Greedy Woolworths chasing independent pharmacies

The giant Woolworths supermarket group has unleashed an expensive media storm today in its pursuit establishing pharmacies in supermarkets. Woolworths CEO Roger Corbett has been the media tart of the day getting on TV, radio, in print and online. He says it’s all about saving money for consumers. Nonsense. It’s about Woolworths bottom line and Corbett’s compensation. This ABC Online story is more balanced than much of the reporting. At the other end of the spectrum is the Today Tonight story. Unbalanced and built around a price comparison of pharmacies and online services. Of course, the online service does not provide the face to face care and attention of a pharmacist.

This is a battle of epic proportions and every independent business small business owner ought to engage to ensure that Woolworths does not win. There is more at stake here than the sale of prescription drugs in supermarkets. The Woolworths proposal, if it gets up, will see more small businesses close, customer service fall and Australia lose more independent family owned businesses.

The Woolwoprths press release can be found here.

Pharmacists need to get smart and quickly if they are to stop the Woolworths trial going ahead.

Why do I care? Because I own a couple of small businesses and they are at risk from such predatory opportunistic action as pharmacies and it’s only after the forest is razed that you realise how much you wished it was there. There is still time to stop Woolworths.

Hungry and rich woolworths increases pressure on pharmacies

This report in today’s Sydney Morning Herald newspaper reports on a fresh assault by the giant Woolworths group to get government approval for pharmacies in supermarkets.

Woolworths chief Roger Corbett says pharmacies are the most protected market in Australia.

He has released a report from ACIL Tasman, an economics modelling consultancy, outlining potential savings that could be made if supermarkets operated in-store pharmacies.

Current laws restrict the number of pharmacy licences in the country to about 5,000.

“It’s almost a no-brainer, it’s so obvious and it’s just because of this enormous political pressure that has been established over the years, that this situation has been allowed to continue for so long,” Mr Corbett said.

The SMH report is well balanced but could use some more depth to explore the value for the community of independently owned and operated pharmacies.

Woolworths says it wants pharmacies in its supermarkets to help Australian consumers save money. That’s nonsense. They want it because of the profit it will generate. Anyone who believes otherwise is seriously gullible. This is a hungry and rich giant out to harm a struggling small business channel. Once they get pharmacy customers in their stores how do they treat them? While opportunistic promotion and pricing policies – they prey on gullible consumers. This is the strategy of big stores. Small business may look more expensive but you’re looking at a smaller (niche) range and so you don’t get lured into the price game of places like Woolworths.

This report Woolworths has produced should be ignored by the government and Woolworths should be told to leave the small business sector alone.

If the government does consider this latest push it also has to look at employment in the pharmacy channel, the employee:turnover ratio in small business compared to giants like Woolworths, the risk to high street tenancies, the damage to family businesses and the social cost of losing more small businesses from our retail landscape.

Big is not better. Roger Corbett’s arguments are driven by his desire to push the share price up and make his options more valuable.

Independent retailers in Australia need to fight this push we need to band together and educate consumers, fight the push from companies like Woolworths and support each other more.

Learning Improv as business training

Read this blog entry Lessons Learning from Improv and you’ll read about innovative business training. It’s brilliant in fact. The lessons John Moore blogs about what he’s learned from taking Improv. comedy classes. The applications for business are excellent. Take this gem:

Failure is an Option
In business we’ve been conditioned to believe failure is bad and most be avoided at all costs. Improv believes in the opposite. In Improv, I’m learning failure is good because it means you are challenging yourself to take chances in pursuit of living in the moment. Failure happens. Mistakes happen. Learn from failures. Learn from mistakes. If we don’t take chances and fail, how else will we ever feel the pleasure of learning?

Some of us in our software company took singing lessons 4 or 5 years ago and learned similar lessons to those John blogs about. Stepping outside the business box and taking risks can set you free back in the business world. Singing in front of co-workers, when public singing is your biggest fear, proved to be invaluable.

I’d add to John’s lessons: Respect. Singing with co-workers from different positions within the company put everyone on a level playieng field. That helped build mutual respect.

The Tower Systems 2005 Fast 3 Award

We take this software business seriously and feel it personally when we see the facilities we have labored over for months and years being abused or, worse, ignored. Good software functionality ignored is something I’ll never understand. Especially in small independent business where good help is hard to find.

We’re on a mission to get our small business user base using more of our software. But we’re taking small steps to start with.

We’re launching the TOWER SYSTEMS 2005 FAST 3 AWARD. This will be an award for the three fastest growing users of our software based on a year on year comparison of transactions and revenue. We could have looked at 10 or 20 or 100 but we want to start slow and work our way up. Look at this contest as foreplay. The main game is a way off yet. We also had to make it easy for our client base to enter.

