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Strategic
skills in management and marketing have enabled Woolworths to
operate multi-dimensionally as a "bricks and mortar"
retailer, as an e-commerce retailer and to develop specialty retailing
across a range of merchandise and services as standalone entities
e.g. the Dick Smith electronic stores.
Paralleling the above, Woolworths skills in supply chain management
are now regarded as legendary.
It is all
of the above that Australian community pharmacy fears, for being
structured as approximately 5000 independent cottage-industry
enterprises, they are vulnerable to being "picked off"
by an organisation such as Woolworths, with their accompanying
expertise, and their accumulated previous experiences from forays
against a diverse range of competitors.
And it has
to be said that the Pharmacy Guild of Australia (PGA), as the
lead organisation for the commercial and structural elements of
community pharmacy, is way out of its league in any attempt to
outsmart a focussed Woolworths strategy.
For years,
various commentators (including myself) have been outspoken, in
that the structure of pharmacy has needed urgent attention, particularly
in the area of a redesign with a strategic purpose.
Instead, we have staggered along with a band-aided patchwork of
a structure, and a lopsided strategic purpose, which has resulted
in a lack of confidence as to future prospects.
The PGA has
traditionally led its members down the path of garnering protection.
Through a jumbled framework of legislation, pharmacy has become
legally protected but has created a soft "underbelly",
being artificially isolated from real world competition.
Basically, pharmacists have only competed amongst themselves,
resulting in a fairly bland and homogenised offering to the general
public.
That is not to say that the model developed is all bad.
It is a model of planned health in association with government
agencies, and basically can only work in a regulated manner.
But regulations
quite often inhibit innovation and creativity of professionals,
resulting in frustration, loss of motivation, degraded work and
high levels of unnecessary work, as governments inflict procedures
on pharmacists in the name of protecting taxpayer's money.
Protectionism
dates back to the middle of the last century when Bootes the Chemist
tried to gain a toehold in Australia.
The fear that was generated by the spectre of Bootes becoming
the local dominant player has never ever subsided, and has formed
part of the permanent culture of Australian pharmacy. Given that
the majority of Australian pharmacists would be unaware of the
events involving Bootes, they forever remain infected, with pharmacy
leaders passing the infection on to successive generations.
This "fear factor" has been one of the reasons for the
rise of the PGA as a coordinating body.
But like most political bodies, the membership are also fearful
of losing control of their destiny through their elected political
representatives, and always keep a critical watch.
This has meant that the PGA has ultimately had to defer to the
wishes of each of their members, the majority of which are "cottage
industry" in size and thinking. Consequently, those pharmacists
wishing to break the mould and form up in a different way, are
totally inhibited by the cottage industry thinkers.
As the leaders of the PGA come from the same pool, it follows
that their leadership could never be described as dynamic.
It would be unrealistic to compare John Bronger of the PGA to
Roger Corbett, the CEO of Woolworths, in terms of style, management
skills and dynamism.
If you had the choice, who would you vote for as leader?
Because there
are few commentators dissecting PGA leadership, and because the
PGA have over the years, developed an organisational approach
to respond to public relations issues, dissenting voices are hard
to hear.
So when I saw a recent posting by an American pharmacist on AuspharmList
regarding the issue of protectionism, I gave three cheers. Part
of his listing reads as follows:
"And
also, we independents have no fear of "Woolies", Walmart-Walgreen
etc.
Bring them on.
It would be very refreshing to see some Aussie realism instead
of so much Aussie pleas for "protection" from the big
bad world of competition.
Now I know I am going to get flamed for this.
I have followed Australian pharmacy for several years now and
must observe that I note a "head in the sand" attitude
that disturbs me a little.
Independents in the US have survived mail order pharmacy, pharmacy
benefit managers, low fees set by insurance companies, and of
course the chains, and are alive and well.
There is not one on every corner anymore, but everyone has a job
and the independents that have survived are doing very well."
My thanks
to B.E Leissner, the US pharmacist who generated the above posting.
He certainly will not be "flamed" by this writer.
Now what I
think Mr Leissner is illustrating is that given the freedom of
choice as to the type of business structure you can operate out
of, coupled with the additional freedom of following a marketing
style of choice, the playing field becomes more level when compared
to that of the Woolworths of this world.
You would not immediately recognise it, but the average IQ of
a pharmacist has been estimated at around 125, which makes him
or her, a reasonably intelligent person. The pool of intelligent
pharmacists available outstrips those of Woolworths executives,
so logically, a combined and disciplined group of pharmacists
could technically be able to out-think and out-perform the talent
found within the average Woolworths store.
It is only
the PGA standing in the road of discipline and logic.
Why?
Because of
their sustained and unreasonable opposition to not allow pharmacists
to incorporate and develop the business structure of their choice.
If the PGA
continues down the same old pathway, it reduces the lead time
for its members to be able to come up to scratch within a competitive
structure. The longer the PGA delays the more disadvantaged its
members become.
Considering
the range of potential competitors lining up, who would the PGA
prefer to be competing against?
* Global Rx (including Bootes once more)
* Woolworths Rx (at least its Australian owned)
* Priceline Rx (a mini-global company owning pharmacies outright,
with the same aspirations as Woolworths)
* Mayne/API/Sigma Rx (not franchised offers, but fully owned chains)
* Pharmacist Rx (where a pharmacist owned corporation builds up
to a competitive critical mass)
The reality
is that if the PGA continues to inhibit proper structure, we will
get all the above over a period of time.
The only problem-the Pharmacist Rx company will have to start
competing with one hand tied behind its back, because it will
lack the financial resources and corporate expertise.
Now ponder
on which of the above pharmacy types will seek membership of the
PGA.
Answer?
As the PGA is currently structured-none of the above!
So the PGA
could face a rapid demise as most of its members are taken over
or merged into larger, more efficient operations, leaving the
"cottage industry" mentality way behind.
Should not the PGA be looking at structuring itself to service
different classes of members, and basically looking at how it
would deliver services to each level?
And what about rationalising all the other pharmacy organisations
that would be a "fit" with the PGA to eliminate the
expensive duplication that has been occurring?
We can always
appreciate change when it is happening to others, but somehow,
when we are personally involved, it does not seem quite as appealing.
But see yourselves a Mr Leissner has objectively stated.
Here is a person outside of Australian pharmacy, but who is qualified
to comment on what he observes because he is a pharmacist, and
one living in an environment that we are about to enter.
To manage the change process by embracing it early enables a future
where Australian pharmacists can still retain a maximum market
share and control-but by competitive force, not by legislated
protection.
Next
article in Woolworths series---->
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NEIL
JOHNSTON 