As part of an inevitable global trend accelerated by recession, pharmacy deregulation and the resulting increase in self-medication, parapharmacy represents significant opportunities for all parties involved in the provision of consumer healthcare, everywhere. Moreover, because of its unique potential in the midst of traditional categories threatened by the current cut-backs in resources, parapharmacy could have significant knock-on effects in other retail areas.
The entry of Multiple Grocery retail into parapharmacy, with their leading-edge skills in retailing, a focus upon enriching the shopping experience via a meeting of consumer-need, combined with the provision of equal-function private label and removal of price controls, means that the continual loss of Over-The-Counter (OTC) medicine business by traditional pharmacies to Mass could accelerate, unless pharmacists adopt equivalent commercial skills.
The Knock-On Effect On Other Categories
Whilst special-interest groups may succeed in delaying the change in some countries, the recession will inevitably cause Governments to continue to seek ways of managing the escalating costs of providing medical care to ageing populations. They will gradually deregulate appropriate prescription-only medicines, making them available without prescription and where possible, allow their sale via a wider range of outlets, at a time when leading-edge multiples are seeking new ways of exploiting their efficiencies. The inevitable gains will probably encourage Governments to then apply the process to other ‘expensive’ categories, with similar consequences. The resulting increase in trade concentration will in turn put more pressure on allied categories like derma-cosmetics and nutritionals, in the process.
The emergence of generic medicines has in fact accelerated the process, making parapharmacy one of the most exciting ideas in retail, at a time when the growing recession has taken the innovative edge off many traditional categories. In practice this means that in a zero-sum game, parapharmacy could steal space from less exciting categories.
The Parapharmacy Opportunity
Essentially, parapharmacy represents the transition from traditional pharmacy to the provision of OTC (non-prescription) medicines, nutritional supplements, derma-cosmetics and appropriate services in outlets that include specialist pharmacy, drugstore, grocery, departmental store, and luxury perfumeries/cosmetics outlets, both independent and Mass, and via the Internet. Parapharmacy thus has the potential to impact traditional channels, at the expense of traditional categories…
Consumer need is obviously a key driver, with the consumer free to choose between doctor, pharmacist and retail outlet, as appropriate. The global recession is obviously making consumers more demanding, especially in the provision of and payment for healthcare. A consumer becoming more conscious of value for money in healthcare may then want to apply the ‘learnings’ in other categories.
Efficient response to consumer need in parapharmacy means ensuring that a service matched with consumer expectations is provided wherever the consumer chooses to enter the process, in a manner that provides sufficient incentive for a repeat visit, again adding to the demand for improved service levels in other categories. It follows that such service-provision be sufficiently rewarding to encourage the service-provider to continually enhance the service across other categories, and thus ensure customer-retention.
Mass Role In Parapharmacy
However, the inevitable entry of Mass retail into high-performance parapharmacy will bring a new urgency to the process for other players. It is obvious that Wal-Mart, Carrefour, Tesco and Alliance Boots are setting standards in state-of-art global retail, especially in driving supply-chain efficiencies, retail space optimisation, and shopper lifetime management. Moreover, they have developed the potential of leading-edge private label to optimise profit and outlet differentiation.
Given their total commitment to the enhancement of the shopping experience, this combination of retail strengths and scale will probably result in these four players obtaining a significant share of the evolving parapharmacy market, worldwide.
The resulting increased allocation of space to healthcare provision, nutritional supplements and derma-cosmetics will inevitably put pressure on other categories in-store. In other words, FMCG suppliers and retailers will be affected by Mass involvement in parapharmacy, making this a need-to-know topic in formulating trade strategies in many categories.
Given its potential impact on all aspects of recession-retailing, parapharmacy is too important to be left to the pharmacists…