Once we see how this goes we will have follow-up contest ready to run. Each designed to get our users actually finding out about the data being gathered in their software.

For the TOWER SYSTEMS 2005 FAST 3 AWARD we will be judging based on year on year sales of what we would call non agency lines – that’s sales of real products and services. No soft gambling, no transport tickets, no bill payment. We’re trying to weed out the areas of business which might have received a kick of growth for other (external) reasons. We want to reward growth chased and obtained by the business owner. This goes to the heart of small business.

We see our mission as beyond software developer. We need to lead, cajole and guide our client community to better use our software tools so that they measurably benefit from this in their business.

In reviewing the entries we expect to find some businesses which could use some help along the way and we’re ready with assistance there. This will be in the form of telephone calls and visits to help correct problems we find.

Selfishly we expect to also find some brilliant ideas which we can learn from too. This will be the icing on the cake.

So, the first contest is about comparing trading periods for selected categories. Users of our software can do this easily and quickly using our Monthly Sales Comparison report. We’ll ask them to compare January 1, 2004 through April 30, 2004 with the same period in 2005. We’ll then ask for transaction growth and revenue growth numbers in percentage terms as shown in the variance section of this report. This will be entered online and we’ll then ask the top 3 to send in further data to allow verification.

The winners will receive a certificate, high praise from us and some other token gift we’re yet to determine. This is not about the gift since the prize will be the knowledge of such success and the opportunity to help other like minded small business people to achieve similar success in their businesses.

Our website will have a link for entry early next week.

The contest will run for four weeks.

Openness

In the small business software marketplace, especially in vertical niches such as those in which we play, credibility is a key selling feature. We’ve found that openness pays on many ways. On our website you can see how many employees we have, read their names and see their photos in all their glory. You can red the detail of our software updates. Find out about bugs. Read our user advice sheets and check the latest fixes. There isn’t any part of our website hidden for registered users.

Such openness is an approach we have followed for more than 10 years. It’s something I first came across when I met Jack Stack from the Springfield Remanufacturing Company and author of The Great Game of Business. While this book and the Stack message is about complete openness with employees; business education; business literacy; we pointed outwards and became open about things companies often keep secret, software companies especially.

We’re only human. Of course we make mistakes. By being up front about our mistakes we’re finding that our customers trust us more. It’s common sense really. Yet it’s amazing how many competitors try and use our openness against us. Occasionally they can dupe someone into believing that our software has bugs and theirs doesn’t but that’s rare. We’re only human. We make mistakes and they do too.

As Jack Stack advocates, we see business as a game and while we’re not as open internally in some areas as we might be – due to time and cost constraints – we’re more than open in other areas and this creates for, we hope, a work environment which is more enjoyable and appreciated than most.

As well as a policy of openness is a policy of no spin. Tell it like it us. Sugar only gets in the way of what you’re trying to say and will dull the potential of the message.

Free training … a word of mouth experience

One of the challenges we have is when one of our small business clients sell their business. The new owner, having paid a big chunk for the business, usually doesn’t want to pay for training in the use of our software. But they need training to understand our system. To address this situation last year we commenced offering a free day of training for new owners. While new user training would usually run for 3 days, we felt that with a day from us and a couple of days at hand over we’d cover the issues.

This decision has helped us retain businesses as clients and ensure that bad habits do not transfer to new owners. A good win win.

Now, we’re expanding on that with a mentor program for new owners and a series of consultations to help them settle in with our technology. We also offer general business advice/assistance for those who want it.

The interesting news today has been a couple of leads from people who have bought businesses where software from a competitor is in use. The competitor has refused free training and that’s got these new business owners considering a switch.

You gotta love word of mouth.

Human’s rule

Colonial First State has been running a TV commercial promoting that their phones are answered by humans. None of this press 1 for xxx, 2 for yyy etc.

I like the ad because of a ‘discussion’ we have been having internally about a new phone system we’re buying. I have refused to consider any of the automated options. Customers, of any business, want to talk to someone and not a computer. Our human response in small business is our point of difference and we should never lose that.

National Independents’ Day

June 1 in the UK is National Independents’ Day, the day when independent retailers across various categories will be in the spotlight.

Millions of money saving coupons on leading brands will be in circulation The Mirror in England and Wales and The Daily Record in Scotland on May 27.

Coca-Cola Enterprises, Britvic Soft Drinks, Walkers, Scottish Courage Brands, Masterfoods, Nestle Rowntree and Heinz and the suppliers supporting the discount initiative. Once can only expect thsi this list grows in the second year of the campaign.

