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Retailing in COVID 19 storm: What about Pharmacists?
Claude Boffa
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Your Coach for today Claude BOFFA
Master in Business Engineering, Solvay Brussels School of Economics and management, ULB, 1977
Academic director of the Executive Master in Retail and Distribution Management, Solvay Brussels School
Honorary Professor in Retail and in Marketing at Solvay Brussels School of Economics and management, ULB
Professor in Retail and in Marketing at ICHEC and in Solvay Master programs in Vietnam Extended Professional management background in International Retail, both in Food & Non-
FoodSpecialties : Consultancy and training in Retail & retail marketing, customer relations, Point of sales
management, Merchandising techniques, marketing in public and non profit making organisations,Retailing in Pharmacies
References of teaching in retail include Multipharma, Familia, Pharmasanté, V-Pharma, Lloyd’s Pharma, Pharmacies Servais, APB, Carrefour, Ahold-Delhaize, Sanofi Aventis, Metro Group, L’Oréal, JTI, Proximus, Crelan Bank, Vivendi Universal, Puratos, Club Med…
Partner Founder of Coach Europe s.a. consultancy firm Past Certified Public Accountant15 years of regular training, teaching and consulting missions in Pharmacy businessKeep in touch: [email protected]
Our agenda:3
•Some trends in Retail and in Pharmacy retail•What are the options for Pharmacy retailers when a storm like Covid is raising?
•What impact on their operations and finance?•What type of solutions can Pharmacy retailers develop?•At what cost for them?•And tomorrow? Back to business as usual or new paradigm?
Retail is …
Retail is about getting a lot of customers coming often to your point of sales to buy more goods or services at a good price on which you get a high
margin, with reasonable cost.
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Current global trends in Retail
and in Pharmacy Retailing
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TREND # 1:Shrinking of the Value and supply chain
• Wholesalers disappear ( Small electro, pharmacy)• Producer has direct access to consumer ( Apple, Ben&Jerry’s, l’Oréal, Unilever, Nike,
etc.)• Retailer goes to local producer (D’ici, Ferme du Sart, Masks …)• Producers merge or create groups of common interest ( Sanofi + GSK, …)• Consumers group (Groupon, Cooperatives ) or interact with customers• Retailers group in market Central Purchasing offices ( Dynaphar, Sofiadis, …)• Producers group in E market places : Transora.com ( Procter&Gamble, Philip Morris, Coca-
Cola, Pepsi, Heinz, Cadbury-Schweppes, Unilever, Heineken, Gilette, Sara lee…)• Retailers produce themselves (Multipharma retailer’s made products, …)• Producers go onto internet platforms (Newpharma, Farmaline …)• e-commerce pure players open stores (Amazon Go, Cool Blue, …) or partner with some:
Colruyt + Newpharma• Smaller retailers disappear
TREND #2 :Discounting and low price war
• Even International Brands sold at discounters Aldi & Lidl• Growing market share of «discounters» &« low end
retailers » (Action, Farmaline, Medi-Market)• More Generics and More Private labels• E-commerce with price strategy (-10 to 15%)• Many promotions based on Price( - 20% -25%,-30%,-36%,
-66% !)• Automation, AI &Robots to reduce costs
WHO WINS ?
TREND #3 :Increase Perceived Customer Value, through
• Product or POS differentiation( in Pharmacy?)• Shorter circuits: D’ICI, La ferme du Sart, «home made»• Organic, Ethical, green, durable, slow, without CO2 emission…• Shopping experience: no-contact payment systems, vending
machines, Growing opening hours, Human contact,?• Hyper-segmentation ( individual-based product and advises)• Multi/Omni-channel marketing and distribution• Mobile media individual communication ( eg: for compliance ?)
