i2P began reporting on Aldi well before they opened their first store in Australia and it has always been favourable.
They are renowned for their constant attention to detail in designing their internal systems and their continual auditing of costs.
They also tend to put cost savings back into their retail prices.
And by putting substance into their advertising tag – “Like brands, only cheaper” they have created a point of difference and a business model that could be emulated by pharmacy.
Aldi has created consumer trust in the time they have been trading in Australia, and as we move into 2015 we see Woolworths and Coles (particularly Woolworths) falter in their incessant battle for world domination, while in contrast, Aldi has reached a critical mass now owning 10 percent of the market and is now ready to tackle the “big two” by systematically taking away their market share.
For Woolworths to aggressively compete, they may even have to trade at a loss for a period, to win back market share.
This illustrates how weakened they have become.
Yet they cannot be written off and they do have a potential secret weapon in the form of Roger Corbett, if he accepts chairmanship of the organisation next August.
And that’s where pharmacy becomes inextricably bound up in Woolworths future survival strategy, because they will try and emulate the successful Walmart strategy of creating a “whole of health” destination strategy, of which Roger Corbett has been one of the principal architects.
This will become Woolworth’s point of difference and will be a viable choice against the Aldi offering.
Anyone who was looking forward to a quieter time after the 6CPA negotiation sign-off needs to rethink that attitude.
The Australian Parliament is now set to investigate all aspects of 5CPA management, which effectively disrupts 6CPA uptake, creating further stress and uncertainty for all of pharmacy.
That’s for starters.
But with Roger Corbett’s ambition to have Woolworths owning pharmacies, the timing for his declaration of war could not be better from his perspective.
While I suspect underlying anti-pharmacy agendas are fomenting and assisting the politics of pharmacy destruction, the reality is that they have become stronger while the PGA has become correspondingly weaker.
And its weakness is a direct result of not reforming and not ridding itself of conflict of interest issues internally and continuing to be divisive towards the clinical pharmacist sector.
The PGA is urged to rectify these situations so that pharmacy can truly stand united against all its detractors.
From the earliest days of drug regulation, drugs and food have tended to come under the one administration in most countries around the world. In the US it is very simply named the Food and Drug Administration (FDA).
So whether we like it or not, pharmacy is joined at the hip with food supermarkets and they want to absorb us here in Australia (and have already done so in other countries).
So maybe a new retail direction for pharmacy may be to become the “gateway” for consumers providing good information and stocking those foods that give support for various illnesses (functional foods).
At least it beats being passive and being continually in a position of losing market share.
For the first time I have a design brief for a pharmacy to have incorporated in its retail offering, a “functional food” department.
Staring with dry organic foods that are known to be supportive for various illnesses e.g. powdered cinnamon for diabetes, and to integrate this department through design of fittings and information services.
We must all use our prime product more regularly and efficiently – quality health information – to give consumers the education they need to make good choices.
In this edition there is an article titled Organise online to succeed offline – the connected world which describes how to integrate information with a retail environment and extend it to other related services, building a point of difference and a cost-saving environment,
Also, we need to regularly point out how supermarkets continually erode health through the sale of tobacco products, alcohol and contaminated processed foods that seem to have deficient labels not reporting this information.
Attack them where it hurts and force them to stock only unadulterated foods.
Forget about trying to compete on price – that is a war that is unwinnable.
So, after a long absence, i2P will be presenting more information on supermarkets so that pharmacists may better understand how to defend themselves and what areas to target and actually go up against.
Are Aldi shoppers actually different from Coles or Woolworths customers?
Yes, in one significant way, according to new research by Roy Morgan.
While nearly half (47 per cent) of Australia’s 14 million grocery buyers say they will go out of their way for a bargain, 70 per cent stick to their favourite brands for most products they buy and just 38 per cent buy more store-brand products than well-known brands.
But customers of Aldi “buck this trend dramatically”, with 63 per cent saying they buy more store-brand products.
Pharmacies can emulate Aldi but need to highlight their informed advice “card” to build trust with their own customers and then further develop information into a connected system where other related services can be integrated.
This is the new competitor interface and pharmacy currently is on top as far as qualified staff able to access information, but not yet having an IT infrastructure to allow delegation to sales staff or self select by customers/patients.
This type of system will become the “guts” of self care and primary health care. It will bring the PSA self care information system to life because the online version will exactly match a pharmacy delivery system, and the whole concept will have a new life.
Pharmacy customers will be more accepting of home brands provided they are of high quality and a lower retail price point compared to the national brand.
Rule of thumb, 20 percent lower in retail price.
Aldi customers are also far less likely than people who shop at Coles and Woolworths to trust well-known brands better than store brands, or have favourite brands which they stick to.
This could occur in pharmacy because of trust levels.
It therefore comes as no surprise that a much greater proportion (60 per cent) of Aldi shoppers are willing to go out of their way for a bargain than Coles (46 per cent), Woolworths/Safeway (47 per cent) and Foodland (40 per cent) customers, the company said.
“Over the last five years, the proportion of grocery buyers who say they buy more stores’-own products than well-known brands has remained static,” said Roy Morgan’s Angela Smith.
“Australians are not becoming more open to them: on the contrary, trust of well-known brands over stores’-own has grown slightly since 2010, as has the proportion of grocery buyers who tend to stick with their favourite brands for most things they buy.
“Grocery buyers who usually shop at Aldi are a striking exception, being keen bargain-hunters and prolific consumers of stores’-own products. A product’s brand or label is less likely to be a conscious factor in their purchasing decisions.”
With both Coles and Woolworths outlining plans to improve and expand their store-brand offerings, these findings “indicate that they have their work cut out for them”.
“Grocery-buyers who usually shop there are less likely than Aldi and Coles customers to buy primarily stores’-own products. On the other hand, they are considerably less brand-fixated than shoppers who usually get their groceries from Foodland,” Ms Smith said.