Do Turf Protection Strategies Really Work?

 
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It is interesting to see the response of any industry to a threat, and particularly how some individuals respond. With every industry there are always threats, and if you are heading into business ownership, this is a reality you must face. In pharmacy land particularly in WA with the growing presence of Chemist Warehouse (CW), the overwhelming response has been fear and defensiveness.

That is particularly evident in the turf protection wars that have been played out many times in recent years. There is a strong fear in the pharmacy community of a CW coming into one’s local territory. Therefore, a lot of effort is going into trying to prevent that from happening. For example, in a local area a group of competing pharmacies are quite happy to compete amongst each other. Furthermore, these pharmacies often agree in the event someone in that area wants to sell, they will only sell to one of the immediate competitors. Sometimes a seller may use the CW threat to get competitors to outbid each other to buy out one another to prevent CW from buying it.

I question whether such strategies are ever successful. In my time these types of games have been played many times. Often scared pharmacy owners have paid over the top for these businesses, only to lose their money on a pharmacy that often was a poor performer to begin with. Many have lost significant dollars to play out these strategies. The ironic thing is in some cases CW end up coming in anyway. So why play this turf protection strategy?

The immediate reaction is to be defensive and try to protect one’s turf from the CW threat. However, with the amount of $ that is sometimes lost on poor performing investments, I wonder whether this is the best approach.

If you were able to see into the future, and see that you were going to lose $000,000’s playing a turf protection strategy, what else would you do? This is something I have been pondering lately. Overall think to yourself, what is the best use of my hard-earned money. Here are my suggestions;

1.       Keep focussing on the basics of business investment. Only invest in a business if you know of solid strategies that will grow that business. Buying a business to keep a competitor out is a flawed strategy. If you can see that you can grow a pharmacy, turn it around and make something of it, then do it. If not, then save your money and focus on another strategy.

2.       The reality of modern-day pharmacy is you have got to accept you are going to be competing against some solid pharmacies. CW is not your only competitor. There are others out there who have no problems in taking customers/patients off you. If you do not have a strong product offering or a strong service offering, and not connecting with your local community, then perhaps your tales of woe is more your own doing. As I have often said, if something is going wrong look internally and you will find the problem and the answer.

3.       Is it such a crime that a business must change and evolve? If you don’t change, innovate and evolve you are only ever going to be overrun by others who are more dynamic than you. Pharmacy land is suffering from years and years from inertia and being in a protective cocoon. The smart business owners will be employing new strategies, trying different things, innovating, have a vision for their pharmacy and will go about achieving that dream. In other words, they are being positive, progressive and proactive. Learn how to compete.

4.       Whilst most individually don’t have the horse power of the big boys, there is still nothing wrong with independent pharmacy owners coming together to swap ideas, learn from each other’s experiences, perhaps ever part fund some programs, invest in different technologies, form buying groups etc. Perhaps the independent pharmacy owners should be coming together, working together to explore different ideas and strategies to enable their own respective pharmacies to grow in an ever-competitive world. Together we could achieve much more.

I am not a great fan of the turf protection strategies. Perhaps it is a little too defensive. I think the successful pharmacy of the future should be designing its own journey and learning how to be competitive and be more meaningful to the community.

Now I could be writing about something that would promote my own products and services, perhaps I should. Furthermore, I know Sarah my brilliant marketing lady may get cranky with me for not doing so, but this is just something I wanted to write about. I would not like to see a pharmacy landscape dominated by corporate. I want to see the independent thrive. Why? Well it means a lot to me to see your average local business owner compete strongly and be successful in this highly corporate world. The independents are just your average local member of the community trying to make a go of it, for their own families. They give a lot to their communities, schools, sporting and dance clubs, local businesses and charities etc. Its these independents that make our local societies that much more special and richer.

Don’t play the defence. I think we should be learning how to grow, and to be competitive, and not just the CW of the world, but against any other of the big boys that want to take you down.