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brings me to the subject of image, perception and vulnerability.
Roger Corbett
and his predecessors, have for years been running campaigns of
disinformation against pharmacy.
Pharmacy has always had a strong public image (as evidenced in
the Gallup poll), which has been deservedly earned.
The bond that exists between patients and "their" pharmacist
is a strong one, built up over the decades through the personal
concern and interest that pharmacists have always demonstrated.
Despite anti-pharmacy
campaigns continuously conducted by Woolworths (and it must also
be said, governments, on occasions), pharmacy public perception
and its image, remains both positive and strong.
Which brings me to the component of vulnerability.
Everyone (including
Woolworths) has an Achilles' heel, that can be used to combat
or unbalance an opponent.
For pharmacy,
it has always been the lack of scale.
Unable to
price competitively, support a specialist middle management and
with virtually no budget to conduct positive publicity campaigns,
each individual pharmacist has experienced frustration and vulnerability.
The solution has traditionally been to cooperate under the banner
of the Pharmacy Guild of Australia (PGA) and allow this organisation
to work on behalf of the collective individuals.
And the PGA
has done a magnificent job, but it is still unable to match the
total resources of a public company the size of Woolworths.
While it represents the common interests of each member pharmacist,
it cannot exactly match all individual requirements, and it is
not representative of all pharmacists.
The vulnerability
of Woolworths can be summed up in one word - "shareholder"!
Like most
modern corporates, the board and management have only one god,
and that is the shareholder.
The shareholder derives nourishment from profit - the more the
better, and in turn, profit is derived from increasing sales,
maximum margins and reducing expenses.
So why not a pharmacy campaign built around shareholders and share
price?
A direct mail campaign to shareholders may pay some pharmacy dividends.
Woe betide the CEO that does not pay due homage to the shareholder!
Core product
sales growth in the Woolworths supermarket division have become
increasingly more difficult to generate, primarily because that
market is almost fully saturated and the operators servicing the
market have had to become as efficient as Woolworths to preserve
their market share.
This is why Woolworths has been so vindictive towards smaller
independent operators, and continues to work towards their total
demise.
In recent years, Coles has had management slack and lagged behind
Woolworths development. However, Coles did take steps to rectify
the situation approximately two years back, and they are now reaping
the rewards.
The driver of Coles sales has been its alliance with the Shell
petroleum company.
Woolworths was first in this field with its own petrol sites,
then an alliance with Caltex utilising Caltex owned sites.
However, unusually for Woolworths, the Caltex alliance has become
flawed and has stalled, because independent Caltex franchisees
do not trust the motives of the company.
Incredibly, the managing director of Caltex had generated an internal
memo to its management, stating that franchisees should be discriminated
against, in favour of Woolworths.
Legal action has been threatened.
This problem
has reflected in Woolworths supermarket sales growth of around
3 percent for the year to date, compared with a rate double this
for the previous year.
Grocery sales are now inextricably bound with petrol sales.
Taking inflation to account, Woolworths has reached stagnation
in sales growth, while Coles is enjoying good growth.
Roger Corbett
has suddenly become vulnerable and desperately needs a sales driver,
hence his all out effort to absorb pharmacy into the Woolworths
market mix.
The reality is that if Roger Corbett does not deliver expanding
and profitable sales, he will be out.
Woolworths have a tradition of thrashing its management, having
given many near-death experiences to a number of its managers.
It is a tough culture, but not uncommon in corporate circles.
All this leads
one to speculate on how a strategy might be developed to target
the Woolworths share price downwards, so that pressure on someone
like Roger Corbett, can be generated through shareholders.
It may be
that pharmacists collectively may turn out to be significant investors
in Woolworths.
If so, what would be the effect if they were all coordinated to
sell their shares at a common point in time?
Would it be sufficient impact to drive the share price down?
Or a direct mail campaign to shareholders giving them the facts
on why Woolworths would not be the best entity to deliver health
care.
A number of targeted campaigns here could keep Roger Corbett off
balance, putting out all the surrounding bushfires.
If Roger Corbett falters, and then departs, his successor may
not be as keen to take on pharmacy as a "sales driver".
Shareholders
these days are beginning to become environmentally conscious,
and are also developing a social conscience.
The health of Australians would surely rate as a major issue for
the socially conscious.
A long term campaign built around the lack of social conscience,
exhibited by Woolworths generally, and in health specifically,
needs to gather momentum.
You don't need to go far for some ammunition.
The top 10 to 20 products sold in a supermarket relate to cigarettes,
carbonated beverages, confectionery and liquor.
This is a vulnerability, for it would be difficult to justify
on health grounds, the sale of any of these products.
If we look at illnesses such as obesity, heart disease, cancer
and respiratory disorders, they could all be linked with the volume
promotion of supermarket products.
The tokenism of a firm like Woolworths selling Nicotine Replacement
Therapy at the tobacco counter would inspire cynicism to the highest
degree.
While Woolworths promote the concept that any product required
by their customers ought to be available on their shelves, I could
only support this if Woolworths picked up the tab for the major
lifestyle illnesses their products cause.
A properly orchestrated campaign highlighting "bad health"
products sold by Woolworths, should be able to destroy any pretensions
Woolworths may have, in the health involvement of Australians.
