Pharmacy closures - don’t let yours become a statisticPublished on 19th August 2019 2019-08-19T11:00:00+00:00
The statistics make the bad news clear - the UK’s entire retail sector is suffering from reduced customer numbers and spend and pharmacies are, unfortunately, not immune. So how can you ensure that your pharmacy doesn't become another statistic?
How can you ensure that your business doesn’t join the list of closures?
Although customers may be tightening their belts, the real cause of the problem may not be decreased discretionary spend - it is the funding cuts in the health system.
At least the funding cuts, changing needs of the NHS and changing patient expectations are all cited as the main reasons for pharmacy multiples shutting branches. As an independent pharmacist, you might take this with a pinch of salt. As a retail business owner yourself, you know that no shop business will ever admit to factors like increased competition from the internet and supermarkets being responsible for restructuring - it would hardly be a positive message for the branches that remain.
The supermarkets or the internet?
But whether it is increased pressure from the likes of Amazon and Tesco, or the NHS looking more closely at approaches to prescriptions and the dangers of overprescribing, it is evident that retailers across the entire sector – multiples and independents alike – are under severe pressure.
Reduced prescription funding and reducing footfall have meant problems for many chains. Some, like the Rowlands Pharmacy group, are planning to sell up to 70 pharmacies and are looking to a move towards automation for their future.
Others - such as the Well group - are looking at the hub and spoke model.
Boots cutting branches
But perhaps the most dramatic news comes from UK leader Boots.
Despite a near 10% year-on-year increase in sales, the first quarter of 2018-2019 saw Boots UK parent company, Walgreens Boots Alliance’s adjusted operating income decrease, with weak UK market conditions blamed as the cause.
Boots has announced plans to close more than 200 shops over the next 18 months - roughly 8% of more than 2,400 branches.
When one of the UK’s largest retailers is closing branches, it is clear that the sector is under real pressure.
A silver lining?
As an independent pharmacist, you face exactly the same pressures as the multiples - but, fortunately, you may have greater opportunities to retain your profitability.
Many of the Boots closures may be simply because the chains have too many branches. Observers believe that as many as two-thirds of Boots branches are within walking distance of each other.
This kind of branch closure should actually be good news for your independent business. But the underlying problems of high costs and reduced profitability remain.
If multiples, with their integrated wholesale operations, are facing problems, then it may be a problem maintaining profitability as an independent - unless you can drive down costs and increase footfall and sales
So what can you do?
As an independent, you have greater freedom than the chains to make the changes you need to your business.
Become a health business
Long waiting times to see a doctor mean that you have probably seen an increase in customers coming in to see you for the answer to routine ailments, rather than their GPs. If you position your pharmacy as a ‘healthcare business’ rather than simply a filler of prescriptions, you can profit from this source of extra custom.
You can’t hope to compete with the supermarkets on the mass market items. However, you can provide the personal service that they cannot, and support your service with knowledge and quality healthcare products. When a customer comes in with a simple ailment, such as athlete's foot, or is looking for a way to deal with excess weight or help with smoking cessation, you can provide the advice - and the over-the-counter solutions - that they need.
Obviously, you will want to refer patients to their GP if you have any doubts, but providing the kind of advice that you do now and simply making it the centre of your business could mean welcoming in a great many more people.
You may be able to set up a specialist smoking cessation service or stock a range of self-diagnosis kits. More than half of adults in the UK may now self-diagnose, according to a recent survey by the Royal Pharmaceutical Society.
Easy, early screening, your expert advice and the easy availability of medication can improve outcomes and reduce the load on the NHS - while simultaneously boosting your business. But you may need to invest in staff training and a private consultation area if you are to give the counselling and support that may be required by customers who see you rather than their doctor as the first point of call when they have a medical question.
Provide an enhanced retail experience
As an independent, you have always known that the pharmacy is the foundation of your business but that the real profits come from retail. Obviously, pressure on price comes from the supermarkets and the internet, but being able to provide the right product at the right time - and to provide it in a way that delivers a positive shopping experience rather than the utilitarian approach of the supermarkets - is key to profitability.
With lines such as beauty and electricals, the ability to offer expert advice, a full range and attractive displays can all contribute to your success. You will need to invest in new merchandising displays and lighting, and possibly in training for your staff, but the benefits in terms of increased business can be dramatic.
As a retailer, a Merchant Cash Advance might be a simple way to raise the funds you need to invest in retail equipment.
Cut costs with automation
Putting a robot dispenser in your chemist shop could be a major investment, but it could quickly pay for itself with increased efficiency, tighter stock control with reduced wastage and reduced staff costs.
A business loan could provide a simple way to spread the cost of a dispensing robot scaled for your business - and is likely to undercut the costs of supplier finance.
Unsecured business loans can be arranged quickly and are suitable for smaller sums, and can be repaid over an agreed term under 5 years. A very large automated system might require a secured loan, with security provided by your business premises - although this could offer smaller monthly repayments for you.
Asset Finance may be able to reduce costs further still. This type of finance is designed to provide the cost of equipment, by securing the funds on the asset itself. This reduces the risk to the lender and so, in turn, reduces the amount of interest you pay and, hence, your monthly repayments. It could allow you to have the dispensing system you need in your pharmacy for the lowest initial cost.
Invest in marketing
A good position on the high street has always been important to draw customers into your pharmacy. However, you cannot rely on passing trade alone. If you are going to offer new products and services, you need to make sure that your customers know about them.
Putting your sales message where it will be seen in your community may require press and poster advertising - and, increasingly, an online presence.
You may be able to get the support you need from a local marketing business - and even use a short-term loan to cover the costs required.
Getting the financial solutions you can depend on
You probably can’t fund the measures you need to keep your pharmacy healthy if you have to dip into cash flow that is already restricted. However, by coming to Rangewell, you can find cost-effective ways to raise the finance you need.
We have business finance experts who specialise in the pharmacy sector and who can help you find the most appropriate and affordable ways to secure the finances you need for your pharmacy business to thrive.
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