From the source: Richard Vincent, Australian Pharmaceutical Industries

Despite heavy discounting and continued headwinds in the global beauty category, the boss of health and beauty giant Australian Pharmaceutical Industries (API) says business is “good”.

“It just means we must work harder and focus more on how we create that point of difference in our stores,” Richard Vincent, API’s managing director and chief executive, explained. “That’s both on the beauty and health side.”

Speaking to IRW at Priceline Pharmacy’s latest media briefing, Vincent talks about API’s latest acquisition, growth strategy and Priceline Pharmacy’s latest move, ‘dementia-friendly stores’.

Inside Retail Weekly: API recently acquired Clearskincare Clinics. What was the rationale behind that?

Richard Vincent: Very simply, it’s the same customer that shops in Priceline – it’s the same woman. Priceline is about health and beauty retailing around products – fundamentally, our offer is built on products. [The Clearskincare Clinics offering] is health and beauty retailing in service. It’s a large and emerging sector, and we have got experience in growing small networks into large networks. So, from a business point of view, it’s a good fit.

It’s a natural extension – it’s the next stage of API’s growth. It’s service retailing and that takes you – if you are thinking high level and strategically – out of the zones where you might be competing with Amazon or competing with 50 per cent-off sales. This is a different environment.

Obviously, it’s also about helping women improve and fix their skin. The owners of that business are staying in the business with us, which gives me a lot of confidence as we grow. [Clearskincare founder] Dr Philippa McCaffery has developed a lot of the treatments herself – she has scoured the world for anti-ageing and acne treatments that really work. Our customers come out of the clinics really pleased with the service – there’s a product range attached to that business. You might find over time that some of those products are ranged in Priceline. You might also find that our pharmacists are on the lookout for people that need skin treatments and referring them back into Clearskincare.

IRW: Where are you at with the transition of the clinics into the business?

RV: We own half of that business at this stage, and we are buying it over a three-year period. We have 44 clinics: 42 in Australia and two in New Zealand.

What we will do is use our marketing assets and create a lot of noise around the brand so that it becomes a household name for Australian women. That’s the strategy for now – and then obviously expand the network, the same way we have with Priceline. We have a team internally that design and build these clinics and find the right locations, negotiate with landlords – everything like that will happen in the next 12 months.

IRW: You mentioned that you have had to “work harder” this year. What does that look like, particularly in relation to Priceline Pharmacies?

RV: Looking at how we make sure we are even more relevant to the women that are shopping in our pharmacies, whether that’s servicebased, or new and exclusive product ranges. Our Priceline beauty advisers are a good example, with the consultations that we are offering in store now. Also, the launch of Napoleon Perdis into store, as well as a whole lot of new and exclusive products. Just making sure that those things are coming through.

On the health side, our flu vaccinations were an absolute success. We doubled our previous year on the number of vaccinations and
all our pharmacists are trained, so instead of having to make an appointment at a doctor at a time that suits the doctor’s clinic, you can just walk into a Priceline Pharmacy and get a jab. We must keep working at what we do next to become even more relevant to our customers.

IRW: What would you label as some of the key challenges?

RV: The amount of discounting in the market has become even more fierce over the last 12 months – we’ve actually held fewer tactical sales. One of the things we need to avoid is getting caught up in commoditising the various categories – it’s important we
keep adding value so we can stay away from that. So, you will see that we’ve taken our ranges up a little bit – added some masstige
and prestige. Fragrance is a great example of that. Our fragrance has grown strongly because we’ve moved more into prestige
fragrances and stayed away from celebrity fragrances. So, all of those little tweaks around merchandise and the messaging to our customers, they’re all the things that help you avoid getting commoditised.

IRW: The global beauty sector is booming right now. Are you experiencing any tailwinds from that?

RV: For us, it’s about taking advantage of it. There’s trends appearing all over the world, particularly in Korea. For example, in Korea they have a 10-stage regimen for women’s beauty. So, 10 products every day. So, educating customers on how to have that sort of regimen, those sorts of trends are emerging, and the personalisation of products. So, we need to stay ahead of the game on that. Which we do with lots and lots of trend trips. We do it by working with key suppliers that invest in innovation and research and development. Often, we see this stuff overseas first and then we bring it to Australia.

IRW: What are some of the main ways Priceline leverages its loyalty programs to drive sales or otherwise improve the business?

RV: The first thing I’d say about our loyalty program is it gives us the ability to have a conversation with our customers. The second part of that is we segment our loyalty database into different motivational shoppers. Not just ages, but why women are shopping, what’s motivating that purchase or the reason they are coming to Priceline. We know how often they shop, we know when they shop online, we know when they shop in store, we know their basket size is 4 to 6. per cent more than a non-member. All of that rich data is brought to life by our data scientists in the business to decide how we present the offer to that customer.

As time goes on, there will be more and more different ways of our customers shopping with us. For example, my three daughters are in their twenties and they shop as much online as they do in-store. It just depends on if they’re in a hurry, where they’re at. So, it’s being able to tailor the offer to where she is thinking at the time.

IRW: You have announced that you will be making Priceline Pharmacies dementia-friendly. Can you tell me about that?

RV: This will be more of an evolution than a revolution. It’s little things in-store. For example, if we are using the wrong colours on the floors with matting and those types of things.

The elements that we know upset a customer with dementia will be adjusted. It’s is also about the interaction with our pharmacists. Our staff will be on the look-out for people that might [display] the symptoms of dementia.

IRW: Retailers like Coles are rolling out quiet hours for customers on the autism spectrum. Why do you think retailers are becoming more community-focused?

RV: Well I can only speak for ourselves, at Priceline Pharmacy our customers range from 17 to 70. So our older customers are just as important as our young customers. We’re looking to keep them for life, so it’s important that we recognise the difference in the segments of our customers and treat them accordingly.

Dementia is something that has been swept under the carpet for years. Dementia Australia is one of our charity partners, and we’ve learned a lot as a brand through that process. What it means to be a carer or what it means to be a person with dementia. We’ve got a lot of focus on putting back into the community, it’s not just about commercials of the business. And if we can do something, if nothing more, we are raising the awareness and taking the stigma away. That’s a good thing.

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