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John Kerry looks at ways of evaluating the health of a pharmacy business before thinking of a merger or sale There are critical times in the lifecycle of any business [...]

With the increasingly health-conscious general public constantly on the lookout for alternatives to drugs to remain healthy, could complementary medicines be the niche market for you? John Kerry investigates The [...]

Running a village pharmacy is never easy; the situation becomes even more complicated when your customers range from millionaires to council house tenants. You need hard work, perseverance and expert [...]

A UK community pharmacy owner was advised to reorganise her shop to improve its look and to concentrate on selling goods allied to the pharmaceutical business. The pharmacy shop had been facing falling sales of over 50% between 1988-1998. The shop owner tried to encourage sales by introducing a range of new products which helped a little to stem the decline. It was predicted the shop has lost around 500-600 pounds sterling per week in turnover since 1990. The shop was looking shabby but the National Health Service prescription side of the business was still good., How can you improve a business with a split personality: a thriving NHS business but falling counter sales? Ten years ago, this community pharmacy operated from a tiny shop only [...]

An outmoded small retail pharmacy in a UK city was in need of reorganisation in order to compete with two other pharmacies located within half a mile. The shop fittings needed to be replaced, opening hours extended and the merchandise changed to appeal to customers. The pharmacy relied on dispensing National Health Service prescriptions yet it only dispensed 40% issued at a nearby health centre. The pharmacist may consider co-location to increase dispensing services. The new pharmacist managed to increase the turnover from 350,000 pounds sterling to 380,000 pounds sterling in 1997-98.

Most traditional rural pharmacies are believed to be small, old-fashioned and picturesque, but they have the potential to become profitable tourist attractions under the right management. Two business strategies are proposed and discussed, one aiming to expand local trade, the other focusing on tourists. A typical profit and loss account for a village pharmacy is included.

A pharmacy located in a picturesque UK village with many wealthy, elderly residents has benefited from stocking large amounts of exclusive soaps and hair products. The pharmacist has developed a speciality department in supplements, remedies and vitamins, and even has an own label range of vitamins and supplements. Specialities now play a valuable role in replacing lost sales of proprietary brands. It would be worthwhile undertaking a concentrated promotional campaign to boost sales, possibly including local newspaper advertising and in-store demonstrations. Small advertisements in glossy county publications can also be very effective.

It was recommended a pharmacist, in a UK rural town, undertook changes in his shop to increase his committment to patient care and health linked services rather than retailing toiletries. The pharmacist was advised to extend his range of health linked products, such as first aid and diabetic goods. Sales from the shop floor accounted for only 16,000 pounds sterling in 1996 whilst sales of counter medicines were valued at 50,000 pounds sterling. The pharmacist dealt with 8,500 prescriptions monthly. He purchased the store in 1984 and has since modernized the business.

Small community pharmacies are becoming increasingly threatened by competition from the pharmacy services provided by large supermarkets. Suggestions for enticing customers back to local pharmacies include taking advantage of individual unique selling points such as location and reputation. Local pharmacists should also stock more complementary healthcare ranges such as vitamins and herbal products and reorganize shop layout to take advantage of associated goods and seasonal products.

Retail pharmacies need to have a unique selling proposition to compete effectively with larger organisations. Specialist services in alternative medicine, homeopathy or skin care are sometimes worthy initiatives assuming that no other local business already occupies the same market niche. Modern and attractive shop fittings and a wide range of off-the-counter medicines also tend to improve sales.

Rural village centres in the UK can thrive through the adoption of a well-planned marketing initiative and traders need not fail because of competition from large out-of-town shopping centres. Forty retailers in one village combined forces and paid for a marketing consultant to help rebuild their businesses. The village pharmacy was advized to install an EPoS system to help maintain stock control and to change the shop layout in order to increase stock space and improve customer access. Friendly, helpful service is an important factor in attracting local customers.

