AV: There’s no doubt that Covid accelerated a lot of work for retailers around Australia. In our case, there were a couple of really important changes. One is the way our business embraced the digital opportunity so quickly. We took a central fulfilment online business and we deployed it throughout all of our stores, so our objective was that when customers ordered something online, they would get it quicker than a pizza. It just sped up the whole process.
We used to have a big warehouse in Sydney, and if someone placed an online order, their order was picked up today or tomorrow if you were a Queensland or Western Australian customer, but then it would take four days for postage. So through some cool technology, we moved all of those orders to the store that was closest to that customer.
We could see the inventory that was in those stores too and if the customer ordered something that was still on the shelf, and we would send the order to the store, the store would pick the order and then send it to the customer. It just sped up the cycle. We had a few really big stores where an order would default to if that local store didn’t have [the item]. Then the technology would say, “Well, there’s another store down the road that does have it, so we’ll send the order there.” Our objective the whole time was to make sure customers got what they wanted as quickly as possible.
IR: Is that a permanent change for Priceline?
AV: It will be. We’re a franchise business. Our franchise partners need to feel like they’re part of that journey with our customers as well. This is empowering for our customers and our franchise partners who are now able to service digitally the customers in their trade areas.
IR: Wesfarmers has finally just acquired Priceline’s parent company, API. What’s next for the business now that it’s been acquired?
AV: Wesfarmers’ approach to the business has been liberating. They are not coming in with some high level pre-determined view or expectations of what we should do. But they are coming in with a focus on investing in Priceline and API to make it a better business.
I think there are sort of a few areas that they’ve identified that we agree with. One is the digital story that I’ve just talked about. It’s very expensive to deploy really high quality digital capabilities to a big business and Wesfarmers has a real competency in that space. So we’re rapidly doing that work.
The next is expanding our Sister Club, which is a massive database of women. Obviously Wesfarmers has a 50 per cent ownership of Flybuys and there is a huge opportunity to track the customer journey, and present offers to people that simply make sense based on our knowledge of them. We need to do that in a very careful way to protect their privacy, particularly where health is involved. But nevertheless, there is a massive opportunity to make our business even more relevant to our customers.
The other thing that Wesfarmers will invest in is simply all the stuff that consumers don’t see behind the scenes, like the warehouses.
If you go into a pharmacy to get some medicine that’s not very common, and that pharmacist doesn’t have it on the shelf, we have an obligation to get that to the pharmacy within 24 hours, no matter where it is. That requires some really cool technology and warehouses that can pick orders and deliver it to pharmacies very quickly. We’ve improved our warehousing capability around the country a lot in recent years, but with Wesfarmers, we can really speed up that process.
IR: Are you going to do drones? It just makes sense for a pharmacy business.
AV: Oh, it does make sense. I saw somebody getting a pizza delivered by a drone recently! I’m not going to talk specifically about drones, but I absolutely am passionate about technology and service. And whatever technology we use to improve the customer experience.
IR: What are your plans around the store network and the CBD?
AV: Priceline definitely copped it a bit harder than others during Covid because we had so many big stores in the CBD in Melbourne and Sydney in particular. We also copped it a bit harder because of our beauty business. People just didn’t need make-up. However, our health business did very well. Of our 480 stores, about 100 of those are what we call beauty stores. They’re actually company-owned stores, that don’t have a pharmacy and are just called Priceline. And then the other 380 stores are Priceline Pharmacies, owned by a franchise partner who is a pharmacist.
What Covid taught me is that to really deliver on our proposition, we need that pharmacy connection in all of our stores. It’s ramped up my motivation to convert the company-owned beauty stores into pharmacies as well, within the rules of pharmacy in Australia, which are quite complex. And then over time, we’ll reduce the number of non-pharmacy stores. We’re not going to just close them, we’ll just turn them into pharmacies and open more pharmacies.
IR: How would you describe the traditional pharmacy experience, compared to the modern experience?
AV: Let’s think about it from the customer’s point of view. It used to be that the customer went in with a prescription, and there was probably a bloke on an elevated platform behind a big section full of complex medicines, who looked at you over a pair of glasses and you never really got to talk to him. He would sit there and dispense some medicine, hand it over to you and good luck if your health outcomes improve. That was the old fashioned world.
The new world looks nothing like that. The dispensary is a modern environment, it probably has a robot actually picking those orders. And the pharmacist could be male or female, they’re probably younger and their job is to talk to you, while somebody else hands over the medicine.
But the pharmacist is saying to you, “Hey, let’s have a chat. Let’s talk about what this medicine means for you. Let’s talk about other products that might help you. Let’s talk about how many medicines you’re on. Let’s talk about other health issues you might have. Let’s add some vitamins to that sale, if it’s therapeutically appropriate. Let’s talk about your children or your grandmother, let’s help manage their medicine.”
There’s such a broad range of areas that pharmacists can help customers in. Pharmacists can talk about the therapeutic side of skincare, and sometimes people dealing with major health issues often have other self esteem or physical issues that we can help with. We want the pharmacist to literally hold our customers’ hands and engage as humans.
The objective is not to get a bigger sale. The objective is for the customer to leave our pharmacies feeling like we’ve solved a problem and that we actually care. Then the result of that is we’ll build loyal customers who, over time, will create a much more prosperous business for our franchise partners.
IR: Can you tell me about the training involved for your staff to provide that kind of service?
AV: We’ve defined our service culture as a culture of real classic care. It’s easy to say, but what does that mean? So firstly, as we recruit people now, we’re able to recruit certain personality types that we know can do a good job. Secondly, we have a really comprehensive suite of training around how to serve someone which goes beyond simply saying, ‘Hi, how can I help you?’
Our job is to care, be empathetic, listen and not use cliched lines. Start with introducing yourself like: “Hi, my name is Andrew. What’s your name?” And then listening to the customer’s issues and working through solutions that can actually help.
At the same time, we also need to build stores that actually have a range of products that people want to buy at really good prices and some good promotions so that there’s an energy in the store as well. It’s about bringing all that together in a way that is “a festival of you” – as you heard, it’s our new tagline. We’ve got to turn our stores every day into a festival for all our customers.
IR: What would you say are some of the biggest challenges for pharmacy at the moment?
AV: We need to get through this period of doing all these vaccinations for relatively little reward. It’s a nice way to build a relationship with a customer and build a new friend. But the amount of money to do those vaccinations is less than ideal, but pharmacists understand that that’s our role. As an industry, we’ve done a good job.
The biggest opportunity now is to invest in bringing our retail experience up to par with what customers are getting in every other retail experience. So we talked earlier about digital, for instance. It’s about making sure that our customers’ digital journey is a brilliant, first class experience that’s enabled on apps that allows you to get your e-scripts, to earn and burn your points and be communicated with in a way that’s relevant to you. Making that investment and then deploying it across the network is a massive challenge.
And then for the industry generally, I think Covid has given us permission to be more involved in health. The way the pharmacy industry refers to that is known as “scope of practice”. A pharmacy used to be a place where you simply got your scripts filled, but now we can be more involved in health screenings, vaccinations and in less risky health, diagnosis and treatment. It’s the scope of practice that customers can rely on. It’s so hard to get an appointment with a GP. We will refer to GPs or emergency departments if things are serious. I do think pharmacies or pharmacists are trained in this space. Now we have permission to actually do what we’re trained to do.