This is an excellent initiative supporting independently owned retailers. It’s an initiative associations in every country ought to be creating to re-energise their networks and reconnect their stores with consumers. The overall theme of the campaign is My Shop is Your Shop.

Technology fatigue

Good to read Bill Gates’ top researcher, Richard F. Rashid, telling The Associated Press in an interview that technology in some ways is outpacing people’s ability to use it meaningfully. Read more in this ABC News report.

Richard, I agree. We’re storing more than people can consume in so many ways. In fact, our approach to information hoarding is somewhat like the gluttony of the consumption era of the 80s and 90s which turned much of the world’s population into fat slobs and taught too many kids to be unhealthy.

The support employee:client ratio

The support employee:client ratio is an interesting metric for a business like ours. In terms of pure technical support employees it’s a 1:100 ratio. If we look at it in purely help desk numbers we change the metric to employees:calls and in this instance we aim for 1:22. That’s an average of 22 calls per active help desk employee per day. This provides sufficient time for the 2 hour calls and plenty of the < 5 minute calls. We're not bean counters in measuring these things but every so often we check in with the metrics as a measure of efficiency of our internal systems and our software which is an active participant in generating call traffic. For it's all about customer service and making sure we get to people when they need us and with quality assistance.

How open do you get?

We pride ourselves on being an open company and advise our client base when we uncover a bug in our software so it’s frustrating to hear of a competitor ‘spinning’ this information provided to our clients as demonstration of bug ridden software.

Our software is not bug ridden. In fact, it’s stable. Our last 3 updates have been our best ever in terms of stability. Yet this competitor says, apparently, see – they have bugs. They apparently follow this with: we don’t issue a bug list because we don’t have bugs.

While you would expect most to ignore such claims, in a marketplace where you’re dealing with first time computer users it’s a challenge and occasionally the pitch from the other side wins. Our openness has come back to bit us. But we won’t stop. We’ll report bugs when we discover them and provide updates and or patch as necessary.

Is Google the next Wal-Mart?

For Australians reading this Wal-Mart is to the US as Coles-Myer is to Australia. A big fat giant of a retail business which scares the breath out of small business.

This article by Adam L. Penenberg at Wired News takes the reader through a number of comparisons between the two companies to support his position that Google is the next Wal-Mart.

It’s an interesting comparison but insufficient to make the claim. The companies are very different. But then, in a year or two and with some changes at the top of Google who knows?

The underachiever

Each software module a company like ours develops is like a child. You conceive, develop, test and release it – hoping it will grow and have a useful life of its own.

Occasionally there is an underachiever in the family – a module not taken on by the user base.

We have one of those. It’s our marketing module. This software allows our users to trawl their customer and sales databases looking for marketing opportunities based on sales made to their clients. The result is marketing lists which can be used for calls or merged to create personalised letters. It’s smart and flexible.

We expected this to be hot software which our small business clients embraced. While sales have been good they have not set the world on fire.

So we called around and asked some people why not. It seems that they like the software but get so caught up in the day to day running of their businesses that they forget this business building opportunity is there. That was the only objection. Not price. Not the software itself. It was more about them.

We plan to turn this underachieving software into something of significant value for our user base. We’ll do that by eliminating the need for them to run the software. Instead, we’ll take the approach of more or less knocking on their door and saying hey why not write to these 20 people with an offer to lure them back. We’ll automate the trawling and look for up sell and cross sell opportunities like Amazon does so successfully through its website today.

By eliminating the need for our users to engage we might be able to make the underachieving child more of an achiever and put more money in our client’s pockets.

This is what the relationship between small business software company and its client base is all about – tangible business outcomes.

The juggernaut against independents

Thousands of local businesses have been hit by the supermarket juggernaut, which now sells everything from car insurance and cat food to books and bank loans.

As its grip on the high street tightens, local shops are disappearing at the rate of 11 a week.

So reports British newspaper webiste mirror.co.uk in an article by Damien Fletcher (no relation) today.

The article goes on to list businesses in one suburb which claims have been SHUT FOR GOOD BY A RETAIL MONSTER.

Newspapers tread a fine line here. On the one hand they need the national chains because of their advertising spend while on the other independent retailers employ more people as a ratio to turnover. Independent retailers, on the basis of this metric, are better for the economy. Independent retailers are also the keepers of community – they do more to connect people in a community than the branch of a national chain. Whereas the chain might put dollars on the table, the independent retailer is more likely to interact with the community.