One suburban pharmacist is finding that although the annual turnover is 680,000 pounds sterling, sales are not keeping pace with inflation. The pharmacist should try to get existing customers to spend more rather than try to attract new customers. This can be done by improving the appearance of the exterior; altering the layout, so that customers see more of the merchandise and may impulse-buy; updating the fittings; displaying the merchandise more attractively; and introducing new product ranges.

The Business in Focus team looked at four different pharmacies in order to improve business capabilities and profits. The pharmacies ranged from a small run down site with a turnover of 250,000 pounds sterling to a large high street store with a turnover of 1.15 million pounds sterling. A year later, three of the pharmacies, following the advice concerning shop reorganisation, advertising and prioritizing, had increased their turnover by between 12%-40%. The fourth business which was facing increasing competition from other outlets had failed to make change and continued to decline.

Many factors must be considered when deciding where to open a new pharmacy. A rural village may appear ideal because you have a captive market and pleasant surroundings, but issues such as the potential for expansion, refitting, modernisation costs and how to increase sales are also important. Small businesses may find that new technology, such as electronic point of sale systems, are not financially viable.

A pharmacy manager used a marketing strategy recommended by the franchiser, and has managed to turn the declining sales of an independent pharmacy into a 40% increase in two years, according to a case study. The shop was refitted and re-merchandised, but there has since been a drop in business, attributed to both Sunday trading and the rise in popularity of retail parks. Recommendations to improve business included making more space available for new healthcare lines and extended opening hours.

The implications of the arrival of a superstore, boasting an in-house pharmacy, on three local independent pharmacies is discussed. It is suggested that although many shoppers will favour the one-stop shop and pharmacy service at the superstore, others would prefer not to have to trek through to the centre of the store to obtain their prescriptions. Suggestions for all three local pharmacies are provided.

A London-based pharmacy, owned by Mr P, makes 500,000 pounds sterling annual turnover, of which 32% is made up of counter sales and 68% by NHS trade. Despite the significant turnover, the pharmacy is suffering from a drop in profit and static sales. The pharmacy's marketing practices and business management are analysed in an attempt to identify the problem. Some of the possible reasons for the decline include poor car parking facilities, and the recession.

Two independent pharmacies in close proximity, are compared. The lesser pharmacy does twice the business of the other with a higher profile right from the beginning. The shop is in a more prominent position with a large illuminated fascia, and the proprietor is well known amongst local GPs with a thriving prescription collection and delivery operation. His pharmacy is promoted through leaflet drops and advertising, whereas the large pharmacy has not been marketed much over the years.

Pharmacy layout can be altered even in successful stores so as to attract more passing trade. One pharmacy with 3,600 pounds sterling per week turnover could introduce more profitable lines in place of traditional products so as to improve profit per square foot of selling space. New healthcare products could be launched and the pharmacy could extend its existing popular baby product range with pushchairs and quality toys. Products and specialist services could be promoted via window graphics.

Location is very important to the success of a pharmacy. A small pharmacy in a northern city has had its performance helped by Mr M, its owner. The pharmacy deals with 3,000 prescriptions a month and has turnover of 250,000 pound sterling a year. The shop is situated opposite a health centre. It covers less than 350 sq ft.

Country pharmacies do not usually attract multiples, but can be made quite successful by an independent pharmacist prepared to work hard. Indeed, a community pharmacy which needs only one member of staff for the front shop and has low rent and rates levels can produce a higher than average net profit. Script numbers are likely to be relatively low, but efforts can be made to attract a wider geographical base of regular customers.

Alocal pharmacy which over the last ten years has enjoyed healthy growth as a result of its dual location in a supermarket precinct and on the high street, is now suffering as a result of the launch of a larger out-of-town supermarket. Suggestions for boosting business include attract more customers with more signs and leaflet distribution; introduce new product ranges; modify the layout to a gondola design; and increase advertising.

