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? on rent,” Grant tells the IMM Journal of observes Schoeman. “Their attitude is
Medical aids tend Strategic Marketing. “They pay around ‘what’s in it for me’?”
to dictate pricing R250m² compared with about R130m²
paid by Clicks and R140m² to R200m² His group has resorted to extensive
ensure the profitability of a pharmacy. paid by Spar-affiliated pharmacies” advertising and creating promotions to
“A pharmacy is a loss leader to draw bring customers into its stores. “We are
customers into the front shop,” Former Springbok rugby player and running a win-a-car competition,” says
reiterates Dave Faber, owner of the owner of five Pretoria pharmacies, Schoeman.” Spend a minimum of R150
franchised Ballito Dis-Chem Pharmacy Hannes Strydom, sums up the plight a month and you are in line to win.” It is
in KwaZulu-Natal. of private pharmacies. “I would rather not a marketing approach he relishes. “I
play 100 games against the All Blacks never thought I would see the day when
Echoing Faber’s sentiment, Schoeman than try and survive in the pharmacy we would have to give cars away to make
notes that, for a big retail chain, having market,” he quips. customers happy,” he laments.
an in-store pharmacy is like the bread at
the back of a Spar store. It creates foot CREATING SCALE Grant believes the only real hope
traffic, but you have to make your profit For Strydom and Schoeman, the scale private pharmacists have is to throw
elsewhere in the store. created by owning more than one in their lot with Spar Group, where
pharmacy is an important factor in he is now involved. He speaks from
Making a profit from a pharmacy the survival of their businesses. experience as a veteran pharmacist of
has become virtually impossible, says 25 years’ standing and owner of the
Schoeman. “Dispensing fees give you “We have centralised our human Sunningdale Pharmacy in Durban North.
a 14% to 17% gross profit margin,” he resources, medical aid claims
says. “You are doomed if you think you submission, stock ordering and “Pharmacists are good at what they
can survive on that.” administration at head office,” are trained to do, but most have no idea
notes Schoeman. “It cuts costs by how to run a business,” he laments. “We
OVERHEADS AND eliminating duplication at store level give our member pharmacies marketing
REGULATIONS and frees the pharmacist to focus training, access to higher-margin private
Grant puts a pharmacy’s overheads at on customer service.” label products, and assist them with
about 21% to 22,5% of sales, which is stock control.”
particularly debilitating for the smaller Schoeman has also been
industry players. instrumental in creating a single Another focus of Spar Group’s efforts
brand for private pharmacies in the to assist pharmacists, says Grant, is
One of the two biggest overheads Port Elizabeth area. “We formed to get high-turnover stock onto their
faced by a pharmacy is professional Klinicare,” he says. “I hated having to shelves, with especially high visibility
salaries. A shortage of qualified give up our own brand but we needed given to their top-selling lines.
pharmacists, in part driven by a unified brand that would have a high
expansion of corporate pharmacies, recognition level across the city.” Spar Group’s partnership model
has driven up their monthly salaries shows signs of gaining traction. “I
to as high as R60 000, says Grant. DIFFERENTIATION have been approached by Spar,” says
Qualified senior assistants earn Schoeman is also striving to find Port Elizabeth-based Schoeman. “I
between R15 000 and R25 000. ways of differentiating his pharmacy am seriously considering [this]. I know
business. “You have to have a I must go with a group. There are
Regulation also weighs heavily. differentiator, but it is hard to find in an weaknesses in our front shops they
“You must have one pharmacist over-regulated industry,” he says. One can help us overcome.”
for every three senior assistants,” approach used by Schoeman is to drill
explains Schoeman, who employs into his staff the need to build strong Strydom is also on the verge of
20 pharmacists. “You cannot open a relationships with customers. “We call becoming a Spar Group convert. “I am
pharmacy’s doors without a pharmacist our customers by name. But to build a looking at options to survive,” he says.
being on duty.” relationship takes a long time.” “Spar is one of them. They will give me the
buying power I need in the front shops.”
The other big overhead is rentals. It is also an era where relationships
“Independent pharmacies get nailed are sometimes not enough. Could Spar’s entry into the retail
“Consumers want more and more,” pharmacy sector have introduced a new
dynamic that may put a dampener on
Clicks Group’s ambitious plans? Time
will tell.
October 2016 – January 2017 strategicmarketing 17