TREND #4: Hypersegmentation
• Seniors• «Gay Friendly "• Halal or Kasher• Sugar free, Gluten free etc.• No stress purchase hour for stressed or autistic or >65 people• Wine lovers …
or even : Patient Mr Claude Boffa, specifically ( Pharmacy)
TREND #5 : Blurring of sectors and channels
Pharma products at Food retailers ?
Consequences of trends• Uniform Shopping landscape• Lower margins• Lower return• Non - loyalty• Raising expectations of consumers• Heavyer legislation and processes
And when COVID comes up …
• Stores lock down if not necessity (parapharmacies)• Trafic builders lock down (Offices, schools, entertainment and sports )• Less footfall in Stores, especially in centre town, offices and school
neighbourhood• Less self-indulging products sold• Postponing even necessity purchases Or stocking them up (March2020)• Procurement more difficult (masks, gel, paracetamol, …)• Necessary investment and organisation in queuing systems, plexi
protections, Hydroalcoolic gel dispensers, planning, …• Additional cleaning costs• Staff on sick-leave but still on payroll• Demanding and stressed customers
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Impact on pharmacists operations• Patients purchase more on line• More purchases from larger stores• Much less footfall ( <100) in smaller or center town stores ( Minus 70% !)• Less items in average basket (less prescription drugs for chronicle deseases:
acc IQVIA: -3,1% in units)• Lower average basket• More demand for discounts• Less high margin OTC, Cosmetics & PEC, more basic products ( masks) so
lower margin mix !• Higher inventory on hand and obsolescence ( Sun protection)• More out-of-stock and lost sales• Cash-flow Out increase, cash-flow In decrease
THIS ALL MEANS LESS CASH on hand !• More administrative work• Less customer satisfaction
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What are the options ?
• Close down and cry ?• Keep on thriving the same way and wait for better times ? …
that might never come back• Apply discounts where possible to compete with Farmaline
and other discounters and increase sales but …
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Needed Progression of sales in %to maintain Gross Margin for each rebate in % from a regular Margin rate
REBATE
1% 2% 3% 4% 5% 7% 10% 15% 20% 25% 30% 35% 40% 45%MARGIN
5% 25% 67% 150% 400%7% 17% 40% 75% 133% 250%
10% 11% 25% 43% 67% 100% 233%15% 7% 15% 25% 36% 50% 88% 200%20% 5% 11% 18% 25% 33% 54% 100% 300%25% 4% 9% 14% 19% 25% 39% 67% 150% 400%30% 3% 7% 11% 15% 20% 30% 50% 100% 200% 500%35% 3% 6% 9% 13% 17% 25% 40% 75% 133% 250% 600%40% 3% 5% 8% 11% 14% 21% 33% 60% 100% 167% 300% 700%45% 2% 5% 7% 10% 13% 18% 29% 50% 80% 125% 200% 350% 800%50% 2% 4% 6% 9% 11% 16% 25% 43% 67% 100% 150% 233% 400% 900%
Example: if you lower your price by 5 % from a margin of 20 %, sales should increse by 33 % if you don't want to lose margin.
What are the options ?
• Close down and cry ?• Keep on thriving the same way and wait for better times ? …
that might never come back• Apply discounts where possible to compete with Medi-market
and increase sales but …
• Develop an on-line business and home delivery but …• Connect to an e-business platform but …• or Get bigger through merger, acquisitions or grouping to
better adapt to the new paradigm
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In summary : Challenges for tomorrow’s retail including pharmacy retail
• ENSURE TRAFFIC on &/or off line• ENSURE SHOPPING EXPERIENCE• ENSURE ADVISE• ENSURE SEAMLESS ACCESS IN OMNICHANNEL ( IWWIWWIWI )• ENSURE PROFITABILITY AND CASH
ONE sentence toremember for ever for
every retailerCash is king,
Revenue is vanity, profit is sanity, cash is reality
« TOUT SEUL ON VA PLUS VITE. ENSEMBLE ON VA PLUS LOIN »
PROVERBEAFRICAIN
WINSTON CHURCHILL
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