The Retail Scientist Blog

The Retail Scientist Blog

5 Tips for a More Profitable Pharmacy in 2024

Dec 31, 2023 | Articles

The Pharmacy sector has had a year of mixed fortunes.

The good news included the removal of the $5 prescription fee and the trial of funded pharmacist consultations for common conditions.

On the bad side we saw prescription remuneration increased at less than the rate of inflation, workforce shortages led to an escalation in wages and locum fees, and the broken process for emailed scripts continued to overwhelm most dispensaries.

As with any period of rapid change, there are significant gains to be had by the pharmacy teams that can identify and act on the opportunities that have arisen.

Here are the Top 5 tactics we have seen at the Independent Pharmacy Group in the last 12 months that create a profit advantage by growing revenue or lowering costs.

1. Less is more

With the pharmacy retail market now clearly divided into two camps: bigger/cheaper Vs smaller/local; it is clear which side owner operators are on.

The “stack it high and watch it fly” approach no longer applies to community pharmacy retailing. This has triggered a change to retail strategy which now includes the implementation of a carefully curated range of products.

This opportunity can turn an unprofitable retail area around by delivering multiple benefits including an improved stockturn, freed up capital from clearance of slow-moving and obsolete stock, and better customer service from staff who find it easier to know what to recommend.

2. A smarter pricing strategy

“Don’t be cheap” is a good catch-phrase to remind staff about your overarching positioning strategy. Your local customers come to you because you are convenient and you offer personalised service, not because you have the lowest prices.

Every customer knows that there is a cheaper option, so when they are in your pharmacy it is because they have chosen a different value proposition.

It is best-practice for small pharmacies to maximise their Gross Margin in the shop while still offering perceived value on some known-value-items. This approach ensures you can employ dedicated customer service staff on the shop floor in order to supplement your business’s financial position with a profitable front-of-shop.

3. Growth in personal services

This tactic doubles-down on what has always worked best in successful specialty stores. Providing great services that your competitors can’t (or won’t) offer creates compelling reasons for a customer to choose your pharmacy.

There is a significant impact on customer satisfaction and retention when you make life easier for customers by delivering prescriptions, compliance-packing medicines and sending repeat reminders.

In the shop your Customer Club should be used to communicate health news and special offers regularly to your best customers.

By promoting newer services like vaccinations and health consultations instore you accentuate the trusted, personal relationship that local pharmacists have with their local community.

4. Rethink your shop floor

As a result of the growth in services and the rationalisation of the retail product range, the layout and space utilisation of pharmacy premises is rapidly changing.

Gone are the franchise cosmetic wall units, along with many of the stands containing non-core ranges such as jewellery, clothing, fragrance, footwear, toys and gifts.

In their place we are seeing multiple consulting rooms, additional triage or health consultation counters and dedicated waiting areas with seating.

5. Dispensary workflow

Most dispensaries have received little or no investment in workstations, benches and shelving for many years – but the nature of dispensing has changed dramatically.

Scripts arrive electronically now (rather than being physically handed to a staff member for triaging. This changes the flow of incoming work and the increased use of automated counting machines means that the subsequent steps in the dispensing process are new and different too.

There is more organisation needed for staging of work-in-progress due to the complexity of many patients’ medications, and there has been a massive increase in space needed for storage of finished scripts. Many busy dispensaries now have one or more separate areas dedicated to unit-dose packing of prescriptions too.

All of this means that doing what-you-have-always-done is likely to be inefficient, stressful or unsafe and will be tying up critical qualified staff for longer and/or in the wrong places.

Your plan for 2024

None of these tactical changes needs to be costly, and it no longer makes any sense to carry out a full pharmacy refit costing hundreds of thousands of dollars.

With the right analysis and planning we are assisting our IPG pharmacies to address each of these changes in affordable steps throughout the next year to improve their business’s health, resilience and financial position.

Want to help your pharmacy take advantage of the changing healthcare market?
Discover how RPM can transform your pharmacy’s retail sales.