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Competition: Wesfarmers threatens community pharmacy

COSBOA is extremely concerned about Wesfarmers' plan to acquire Australian Pharmaceutical Industries (API), owner of the Priceline Pharmacy franchise, because of the threat it represents to independent pharmacies and the communities they serve.

As the owner of Bunnings, Officeworks, and Kmart, Wesfarmers increased its profit by a staggering 40% in the 2020-2021 financial year – depressing news for many small business owners who are still struggling to keep their businesses afloat. Now the conglomerate appears hungry to increase its empire, having put in a bid to acquire API in November 2021.

COSBOA CEO Alexi Boyd said “After all that pharmacies have done to keep their communities healthy, after all they’ve done to support the vaccine rollout, and after thousands of small businesses that rely on the pharmacy next door to bring in foot traffic were forced to close and are now teetering on bankruptcy, Wesfarmers’ behaviour is very questionable.”

“As an essential service, community pharmacies play an important role in bringing customers to the other small businesses that surround them. They’re often the hub of local shopping precincts. If they’re put out of business, their neighbours’ livelihoods will suffer too. Local jobs will be lost. The liveliness and culture the shopping precinct brings to its community or neighbourhood will be under threat.”

“We’re relieved that Woolworths has withdrawn its bid and that ‘free ooshies with your medicine’ isn’t a phrase we’ll have to hear. However, a Priceline franchise owned by Wesfarmers still represents a threat to small businesses.”

“Wesfarmers owns two ‘category killer’ businesses, Bunnings and Officeworks, that provide a template for the future of Priceline. These businesses focus on a specific category of merchandise and offer a wide range within the category at low prices. It’s impossible for small businesses to compete with this business model – just look at the number of independent hardware stores that have had to close because of Bunnings.”

Ms Boyd continued “Another concern is that Wesfarmers owns the Flybuys loyalty program. If this were to be combined with Priceline’s Sister Club, membership could skyrocket up to 15 million people. We don’t doubt that Wesfarmers would use this giant consumer data base to further increase its market power, not just in over-the-counter and prescription medicine but in other products sold at pharmacies such as hair care, makeup, and skin care.”

Ms Boyd added “Advocates for big box retail owned pharmacies often claim that the model will lower the cost of prescription medicine. But sacrificing small business owners’ livelihoods isn’t the right way to address this concern - that’s what the PBS is for.”

“Let’s be proactive. We can’t let Wesfarmers turn Priceline into its next category killer. We can’t let it swallow up more of our local businesses.”



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