Australian retail giant Chemist Warehouse has begun to hire for a new store at Bethlehem, Tauranga.

The Chemist Warehouse has already opened 10 stores in Auckland.

The spread of Australian giant Chemist Warehouse risks a bloodbath that will force the local chemist to adapt or perish.

Pharmacists say they cannot compete with Chemist Warehouse's pricing which includes free prescription to draw customers in and has slashed the cost of everyday medicine cabinet items as well as beauty and wellness products.

The retail giant has begun to hire for a new store at The Base shopping centre in Hamilton and another at Bethlehem in Tauranga.

The stores will be the first outside of the ten Chemist Warehouses in Auckland, with the company reportedly planning to open up to 70 stores across New Zealand.

Chemist Warehouse has over 300 stores in Australia and employed 9500 staff.

Gina Cook, a partner at financial advisory company BDO, says Chemist Warehouse's spread beyond Auckland will be concerning for some of the smaller pharmacies around the country.

"We are still in the watch and see mode but what we are seeing in the Auckland market, those that are located close to the stores have felt an impact," she says.

Ninety per cent of pharmacy owners were concerned about the arrival of Chemist Warehouse according to a 2017 BDO survey.

The pharmacy becomes a destination

Sam Perkins is based in Ponsonby but she makes special trips to the St Luke's Chemist Warehouse.

"I love it. Everything is there, there is a lot more choice than there is in the supermarket or in the pharmacy," says Sam.

"I'm from the United Kingdom and toiletries are actually quite cheap over there. So, when I first moved here six years ago I was really shocked at how expensive they are."

Sam says the dry shampoo she uses costs $10 at the Chemist Warehouse, whereas the same brand will cost her upwards of $15 from her local pharmacy.

Chemist Warehouse is also the only place she can get her favourite perfume, she says.

"There is a lot of choice, you're not restricted to certain brands and you can price compare between the brands."

Perkins gets her prescriptions filled for free at her local Countdown supermarket pharmacy near her work.

Feeling the pain

St Luke's Medical Pharmacy is just down the road from Auckland's original Chemist Warehouse that opened in November 2017.

Dispensary manager Edi Jayetileke​ says without its association with the medical centre, the pharmacy would not be able to survive.

"It's hard to compete against big companies like that because we just can't match their retail prices," says Edi.

Prices comparisons for products such as paracetamol and children's antihistamine show a big difference between Chemist Warehouse and the online prices listed by Life Pharmacy.

A box of 100 tablets of Panadol at the Chemist Warehouse costs just $1 less than at Life Pharmacy, but a bottle of Bio-Oil is $12 cheaper. A box of 30 tablets of Claratyne for children also cost $12 less at Chemist Warehouse.

​Edi says with the medical centre next door, most people were happy to pay for their prescriptions because of the convenience.

However, a lot of customers seem to think pharmacies are ripping customers off by charging the $5 government surcharge, she says.

"People don't seem to understand it is a government fee, it's not a price we set. People don't understand that if we don't charge it then we can't pay wages, we can't pay for the business to run."

In Australia Chemist Warehouse is blocked from offering free prescriptions after pressure from the Australian Pharmacy Guild.

Sandy Kaur owns a pharmacy in Royal Heights, Auckland, close to the recently opened Chemist Warehouse at Westgate.

"I am a young owner who has become somewhat disheartened by the bloodbath that is happening in the pharmacy industry," says Sandy.

Consumers don't see the turf war between two Australian corporate giants, Chemist Warehouse and Countdown supermarkets which has added 30 in-store pharmacies, Sandy says.

Countdown has opened 30 in-store pharmacies nationwide.

In June, Countdown dropped prescription charges from $2.50 to free in all but one of its in-store pharmacies.

"The $5 prescription fee is not a service fee or the cost of the actual medicine. It is essentially a tax that we collect on behalf of the government," says Sandy.

"In Australia there are restrictions on discounting medicines. The retail side of the business is fair game but how can our professional service be used in such a way. It makes a mockery of our profession."

People will also lose the personal touch as smaller pharmacies get pushed out, Sandy says.

Possible law change

The Pharmaceutical Society says there are over 900 community pharmacies nationwide and 50 million prescriptions for medicines are dispensed each year.

Pharmacy Guild chief executive, Andrew Gaudin says the Government takes $5 from the pharmacy regardless of whether this charge is collected from the patient.

"Overseas owned pharmacy chains [like Chemist Warehouse and Countdown] can afford to waive the $5 charge to attract more customers into their stores and drive retail sales," says Andrew.

"Unfortunately, independently owned community pharmacies cannot afford to waive this charge without dropping the level of service they provide to their patients."

Andrew called on the Government to drop the fee on prescriptions completely.

"The guild believes the bigger concern is that the $5 charge creates barriers to accessing medicines for our most vulnerable patients, with approximately 257,000 New Zealanders unable to afford their prescription medicines.

"This is worse for Maori, Pacific people, and low-income earners."

All about retail

Another pharmacy owner, Zahra Tabar, has the 800-square-metre Chemist Warehouse mega store on Queen St, in Auckland's CBD as her new neighbour.

In Australia new pharmacies in urban areas must be at least 1.5 kilometres from the nearest existing business. In rural areas this extended out to 10km.

The Australian rules also ban pharmacies being part of or near a supermarket.

New Zealand pharmacies do not have similar protection.

Zahra says she will wait and see what impact a neighbouring Chemist Warehouse has on her business.

She also co-owns two other pharmacies in south Auckland, about five minutes' drive from the Chemist Warehouse in Manukau, and another in Hamilton.

She is sure she has lost some customers to the discount newcomer.

Zahra says ultimately pharmacies that offered exceptional service will survive and those that are the cheapest, like Chemist Warehouse, will prevail.

The ones that sat in the middle, with average service and average prices, would be the ones that struggled, she says.

"Chemist Warehouse has been a game changer for the industry," says Zahra.

Gina Cook says the businesses that find themselves next to a Chemist Warehouse need to ask what they are offering that is different.

"Chemist Warehouse fills a particular need in the market but they're not going to offer the other things that a community pharmacy might offer," says Gina.

"Everyone is focused on Chemist Warehouse as being the disrupter but I don't think it's them. It's retail in general. Customer preferences are changing. People are having to reinvent their whole business model."

Small pharmacies may be really good at what they do in terms of pharmaceutical care but they needed to also focus on upskilling in terms of retail.

Chemist Warehouse did not respond to requests for comment.

Debrin Foxcroft/STUFF