L'Oreal New Zealand's pharmacy sales roles have been 'disestablished'. Photo / 123RF
L'Oreal New Zealand's pharmacy sales roles have been 'disestablished'. Photo / 123RF
The New Zealand division of global beauty products company L'Oreal has laid off local sales staff, citing increased competition and "disruption" in the pharmacy market.
L'Oreal Group, which owns retail makeup and hair care brands, including L'Oreal Paris, Maybelline New York, NYX, Garnier and Matrix, confirmed L'Oreal New Zealand hadundergone a restructure in its pharmacy retail sales division.
As part of the restructure, four sales roles have been "disestablished" and "replaced with a third-party supplier". The layoffs come following "significant change and disruption" in the sector, the company said.
"The New Zealand pharmacy channel is experiencing significant change and disruption from online retailers, specialty stores and the arrival of new mass players to the market. In recognising this change and taking into consideration how we deliver the best outcomes for our customers and our business, we have taken the decision to restructure the pharmacy sales roles," Aurelie de Cremiers, country manager for L'Oreal New Zealand, said.
Asked about the company's strategy looking ahead, de Cremiers said L'Oreal would continue distribution of its brands in pharmacies throughout New Zealand, serviced by a third-party sales provider.
"Our aim is to ensure New Zealand consumers have access to our beauty brands wherever they choose to shop in New Zealand, including traditional pharmacies, new mass players, specialty stores as well as online," she said.
L'Oreal sells its makeup under various brands into pharmacies and other retail stores. Photo / 123RF
Retail analyst Chris Wilkinson said the arrival and subsequent expansion of discount pharmacy chain Chemist Warehouse had had an affect.
L'Oreal's restructure of its pharmacy division did not come as a surprise as the sector had "divided" into two streams: professional services (for example, stores offering Botox or hair removal services) and mass-market players.
"What we're seeing is the smaller pharmacies to compete are developing niche specialities and then the bigger pharmacies, the likes of Bargain Chemist and Chemist Warehouse, are focusing on commodity and volume, value; they are also broadening their range into household goods that you don't typically see in pharmacies," Wilkinson said.
"Increasingly, pharmacy groups are buying collectively. For instance, at Green Cross that decision is made at the very highest level, so you've actually got only a very small number of actual buyers in the sector now that you can sell to."
In recent years, L'Oreal's pharmacy sales staff were "probably more product ambassadors" than salespeople. "Suppliers essentially buy space off the shelf, so they contract to supply, and there's a time period for that."
Chris Wilkinson, general manager of First Retail Group. Photo / Supplied
Pharmacies were no longer buying cosmetics or beauty products on a weekly or monthly basis like they once were, he said.
Health care company Green Cross Health owns more than 330 Life Pharmacy and Unichem pharmacies throughout the country.
Wilkinson said New Zealand's pharmacy industry was now majority owned by large organisations, with fewer independent smaller pharmacies. He said the sector would continue to go through a period of consolidation.
Future of the pharmacy sector
Consumers no longer wanted bog-standard cheap makeup products, often the kind found in pharmacies today. Instead, they were increasingly after "aspirational products", which some L'Oreal brands and products did not offer, he said.
"Their products are becoming more commodity-type products that you will find at a wide range of stores opposed to speciality or niche sectors."
New Zealand's pharmacy sector began going through a shakeup in 2014, Wilkinson said.
He describes the current state of the sector as "uncertain", and said the growth of discount pharmacy chains would continue, as would the consolidation of smaller independent stores.
"Where these big competitors are, we're seeing stores close."
Independent pharmacies are also feeling the affects of Chemist Warehouse's presence in the New Zealand market. Photo / Aimee Shaw
Auckland's independent pharmacy sector has seen a 9 per cent decline in revenue in the past year.
Pharmacy had traditionally been a business with good margins and profits to be made. However, this was no longer the case given increased competition in the market, he said.
Competition has ramped up in the past two to three years with the arrival of Chemist Warehouse, though the effects of competition in the market has been apparent for at least five years following supermarket operator Countdown opening pharmacies with free prescriptions in its stores.
Some pharmacies had already implemented health and wellness clinics or nail bars within their stores, offering services such as flu shots, Botox, spa services such as facials and waxing or developing their own health, wellness and beauty products to develop a niche offering.
Wilkinson said he expected to see more independent pharmacies close in the next five years, and others become integrated parts of doctors surgeries "on a much larger scale", along with more pharmacies within supermarkets.
L'Oreal brands the group owns include Essie, salon brands Kerastase, Redken and luxury beauty brands Lancome, Giorgio Armani beauty, Yves Saint Laurent, Kiehl's, Ralph Lauren fragrances and Viktor & Rolf, among others.