The national chains such as Tesco, the target of the Mirror article, will not go away. Nor should they – they have expanded legally and their profits flow to the shareholders.

What we need is a campaign which better educates consumers, landlords and government about independents. Such a campaign might delay the march of the majors or help find alternatives. Such a campaign could focus on the importance and value of choice. Look at video distribution and what happened when independents were wiped out and a few major brand outlets took over – the range of titles fell and prices fluctuated less than when the channel was controlled by independents.

Comforting news in consideration of the value of independent businesses, and specifically retailers is a survey detailed in this report by The Scotsman.

The survey, involving 2,200 people, found 72.1% took the view that shopkeepers understood best the needs of their communities

No matter whom you ask people want independent businesses to flourish ahead of their much bigger brothers. It’s a pity that this oft expressed want does not translate into enough sales rung in at registers in independent businesses.

The obligation of knowledge

We work in a marketplace (newsagents) where suppliers control much of newsagents sell. These 4,600 independently owned retailers and distributors are at the mercy of supply decisions by their suppliers. Each day see evidence of unconscionable conduct by suppliers against these small businesses. The small business operators feel helpless. Many have tried to reason with the suppliers doing the damage and have failed. So they give up.

Our mission is beyond providing an IT solution. Our mission is to connect these small businesses, aggregate their data and encourage them to use the data to right the wrongs they suffer every day at the hands of suppliers.

Suppliers who knowingly supply product in quantity anything more than double the maximum sold previously ought to be fined or penalised in some monetary way. Especially when the small business makes only 25% gross profit of the lines in question.

In some cases, suppliers keep cutting back supply when the newsagent figures show that they consistently sell out.

So, on the one hand we see businesses drowning in stock and on the other hand, in a different part of the shop, we see the same business gasping for oxygen through lack of stock.

This is the work of (at best) careless suppliers or (at worst) heartless suppliers who care less about the channel which for decades has been crucial to their success.

There is no other business channel in the world where such behavior would be accepted.

Why am I bothered about this? A client of long standing has been on the phone and in tears tonight about the treatment his business is receiving from one supplier. Beyond the harm to his business, his health and family life are suffering. Through absolutely no fault of his. And the supplier says it is the way it is.

Time is approaching when this small business channel will have to fight in a different way if they are to survive and while it’s not the role of an IT company, we will be there alongside them, fighting for their future.

Ted Turner and the fight for independents

This is a fight about freedom–the freedom of independent entrepreneurs to start and run a media business, and the freedom of citizens to get news, information, and entertainment from a wide variety of sources, at least some of which are truly independent and not run by people facing the pressure of quarterly earnings reports. No one should underestimate the danger. Big media companies want to eliminate all ownership limits. With the removal of these limits, immense media power will pass into the hands of a very few corporations and individuals.

So says Ted Turner, founder of CNN, in an article published in Washington Monthly July/August 2004.

While this is an article about the news business, it’s equally applicable to any business in this global economy. His mantra is that we need independent businesses, small businesses as they are the true innovators and risk takers. I agree. Talk a walk through any shopping mall and you see choice disappearing off shelves and racks. Consumers are not in control in such places. Turner wants government to do more for small business.

The role of the government ought to be like the role of a referee in boxing, keeping the big guys from killing the little guys. If the little guy gets knocked down, the referee should send the big guy to his corner, count the little guy out, and then help him back up.

Consolidation in business channels makes commercial sense. You spread costs more widely, knock out smaller competitors and rake in more ‘cream’ business. It’s the social and societal costs of consolidation which hurt. Losing the niche choices so many small businesses support. Families losing their income. Small towns losing their unique attraction. Consumers losing choice. Ted Turner’s comments are a good read for anyone in business.

Our challenge in small and independent businesses is to move beyond espousing these views and act in a way which strengthens the place of small business in the world. This starts with our own decisions and our own support for small business.

Apples

The McDonalds restaurant chain now buys more apples than any other restaurant chain in the US according to this article from The Guardian. Growers are worried because of the power this provides McDonalds in negotiatiosns and, more importantly, determining just what varieties are grown.

While McDonalds have created their apple success and are to be applauded for that at a business level, the result of less variety in apples grown is unfortunate for the US and ultimately the world.

We need lots of varieties of apples just as we need lots of independent retailers and restaurants buying all these different varieties.

Selling real estate

In the pharmacy marketplace suppliers control some POS technology to help push their systems. In the GP marketplace drug companies control surgery management technology to ‘facilitate’ helping doctors. In the radiology marketplace you have a film maker providing business management technology.

In the 1980s in the US American Airlines made more out of its booking system than from flying planes. They were one of the first companies to realise the gatekeeping role of IT systems and the money which could be made from gatekeeping services.

