New Zealanders are about to get cheaper prices for prescription drugs and many other everyday items as a big Australian pharmacy chain sets up in Auckland.
Chemist Warehouse has opened its first New Zealand store in St Lukes and plans to open about 10 more stores around Auckland next year, before expanding to Wellington and Christchurch.
The Australian pharmacy franchise, known for its packed-to-the-brim stores, is offering zero prescription fees on subsidised medicines and prices up to 90 per cent cheaper than other pharmacies.
For instance, it is selling a 100-pack of Ethics paracetamol tablets for $1.99, compared to $9.99 advertised in Unichem pharmacy. A twin pack of Blistex lip balm at Chemist Warehouse costs $3.99, compared to $6.90 for just one at Net Pharmacy.
A 12-pack of Nurofen 7+ chewable pain relief tablets is advertised as $10.99 in Chemist Warehouse ($16.25 in Pharmacy Direct) and a 100g pot of Vaseline is advertised for $4.99 ($6.99 in Life Pharmacy).
Chemist Warehouse is worth AU$5 billion (NZ$5.5b), has 400 stores across the Tasman and is the sixth largest retailer in Australia.
Chief executive Azman Haroon said the company had been planning to expand into New Zealand for a number of years.
"We came here to explore the market about six years ago, and we thought it was time then but unfortunately we had so much action going on in Australia with new store expansion that we decided to put it on hold," Haroon said.
Chemist Warehouse quietly opened its St Lukes store last week, keeping details and its arrival under wraps.
Haroon would not disclose the specifics of how much was spent to launch the St Lukes store but said the cost to set up a store of its kind was "in the vicinity of five million dollars".
It has plans to open a new store every month next year, and catch up with the pace in Australia.
"We want to do the same thing as in Australia. We want to be in every corner of New Zealand, in all of the communities and hopefully all run by your local pharmacist," he said.
"We have a lot of back-end systems that allow us to get our stores open very quickly."
Haroon, a qualified pharmacist, said complying with New Zealand's pharmacy regulations were easier than doing so in Australia.
"The rules are more competition-friendly in New Zealand and the rules set are more pro for the customer which is fantastic," he said.
"In Australia, a pharmacy can only be owned 100 per cent by a pharmacist. In New Zealand, a pharmacist needs to have control of a pharmacy, but the rest of it can be owned by anybody else - that's not the approach we've chosen to take."
Chemist Warehouse offers discounts of between 30 and 90 per cent on products available in other pharmacies and retail stores, Haroon said.
It has in-your-face signage, with price tickets that display its price and say "Why would you pay..." with a price comparison on the same product elsewhere.
It was able to offer low prices because it ran on lower margin, Haroon said.
"We don't always buy [stock] better than our competitors, yes sometimes we do, but we run on a margin that makes this business work... Any further discount or help we get from suppliers we don't keep that money we put it back into our price for our customer."
We want to do the same thing as in Australia. We want to be in every corner of New Zealand, in all of the communities and hopefully all run by your local pharmacist.
The arrival of the retailer brings an array of new brands to the market including Australian brands The Goat Skincare, Healthy Care, INC and Cenovis.
"In early 2018 we will start our expansion, we already have up to 10 sites close to locked in, and you'll gradually start seeing these open in next year in all of the key areas of Auckland before we begin further expansion into areas such as Wellington and Christchurch," Haroon said.
"I can see us rolling out one store a month, I would like to do more than that, but at this stage we want to make sure we can walk properly before we run.
"In Australia we can open up to 10 stores a month and I presume once we get a bit more organised we'll be able to do the same here."
Haroon wouldn't confirm where the next stores would open, but said it would be in areas with dense populations.
A group of people from competing pharmacies had spent three whole days scouting out the store last week, watching how it operated, he said.
First Retail Group managing director Chris Wilkinson said Chemist Warehouse's arrival would shake up the local pharmaceuticals' offering.
"Traditional pharmacies, to compete now they'll need to look to other areas where they can develop differentiation," Wilkinson said. "It'll be an opportunity now for traditional pharmacies to look at how they can change and adapt to better meet the market."
Wilkinson said he expected Chemist Warehouse to open future Auckland stores in places such as Mount Wellington, Albany, Manukau and Howick.
Auckland resident and shopper Holly Loye said she was surprised at the sheer size of the store and how much variety it offered.
"There's so much selection, it's nice. I'll be coming here more often, definitely," Loye said. "It'll be quite hard for [traditional] pharmacies - a lot of competition."
Haroon said he didn't forecast any risks operating in the local market.
"New Zealand being a pro-active and pro-competition country, I can't see it," he said. "New Zealanders were paying way too much for everything - from pharmacy medicines to fragrances, and we saw that as an opportunity to come here."
The Pharmaceutical Society of New Zealand has been approached for comment.
Ethics paracetamol tablets, 100-pack
Chemist Warehouse: $1.99
Blistex lip balm
Chemist Warehouse: $3.99 for twin pack
Net Pharmacy: $6.90 for one