Chemist Warehouse to shake up New Zealand's pharmacy industry

Thursday, 17 August 2017

Chemist Warehouse commercial manager Damien Gance.

Retail giant Chemist Warehouse has confirmed it is coming to New Zealand.

The Australian chemist chain started looking for staff for its first New Zealand store in Auckland on Tuesday.

Chemist Warehouse Australia is likely to drive down prices on retail items such as supplements, vitamins and beauty products.

It is advertising for chemists, retail staff, and dispensary technicians.

Chemist Warehouse operates more than 400 stores throughout Australia and recorded a A$4.4 billion (NZ$4.8b) turnover last year. It is the sixth biggest retailer in Australia.

First Retail Group managing director Chris Wilkinson and client services manager Lorraine Nicholson say Chemist Warehouse will change New Zealand's pharmacy market.

Chemist Warehouse's main competitor in New Zealand is Green Cross Health, which owns Life and Unichem pharmacies, with revenue in the year to June of $488 million.

Former chief executive of Radius Pharmacy Group Mike Seymour said Chemist Warehouse would bring a supermarket mentality to the pharmacy sector in New Zealand, and focus on a high volume of different products at low prices.

'Green Cross owns the lions share of the prescriptions market in New Zealand, about 60 to 70 per cent of their revenue comes from prescriptions,' Seymour said.

'Chemist Warehouse will look at how they can be the dominant player and drive down current retail prices by about 20 to 25 per cent.

'I think Green Cross are under prepared for an assault.'

Green Cross Health chief executive Grant Bai said Chemist Warehouse was a price driven retailer but his company concentrated more on customer health.

'We can't get myopic about their arrival, the competitive market is changing all the time. Sephora, Zara, Mecca are all taking some of that expendable dollar, and Amazon is on its way.

'None of us like a new person stepping on their patch and it's my job to be worried, but I'm a big believer of play the ball, not the man. We have to be really good at what we do, not focus totally on this discounter coming to market.

'I think they will be a little bit more challenged in New Zealand because of Pharmac, who dictate the price of medicines and have made our medicines some of the cheapest in the world,' Bai said.

Chemist Warehouse operates a franchise network in Australia and landed in court in May over the supply of generic pharmaceuticals.

First Retail manager Chris said that while the chain was not a household name in New Zealand, the store was likely to engage Kiwi shoppers with its bulk merchandise and cheap pricing.

'Chemist Warehouse would be disrupter that would change pricing and ranging expectations from consumers,' he said.

'Their stores would have equal appeal and success in both upscale suburbs as well as lower socioeconomic areas.'

The chain was likely to expand quickly in New Zealand, Wilkinson said.

'The model is slick and scalable. We would envisage the chain would launch with two or three stores into the Auckland market then scale from there.

'Hamilton, Tauranga, Wellington and Christchurch would most likely follow.

'While it is relatively competitive now with many different retail categories selling products, this move would take things to a new level.'

Chemist Warehouse commercial manager Damien Gance and founder Sam Gance have not returned calls for comment.