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Restoring health

Restoring health. Partnering with pharmacies to survive and thrive. Three changes in the convenience industry create new opportunities. 1. 2. 3. Channel blurring between supermarkets and convenience stores. Increasing regulation around tobacco sales. Increasing labour costs.

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Restoring health

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  1. Restoring health Partnering with pharmacies to survive and thrive

  2. Three changes in the convenience industry create new opportunities 1 2 3 Channel blurring between supermarkets and convenience stores Increasing regulation around tobacco sales Increasing labour costs

  3. Industry revenue growth indicates a need for change Change in industry revenue (%) Source: IBISWorld, 2014

  4. As consumer preferences change, health and wellness have taken on increased importance Consumer Trends Retail Growth Expectation for 24/7 availability Increasing OTC medicine consumption Increasing engagement with digital advertising Population increasingly health conscious Source: Australian Institute of Health and Welfare, 2013 Source: Aztec & Retailer Contribution, 2013

  5. Strategy Overview: Repositioning convenience stores and redefine convenience 2 1 3 $ Expand Over-the-Counter (OTC) pharmaceutical range Alliance with the Pharmacy Guild New revenue stream

  6. The convenience store industry requires a long term and far reaching solution What does a solution require? Scalable Innovative, to gain a first mover advantage Capitalise on key consumer trends Short and long term sustainable benefits Source: Aztec & Retailer Contribution, 2013

  7. Convenience stores can advertise through LED screens on street front $ Benefit for convenience stores Will it work? A quick win for convenience stores Coca Cola used biometrics and facial recognition technology via a clear LED digital screen on fridges. The screen serves ad campaigns, collects sales data and can detect customer interaction. This has boosted sales by 12% compared to standard fridges. Maximise street frontage Supplement POS advertising Generate new revenue How will it work? Convenience stores install LED screens Digital advertising space available to sell Interactive capabilities provide new content experiences that can boost a product’s sales and brand loyalty Source: Coca-Cola Is Using Facial Recognition Technology On Fridges In Australia To Sell More Drinks, May 2014, Business Insider

  8. Expanding pharmaceutical offerings will provide additional convenience for consumers Currently Opportunity for convenience stores Some OTC products sold Community Pharmacy Agreement - Up for review 2015 Limited knowledge and awareness of pharmaceutical offerings Increase and market OTC product range Limited association of ‘health and wellness’ with convenience stores Opening hours and locations provide an opportunity to meet consumer demand Pain relief, in your hour of need

  9. Positioning now to benefit from growth and anticipated demand for pharmaceutical products and services Meet consumer health and wellness needs Proven success from the hybridised value of pharmaceutical and convenience stores • Positioning now to improve the accessibility of health servicesin urban and regional settings

  10. The pharmaceutical and convenience industries share characteristics, making it an ideal partnership Benefits for convenience stores Access a wider range of consumers Point of differentiation Legitimise health and wellness focus Motivations for pharmacies New growth opportunity Increased presence Cost reductions

  11. An alliance between AACS and Pharmacy Guild will provide consolidated strength against supermarkets Why will this deliver value? How will value be realised? Gain strength through collaboration Stronger voice Increased Lobbying power Face a shared market pressure Access to a shared consumer base Collaborative efforts will provide new value Shared resources Combined marketing efforts Legitimising existing healthy offerings 1: Woolworths in new bid for pharmacy, October 2013, AFR; Small grocers shocked at proposed increase in hours of trade, May 2014, Dynamic Business.

  12. The Restoring Health strategy will generate a net present value of $259,000 over three years per store $259,000 by 2017 (Net-Present-Value for 3 years) Components Break even in 18 months 87% ROI Net Present Value of $259,000 per store Source: IBISWorld, 2014

  13. Restoring Health can be implemented over three years Pharmaceutical expansion Planning Communication LED screen

  14. Restoring Health can be implemented over three years Pharmaceutical expansion Commence talks with pharmacy guild Establish and begin the alliance Move towards hybridised stores Expand OTC range Implement OTC range Communication Planning LED screen

  15. Restoring Health can be implemented over three years Pharmaceutical expansion Commence talks with pharmacy guild Establish and begin the alliance Restoring health Move towards hybridised stores Expand OTC range Implement OTC range Partnering with pharmacies to survive and thrive Planning Communication Procure and install LED screens Expand LED functionality Understand and adapt Sell advertising space LED screen

  16. Probability distribution for strategy net present value

  17. Discounted cash flow analysis of strategy

  18. Variables used in DCF of strategy

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