Gone are the days when your local pharmacy was just the destination for all your medicinal needs. The humble apothecary has developed into one of the mainstream distributors of beauty items in Australia. We take a look at the buying side of this big business to see what it takes for a brand to make it onto the pharmacy shelf.
The buyers
Each pharmacy has different operations in place when it comes to the buying process. At Terry White Chemists, there is a team of people who each have different areas of the store they focus on. Terry White Chemists is a franchise network, so merchandising decisions are generally made at head office then the product is rolled out to all stores,” says Terry White Chemists category business manager (general beauty) Todd Clarkson. Having said that, we do have some products or brands which, for a variety of reasons, are ranged in select stores only. In addition, Terry White Chemists’ pharmacies also have the opportunity to purchase products locally to meet the particular needs of the demographic serviced by that store.”
At Blooms The Chemist, there is one buyer for all categories – with cosmetics being a free category for the individual stores to decide what they want to stock. The brand will be holding their first cosmetic review in February 2012 to lock in core brands and set up strategies.
YouSave Chemist has a team of three buyers - a senior buyer, junior buyer and a catalogue buyer. All buying is done in the office; no store can purchase stock direct with a supplier,” says YouSave management senior buyer Kate Hennessy. We can control and manage our inventory better this way. The majority of products purchased are rolled out to all stores, but in some cases the buys are done with specific locations in mind.”
What are they looking for?
With thousands of beauty brands available on the market, pharmacies have different rules for choosing which products to stock. At YouSave Chemist, buyers look for four things: customer demand, point of difference, brand awareness and good trading terms,” says Hennessy. While a brand is definitely more likely to be selected if they are doing a big advertising campaign, the pharmacy is open to stocking both established brands and new/niche ones. We are aware that stocking established brands will do well in a pharmacy, especially as a chemist is viewed by the consumer as a safe and trusted environment,” she says.
For Priceline, the buyers look at the brand’s positioning in the market place, what sort of innovation they have, whether they have a strong marketing program and if they are going to deliver the quality in product and the value that are going to keep making the customer come back to purchase that brand. Price is certainly extremely important. But for us, it’s also a bit about differentiation,” says Priceline cosmetics buyer Susie Bearzi. We don’t necessarily want to have the same as what everybody else has, we want to make sure that there’s that reason to come and shop at Priceline. We are a bit of a playground for women with all the ranges that we have in store. We really want to make sure we’re catering for all categories of women.”
A combination of elements contribute to Terry White Chemists’ decision to range a particular product, however brand awareness is important so that the customer will be familiar with products we carry,” says Clarkson. The larger brands are signposts to our customers and give credibility to the range we carry and the quality of our merchandise. However, niche brands provide an opportunity for point of difference.” Other factors include brand activity, perception in the minds of the consumer and how the brand aligns with our core customer. Knowing what other retailers are carrying the product is also important to understand as this can affect pricing and profit margins,” says Clarkson. In the beauty area, we also need to understand market trends and how closely the particular brand is tracking those trends and market shifts.”
Clarkson went on to reveal that media advertising and consumer engagement is a critical component in giving weight to the attractiveness of a product or brand, nevertheless, it is just one part of a wider decision-making process, and a lack of advertising will not necessarily preclude a product from being ranged.” He added that with a very high number of purchase decisions being made at the point of sale, in-store promotions have a very strong success rate in their stores. Recently a therapeutic skin care brand employed in-store advisors in our top 30 locations and they saw sales lifts of up to 150 per cent in these outlets.”
How to get noticed
With all pharmacies agreeing they like to stock new and niche brands as well as the major movers and shakers, there are some steps smaller brands can take to help get picked up by a pharmacy. The key for any brand is to show the retailer how they will achieve sales in the network of stores,” says Clarkson. He also revealed the brand owners need to understand the differences between retailers and tailor their approach and offer to each one. Smaller brands often have the advantage of being able to focus on individual retailers and use their size to move quickly and effectively. A tailored approach can provide success for any size brand.”
For YouSave Chemist, there are a few things that can help get a smaller brand chosen, according to Hennessy. Advertising, social media, customer gift with purchases, free testers, samples for staff to try the product which will result in them endorsing the product.”
Clarkson and Hennessy also said there are things brands can do to increase their success once they’ve made it in store. The key to standing out in our stores is a combination of shelf impact, marketing and promotions. We carry a lot of merchandise in our stores, so the ability for a brand to differentiate on shelf is critical,” says Clarkson. He adds that it is important for new brands to have a strong and interactive marketing program. Hennessy suggests brands apply for a catalogue spot which will give them ideal location in store for the catalogue period, offer consumers special deals such as two for one, and put product knowledge cards near the brand so consumers can find out more information about the brand.