Doing favours for suppliers in this way, selling realestate on your POS screen or directing users to one company over another bothers me – especially in the independent retailer sector. There is no such thing as a free lunch. They’ll get you one way or another.

Small business technology users need to be able to trust the results from their systems and I’d suggest they cannot do this if the systems are controlled by a supplier. They are better off paying the price – this keeps them in control.

Rebuilding the help desk

We engaged a respected international market reseach company to survey our customers and those of our conmpetitors late last year. We wanted to know how we stacked up. The results were good and we privately backed in the glow of the report for a few weeks. The insight was worth the high cost of the survey.

Armed with a thorough analysis of the survey results and a desire to do even better we have spent the last few weeks redesigning our customer service/support processes. Tomorrow we start with a new program, aimed at delivering better customer contact outcomes more consistetly.

The principles at the heart of our customer service focus are human contact at every step of the way; easy access when it is needed; understandable advice; and honesty.

The main change from tomorrow will be more interventionist traffic management – getting calls to the right person each time. This will better serve customers and make better use of the skills at our disposal.

This is the small business focus at work. We don’t like calling automated answering systems so why implement them here? We don’t like spending more than a minute or two waiting on the phone so why do it here? We don’t like dealing with an impersonal call centre in some foreign land so why do it here?

The paper tidal wave

All of our small business clients are time poor yet their suppliers continue to drown them in paperwork – invoices, promotional literature, to do lists.

We have designed a new tool which is being built into our software called ONE CALENDAR. This is an open access calendar into which suppliers will be invited to feed business specific date based information for use in that business. At the small business end the owner will be able to more easily manage requests for in store promotions, requests for data and other requests. They will be able to allocate employees against projects.

In some businesses we have looked this will reduce ten to do lists to one and with this will come a better opportunity to actually achieve the goals.

Our challenge in pulling this off is at the supplier end – getting them to agree on a common file format and delivery mechanism to our 1,300 or so small business clients. Even though the pay off for them is significant, all they see is frustration at dealing with their internal IT department in trying to deliver what we and their small business clients want.

The more we can do to eliminate time waste in small business the better. Suppliers need to get with prgram and do more than pay lip just service to supporting such initiatives.

Word of mouth

Been doing some research on the success of word of mouth compared to other forms of customer acquisitior and came across this interesting report.

Word of mouth beats all other forms of marketing for technology and home improvements.

This is the voice of the customer at work and underscores the importance of getting it right for those you serve ytoday so thast you;ll have people to serve tomorrow.

It is time for regulatory controls?

Local councils around Australia exert their authority against property owners in an effort to preserve the heritage of an area. They control new construction and modification in the interests of planning controls.

I’m wondering why such regulation stops at buildings. Why not act on what goes in them – to maintain the community. For example, if a community has a couple of coffee shops does it really need a Starbucks factory? If a community has a locally owned convenience stores does it need a 7-Eleven? If a community has a local grocer, a newsagent, a butcher and a greengrocer does it need a new supermarket with everything under one roof?

My community doesn’t need such development.

I like being able to walk down the street and shop at these independent retailers. I like that the streetscape is not littered with corporate brands which would make my street no different to thousands of others.

Councils might wish to talk to their constituents and draw a line in the sand before every shopping strip is corporatised and we don’t recognise our homes.

Relentless giants

WOOLWORTHS has joined calls to open up the nation’s pharmacy market, saying its submission to the federal Government outlined “billions of dollars” worth of savings for consumers and the Government if the market were deregulated.

So starts this report in The Australian newspaper today.

Woolworths has not joined anything, they are running the campaign. They want pharmacies in their supermarkets and will stop at nothing to achieve this. The story includes this spin from Roger Corbett, Woolworths CEO:

“Eventually over a period of 10 years, probably billions of dollars can be saved for the consumer and the government by deregulating this market,”

Woolworths exists to serve its shareholders. This means they pursue robust profits for shareholders. I have no problem with that. To accept their argument one must accept that they are more efficient than small the small businesses they want to put out of business. That’s nonsense. Corbett should be called to account by journalists when he engages in such spin.

I reckon the Corbett strategy is to get pharmacy products in and use them as loss leaders – you know the game plan: LOOK AT US GOOD GUYS, HELPING YOU CUT THE COST OF LIFE SAVING MEDICINE – luring consumers to pay more for other products with the net saving to consumers close to $0.

Come on journalists. Ask the tough questions and expose the grand plan.

What is at stake here is independent retailer jobs and businesses. Who wants that blood on their hands?