the OTC industry for more than 30 years; over 20 of them with Ceuta Healthcare, having previously worked for GlaxoSmithKline and Bayer HealthCare. Here he sets the scene of the independent pharmacy market and explains what this means for manufacturers looking to establish or grow their customer-base through these outlets – and the unique benefits of doing so.
What are the challenges faced by independent pharmacies?
Current pressure on pharmacy income, following various government funding cuts, means that pharmacy is more actively looking at their retail space to become more of a profit contributor. After all, independent pharmacies are also independent retailers.
While the vast majority (around 90%) of pharmacy income comes through prescription dispensing, and services/treatments such as blood pressure testing, this means pharmacies need to more actively leverage their retail space to support their profits – and have become more accepting of this
This is something Ceuta has always supported through its Independent Pharmacy focus as well as supporting client initiatives such as Bayer’s ‘Business Fit for the Future’ initiative.
What opportunities do independent pharmacies offer to manufacturers?
Independent pharmacies have a unique positioning with the ability to meet local needs through the right products mix, but also stocking products not widely available in the major mults. Larger pharmacies don’t have this flexibility as they must generally take their lead from Head Office.
Smaller pharmacies also have the advantage of the relationships they’ve established with customers – a personal service and offering that friendly face that people trust and feel comfortable asking for help with their problems. This point is particularly significant in the current climate of worries about personal data security.
What these pharmacies may lack in footfall volume compared with the mults, they make up for in quality: the average dwell time is seven minutes in pharmacies – gold dust!! Pharmacies essentially have a captive audience when customers are waiting for their prescriptions to be prepared.
A study by Pathintelligence showed that “there is a significant and positive relationship between dwell time and sales”. They found that a 1% increase in dwell time resulted in a 1.3% increase in sales.
Where manufacturers, whether their offering is suncare, skincare, incontinence products, medicine, or other products, retail pharmacies can offer a springboard to raise consumer awareness of their brand, as well as providing all-important credibility through pharmacy endorsement.
This is also a route to market to consider when you’re switching a product from prescription-only to over the counter (OTC), as pharmacies are looking to provide convenient, cost-effective access to safe and effective medicines without first requiring a GP or hospital appointment.
What advice would you offer to smaller manufacturers looking to supply to independent pharmacies?
You don’t always need to prioritise immediate sales volume: the potential in this market is in quality over quantity for the reasons outlined above. We know that customers often buy into brands they encounter in independents, often through recommendation by the pharmacy staff. They then go on to repeat purchase, though not necessarily through that outlet, so Pharmacy distribution can act as a strong marketing tool in the life of a brand.
It’s all about targeting the right customer at the right time with the right product; relevance is all-important when reaching customers and cultivating brand awareness.
Competition from larger brands who have the budget to invest in a salesforce, R&D and extensive marketing/awareness programmes, while attracting a premium price – have always been a challenge to smaller manufacturers. This does not mean that more modest brands cannot survive, and Independent Pharmacy affords a strong platform for these brands when guided correctly.
This also applies to more established brands which may find themselves at the ‘tail end’ of a manufacturer’s portfolio. Often these brands have great heritage and a loyal following, particularly from those who visit pharmacy. Ceuta’s brand fostering model has proven a great success in ensuring the availability of these products remain, whilst maintaining/growing sales and profits for the manufacturer as well as increasing brand value.
This makes developing relationships with smaller pharmacies key to success, particularly for new entrants to the market. They’ll be looking to identify and stock products that they know is absolutely right for their specific customer base and work well alongside their other offerings.
The challenge here is that independent pharmacy is a complex and fragmented market. With 25 years’ experience specifically in this trade sector, Ceuta has developed the right formula to manage this vital channel.
To even get your foot in the door, you must obviously be licensed where applicable and able to demonstrate the effectiveness and unique benefits of their products, and have confidence in their brand proposition – for the pharmacies themselves, as well for purchasers and end consumers (remember these latter two aren’t always the same individual).
What advice would you offer in independent pharmacies looking to expand their retail offering?
To optimise the shopping experience for consumers:
- Stock the right products – identifying core ranging and power brands as well as a blended mix of other products suitable for local needs.
- Plan for seasonality as demand for some products will increase in such periods as cough & cold and allergy.
- Understand what products are new and/or will be advertised whether it is on TV, press, social media, as your customers will come in looking for these. Don’t ‘wait to be asked’ or you will just lose the sale as the customer will go elsewhere.
- Support the brands as these are often from the manufacturers that are investing in R&D and consumer awareness which drive innovation and footfall into your pharmacy. They also offer favourable cash margins.
- Pharmacy education and detailing is becoming increasingly important as shoppers are more likely to ask, and trust the opinion of pharmacy staff, than in another type of store. Pharmacy staff need to talk to representatives of that brand and get a thorough understanding so they are confident about discussing the products and benefits for their customers/consumers/patients.
- Invest in making the store, which is a relatively small space in the case of pharmacies, look great so customers shop the store whilst waiting for prescriptions. This doesn’t just apply to merchandising, POS material, and Windows, but the store as whole, which needs to reflect a clean, efficient pharmacy environment.
Ceuta Healthcare won the award for “Best OTC Pharmacy Salesforce” at the OTC Marketing Awards earlier this year. The company offers brand a unique, integrated platform of services, to support brands’ growth, working with an established network including our sister companies within Ceuta Group. To find out how we can help your brand, contact firstname.lastname@example.org.