Other areas
of vulnerability could include an examination of how Woolworths
run their liquor sites.
The regulations here have a parallel in how they would have to
initially conduct their pharmacy businesses.
Do they observe all the laws?
Do they, in practice, prohibit sales of liquor to those under
18 years of age?
I am sure that a probe into the liquor area would uncover breaches
that could easily be extrapolated into a general story, along
the lines that if Woolworths is unable to handle liquor then it
certainly has no credentials to handle drugs.
Drugs can never be considered as ordinary items of commerce, and
to Woolworths, everything they stock is an "ordinary item
of commerce".
They simply do not have the mindset, or the social conscience,
to handle pharmaceuticals and associated health services.
Woolworths
take their advice from an American consultant, Jack Shewmaker,
who is a director and former president of Walmart, the world's
largest retailer. Walmart is currently experiencing massive sales
gains, and it is believed that the advice to locate pharmacies
inside Woolworths supermarkets comes from this source.
The American model of pharmacy would have to be the worst model
you could imagine in health care terms.
Americans pay some of the highest prices in the world for drugs,
and in supermarkets, it is almost impossible to find the pharmacist
for any qualified advice (see research material by Professor Con
Berbatis in earlier editions of i2P).
Why this model is even contemplated for Australia defies comprehension!
Full marks
to the students from Sydney University who recently demonstrated
on the day that Roger Corbett met with Jack Shewmaker for his
consultancy meeting.
Why should they have to consider a life inside Woolworths as part
of their future?
In the collective
psyche of Australians, all corporates are viewed as greedy, grasping
and without a conscience.
There is an article running in a recent Business Review Week on
this very topic, and pharmacy needs to capitalise on this community
trend. BRW also had a comment on small business growth generally:
"growth
of 1.5% between 2001 and 2003 should ring alarm bells in Canberra.
Anecdotally, it is clear that more small businesses are struggling
and not enough is being done to help them. This was the theme
of the second BRW Small-Business Roundtable discussion, attended
by the federal Minister for Small Business, Joe Hockey, the shadow
minister for small business, Bob McMullan, and the chairman of
the Australian Competition & Consumer Commission, Graeme Samuel,
as well as industry experts and entrepreneurs. BRW's emerging
companies editor, Amanda Gome, moderated the discussion on the
topic: 'What's holding small business back?'
An
edited transcript of the discussion accompanies analysis of the
ABS figures by Gome and BRW emerging companies writers Jacqui
Walker and Craig Roberts. David Purchase, executive director of
the Victorian Automobile Chamber of Commerce, summed up the mood
of many at the roundtable when he said:
"The
plight of many small businesses has got so bad, it has turned
into a social and community issue. Other countries do a lot more
for their small-business sector. First, Australia has to decide
whether it wants a small-business sector and then work out ways
to support it better."
Part of the problem is that there is simply not enough debate
on small business, which does not have a powerful voice representing
it."
Note the comment
relating to "social and community issue" gives pharmacy
another strong argument for its existence as an independent entity.
While all the above comments relating to health issues have appeared
in various pharmacy media, the concept of a long-term PR campaign
highlighting the negatives of Woolworths control of pharmacy,
compared with qualified control, has not.
By targeting Roger Corbett through his shareholders, there might
just be a possibility that the question of pharmacies in Woolworths,
or any other major retailer, may be put permanently to rest.
This could also build on some of the already successful methods
run by the PGA currently.
Unfortunately, some of the PGA strategies will have the ultimate
effect of keeping pharmacy in its "cottage industry",
homogenous and non-competitive state, with little ability to fund
or develop cognitive services.
There is a world of difference between a public corporation and
a private proprietary limited company, the model I advocate for
pharmacy, particularly if the pharmacy companies are limited to
pharmacist shareholders/directors and have "exempt"
status i.e. no ability for public company direct or indirect influence.
The fight against Woolworths will not be won just by simply lobbying
for protective legislation, or by neutralising the Roger Corbetts
of this world.
We must be able to compete in our own right, and this means developing
a larger scale infrastructure.
Believe me, Woolworths is working to a long-term plan which has
been developing since 1969.
It will not be deflected from its objective of owning multiple
pharmacies outright.
It seems also that Woolworths has a new ally in Professor Steve
Worthington from Monash University's marketing department who
appears to be totally on side with the various Woolworths arguments.
In part, he states:
"anyone who's dispensing prescriptions is going to be a trained
pharmacist. There's nothing to say that a pharmacy in a supermarket
can't give the same advice as a pharmacy in a strip location."
It would appear
that this message is being repeated through all Woolworths stores
through their senior management.
Pharmacists do not just dispense, and i2P collected some evidence
a few years back indicating that pharmacists did come under commercial
pressure, and that they were not free to exercise professional
discretion, when employed by a major retailer.
It is time to survey pharmacies globally to gather information
on exactly what is occurring at the pharmacy professional level
where major retailers own the pharmacy, and also to collect social
impact information where independent pharmacies have been forced
to close or relocate into a major retailer environment.
The PR issues
will become even more relevant, when the dust surrounding the
NSW pharmacy legislation appears to subside. The PGA might appear
to have won the first round, but they have also succeeded in stifling
any opportunity for the development of company pharmacies, and
in so doing, has lost the long-term war on behalf of its constituents.
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