Survival Strategies of independent retail pharmacies in South Africa

Sibanyoni, Gcinile
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The retail pharmacy industry in South Africa has undergone numerous macro environmental changes, mainly due to regulatory reforms aimed at lowering the cost of medicines. This has had a negative impact on the survival of independent retail pharmacies, as well as the pharmacy profession in general. Independent retail pharmacies are likely to face more difficulties due to these changes. The purpose of this research, therefore, is to investigate the impact of the regulatory reforms as well as survival strategies that independent retailers have adopted in order to survive. Existing literature on the impact of mega-retailers shows that this is a global phenomenon and the most prominent outcomes have been lower profit margins and loss of customers for small independent retailers. The research method used was qualitative in order to explore and gain insights into the various aspects of possible survival strategies. A total of seventeen respondents were interviewed, consisting of fifteen retail pharmacy owners and two industry experts. The impact of ownership changes has lowered the barriers to entry for mega-retailers resulting in intense rivalry between them and independent retail pharmacies. The result has been an alarming coverage of pharmacy mega-retailers in urban areas. This has caused a dilemma for small pharmacies resulting in most of them closing down. Small independent retailers are seeing fewer customers due to the ease of switching stores and there is little customer loyalty. Mega-retailers on the other hand offer a wider product range, at prices perceived to be lower than independent retail pharmacies. Survival strategies that emerged from the results show that service specialisation and niche strategies are the most commonly used strategies by small retail pharmacies. The advantage that small pharmacies have is their size which makes customer service more interpersonal.
MBA thesis
Retail pharmacies, Pharmacies