Pharmacies must change turnover figures
Pharmacy owners must avoid including PBS dispensary sales when reporting their turnover figures to landlords in order to achieve fairer and more sustainable rental outcomes, according to Phillip Chapman the director of retail tenancy advocate, Lease1.
In launching the 2014 Pharmacy Rental Report – Price Disclosure Impact Edition, Chapman says landlords have long been receiving a free kick from over reported pharmacy turnover figures that enable them to charge over-inflated rentals.
“Pharmacists should only ever include front of shop retail sales when reporting turnover figures as this is the only relevant measure that landlords need in calculating rentals,” Chapman said.
“Other health professionals such as doctors, optometrists, physiotherapists, and dentists do not report their Medicare receipts in total turnover figures, so why should pharmacists?
“A huge amount of money goes through a pharmacist’s dispensary and this over-inflated representation of their business turnover has long allowed landlords to drive rents through the ceiling.
In Australia there are around 5300 pharmacy outlets.
“Pharmacists add very high value to shopping centres and medical centres in particular by way of attracting customers and driving increased foot traffic throughout the centre, however, the sector is struggling with unaffordable rentals that are outstripping the performance of pharmacy businesses. The bottom line is that pharmacies have been overpaying rent.
“Pharmacy rentals have continued to increase significantly and are linked directly to the impact of higher reported turnover figures. But the inclusion of PBS dispensary sales has made this a disproportionate measure that outstrips similar metrics such as CPI,” Chapman said.
“What pharmacists do for the Government in regards to PBS is a public service and should be treated as such. The continued practice of reporting PBS dispensing activity only achieves one thing – giving landlords a fantastic free kick to charge higher rentals.”
Chapman says it is important that pharmacy owners, like all retailers, educate themselves on all aspects and critical pathways of the issue that is most crucial to the viability of their business – their retail shop lease.
“For the long term sustainability of any retail business, their lease must be an asset not an anchor. Retailers don’t get the retail lease they deserve, they get what they negotiate.”