Sigma Healthcare’s recent moves in the Pharmacy sector have netted 49% share of consumer spending in the category, the latest quarter figures show.
Their recent merger with an already dominant Chemist Warehouse has benefited from additional share growth of 4.4% percentage points year on year. Wesfarmers’ owned Australian Pharmaceutical Industries (API) has held share constant at 14% during the same period.
The Chemist Warehouse’ effect has changed consumer thinking on how to shop the category - at a category level, consumers are shopping less frequently but spending more each time. Average transaction values across the category increased by 12% during the March quarter to $42, while the average frequency of purchases decreased by 11% to 4.5 (ie, 1-2 visits per month).
Larger store formats, broader product range and stronger price & promotional incentives with Chemist Warehouse are largely credited for increasing both impulse and planned purchases while driving overall category growth.
Spend per Customer (which measures each individuals’ spend with a brand over an extended period of time), increased by 9% year on year and 26% over 2 years for Chemist Warehouse for the March quarter. Total spend per customer was $145 per person, its highest point on record and almost double that of its nearest competitor.
Other factors contributing to the growth of brands in the category include claims by both Coles and Woolworths that the Pharmacy sector is aggressively taking share of grocery purchases for items such as toilet paper, skin creams, and household cleaning products. In March, Coles stated that it was losing $100m of annual sales to sectors including Pharmacy, Home Improvement and Online Retail.
Recent research by Fonto suggests that between 25% and 40% of consumers are purchasing items such as toilet paper, household cleaning products and laundry detergents from non-grocery retailers, an indication of the growing competition between retail categories as consumers search for value in the face of rising prices and predatory pricing allegations against major supermarkets.
