| Concurrent
with this, the Senate Economics Reference's Committees inquiry into
the effectiveness of the Trade Practices Act, has concluded that
Section 46 of the Act does not have the capacity to deal with a
major business misusing its market power, and has tabled 17 recommendations
in total, in an attempt to take the pressure off small business.
Some would
view the stated aspiration of Woolworths and other major corporations
to own pharmacies outright, as a misuse of their market power.
Small business
has known for a long time that major corporations brutally misuse
their market power, particularly in the use of tactics such as
predatory pricing, which has been almost impossible to prove legally.
Big business
has been successfully fighting changes to Section 46 for some
years, but now seems reconciled to reforms, although still offering
a fight before going down. The most vocal segment is the Australian
Chamber of Commerce (ACC, the voice of big business), which still
remains bitterly opposed to the proposed changes.
However, because
it is election year, conservative politicians are waking to the
fact that the Australian Labour Party (ALP) is narrowing the voting
margins daily, and could be set for a win.
So there is definitely noise and clamour in the ranks as the "pollies"
of both sides, endeavour to be associated with Trade Practice
reforms for small business, and the potential for generating votes
on this issue.
In a move
to crystallise pharmacy issues in the minds of voters, the Pharmacy
Guild of Australia (PGA) has circulated a petition among its members
in NSW, inferring that big business is about to take over pharmacies.
The support from the general public has been strong to this point,
with sentiment running in favour of pharmacy control of its business
structure.
The curious thing is that the proposed changes to the Pharmacy
Act only deal with restricting the number of pharmacies a pharmacist
can own, and does not touch on actual ownership.
However, implicit
in the process of NCP being imposed on state governments, is the
distinct possibility of ownership looming as an issue in the immediate
future.
So perhaps the PGA is right to be a bit hazy in its description
of legislative changes, because it seems inevitable that Woolworths
lobbyists will spring into action, and not cease until they had
won their cause.
One pharmacist
(David Wilson) located in Campbelltown, NSW, has decided to go
on the offensive and has actually incorporated a supermarket within
his pharmacy structure.
He is turning the tables by taking on an IGA grocery franchise
as part of his operation.
He is not keeping items known to be injurious to health, such
as cigarettes, tobacco and alcohol.
While the
PGA has been critical of supermarkets owning pharmacies, it has
been equally critical of pharmacists owning supermarkets.
David Wilson shrugs off this criticism and sees the progression
into supermarket activity as a natural progression for his business,
to slow down the rate of loss of pharmacy products to supermarkets.
Although many of David Wilson's colleagues may disagree with the
message and image he is about to promote, he obviously agrees
with the view of Graeme Samuels of the ACC and is unable to see
the difference in selling products in a traditional pharmacy environment
compared to a supermarket.
He notes that you will find items such as mineral water, Coca
Cola and Darrell Lea chocolates in any number of pharmacies.
And while he is determined to go into the supermarket business,
he is totally against supermarket intrusion into pharmacy, because
of the potential for professional ethics to be sacrificed.
But David
Wilson will be aware of one outcome that he is probably experiencing
already, and that is the fact that consumers really like the combined
supermarket/pharmacy as a one-stop exercise in convenience.
They will quickly reward this convenience with a sales increase
that will take off at up to a 40 percent compound increase per
annum (from a calculated base).
I have viewed this type of experience involving this pharmacy
market combination, and it is a recipe for strong retail growth
(but not necessarily professional services growth).
And they
will like it even further if a bank agency is attached.
Yes, they will walk into the store, leave their prescription,
draw out some money and immediately set about spending some of
it in the supermarket area.
On average, this type of customer will stay longer in the store,
make a much higher average spend, and will even give you time
to dispense their prescription, because they are fully occupied.
With proper store design it is quite easy to designate a professional
area that patients will easily recognise, and will not tarnish
the pharmacy image.
On a slightly
different note, the writer followed the spending habits recently,
of two families located in the western suburbs of Sydney.
The objective was to determine what sort of a spend they would
make after receiving a Pharmacy Direct catalogue, which is a supermarket
of pharmacy merchandise without the groceries.
Neither family was aware they were being observed, and after approximately
a half hour visit, family number one had spent just over $150
(two children aged 3 and 5), while family number two (three children
under 10 years of age) spent just over $200.
This was not uncommon and the store was very busy.
No wonder Woolworths sees this as a way of increasing its business!
So I think
we have come to the stage where we will see a diversity of pharmacy
types begin to develop along new and different pathways - and
was not this one of the recommendations contained in the Wilkinson
Report of just over four years ago?
The PGA predictably
will defend the traditional cottage industry style pharmacy, which
constitutes the bulk of its members.
But should it not be taking more of a leadership role and opening
debate on what would constitute a valid variation of a traditional
pharmacy, and supporting those members that wish to tread that
pathway?
It is unfortunate
that business strength is measured in the dollars returned, for
if we follow the traditional pharmacy line, medications are not
ordinary items of commerce.
That says that pharmacy's true net worth measure should be expressed
in health outcomes, not dollars.
Supermarket pharmacy may not be for you, but should you prevent
your colleague from going down that track?
Is it not better to allow this person to increase total pharmacy
market share and leave you undisturbed in your own traditional
practice?
And finally,
in another challenging move by Woolworths, they have registered
a trademark containing the words "Woolworths, supermarket
and pharmacy".
Now it is illegal for persons other than pharmacists to use the
word "pharmacist" to describe themselves.
One would also think that this would apply to the word "pharmacy",
but the issue here is not clear.
Surely the only people who can register the word "pharmacy"
as part of their trademark should be only the persons who can
legally own pharmacies?
This would not be the case for Woolworths at the point of initial
registration of the names.
Do they know something we mere mortals are unaware of, or have
they already been given the "nod".
If the latter, pharmacists will need to get "down and dirty"
with the politicians and take full advantage of the election year.
A shapeup
to a legal challenge should also be looming against the trademark
registration.
The PGA will need to meet this head on, otherwise lose the battle
from day one, or pharmacists will now have any corporation or
other business, with the ability to call themselves a pharmacy.
This is going
to cause the "mother-of-all" confusion to the general
public, and this nonsense should be stopped dead in its tracks
by the responsible legislators.
It is also
a demonstration as to how powerful, and deadly serious, an adversary
such as Woolworths really is.
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