Small community pharmacies looking to increase their sales should consider making some changes to their approach to merchandising. The most important area is the prescription counter, which can be improved with a pinboard for notices and posters, a leaflet rack and a display cabinet. In the rest of the pharmacy, POS aids such as dump bins, shelf barkers and department direction signs can be very effective if used appropriately.

The opening of a superstore and new pharmacy have severely affected business at a local chemist. The chemist has also lost business due to the relocation of a neighbouring GP practice. Options available to owner Mr T in order to boost business include late-night opening, installation of a sub-post office, cut price/low quality brands, and a layout review. Profit and loss accounts for the financial year to October 31 1993 are included.

Pharmacies located near health centres will operate a profitable dispensing business, but some fail to realise the potential profitability of the retail side of the business. To improve turnover, the shop layout should be planned into logical departments; merchandising principles should be adopted; a full-time employee should be made responsible solely for the front shop; pricing tickets and promotional signs should be made more visible; and a good stock control system should be used. The success of a community pharmacy is primarily based on good personal service.

Mrs P's pharmacy has survived in a secondary position as a result of loyal customers and her first class service. The pharmacy joined its pet food and pharmacy businesses together two years ago, and the split is currently 60:40 in favour of humans. Since the refurbishment, pet food sales have remained stable, while pharmacy sales have grown by 40%. The shop currently dispenses over 4,000 items per month, and details of how low till takings could be boosted are given.

The case of a 700 sq ft village pharmacy can be used by a business consultant to show how profitability can be considerably increased. The pharmacy in question handles 5,000 prescription items a month, and has turnover of 680,000 pounds sterling a year. Counter medicines and other health care sales account for a large part of the pharmacy's turnover. The main problems facing the pharmacy are the prescribing habits of the GPs, who often prescribe for three months at a time, forcing the pharmacy to keep higher stock levels, and its physical shape, which means that many customers ignore a large part of the shop.

A Midlands pharmacy located next to a GP surgery has built up a turnover reaching 325,000 pounds sterling in three years, with prescription items reaching 3,400 a month. Counter sales contribute 25% of turnover with 70% coming from P and GSL sales. The pharmacy stocks toiletries, baby goods and haircare products, although they contribute less than 500 pounds sterling a week. Growth in the business could come from expanded prespcription collection and delivery services, increased display for GSL and P medicines and the introduction of healthcare production ranges.

Mr D bought a 350 sq ft village pharmacy a year ago, and has since doubled counter turnover and lifted script items by 33%. Mr D took advantage of local free publicity and did his own marketing with door to door leaflet distribution. So far, Mr D has only reached less than a third of his potential customer-base of 7,500. Recommendations to boost business include: wider leaflet distribution and local advertising, prescription and OTC product delivery services, new shop layout and expanded product line.

A pharmacists's business in a precinct one mile from a large covered town shopping centre is described. Many units have been affected by the recession and competition from the major shopping centre. The pharmacy has a 500,000 pounds sterling turnover and provides a comfortable living. Mr. C's business has also responded successfully to the opening of a competitive pharmacist next to the surgery where most of Mr. C's customers came from. Mr. C maintained good service and offered longer opening hours and information sheets.

Pharmacies can benefit from market studies in order to tailor their product lines and prices to local demand. One example is a store in an low income area, where it was difficult to compete against multiples on price. There was no up-market skin care or gift provision nearby, and the store successfully specialised in these products. Another store in a city center was able to charge more without affecting sales, while a third store in an area where couples returned home late was able to sell more by opening longer hours.

Identifying customer requirements is essential for retail pharmacies to build profitable sales. Retail pharmacy currently ranks fourth behind food multiples, major pharmacy multiples, and drugstores for sales of toiletries, dental care, haircare, personal hygiene, and increasingly also for babycare and fragrances. Pharmacists should get to know their local population, competitors and what they sell, try out new products and marketing, and eliminate or rationalise products which do not sell well.