Gif by Tina Tiller
Gif by Tina Tiller

BusinessMay 18, 2022

The Chemist Warehouse effect

Gif by Tina Tiller
Gif by Tina Tiller

You pop in to grab a single item and leave with $50 worth of stuff you didn’t really need. Every. Single. Time. What has Chemist Warehouse done to us all?

Dan* had just gone in to buy a new moisturiser. But strolling through the aisles of his local Chemist Warehouse, he became disoriented and found himself in the oral hygiene aisle. Something else had caught his eye. It was a water pick, a costly device to simulate flossing your teeth using a small high-pressure hose. Perhaps even more important than what it was, however, was the fact that it was discounted at 30% off. “I looked it up and saw that it was actually quite cheap for what it was. So I thought ‘I can’t let this offer go to waste’.” 

He left the Chemist Warehouse an hour later with a brand new water pick, something he didn’t even know existed when he walked in. “I remember it cost a lot of money and yeah, I didn’t really need it in the first place,” he laments. “I could have just bought regular floss.” 

Since Australian pharmaceutical behemoth the Chemist Warehouse landed on our shores in 2017, spawning 31 stores nationwide, a select group of the New Zealand population has fallen completely and irrevocably under its spell. Some admit to visiting “at least” once a week. Others describe it as their “happy place” and a destination to “relax”. Chemist Warehouse addicts confess to frequently spending over $50 in a single visit, with the more hardcore enthusiasts dropping $300-$400. In almost all cases, sources say they had just been popping in to pick up one or two essentials. 

Even the author of this piece, who The Spinoff has chosen not to name for privacy reasons, reveals that they once visited the Chemist Warehouse to buy cotton pads and instead purchased a skin tag removal pen, a pair of women’s ear plugs (pink), a litre of moisturiser and a Sally Hansen nail polish made in collaboration with Mentos. 

So why does the Chemist Warehouse have such a stupefying effect on customers? A large part of its power is that the information-rich environment quickly overwhelms the customer, says Dr Bodo Lang, associate professor at the Faculty of Business and Economics at the University of Auckland. “If you took a picture of an aisle in the store and counted what you could see, there is so much information there that you’d be completely bombarded with all sorts of information, messages and prices,” he explains. 

An information and nutrient-rich environment. (Photo: Alex Casey)

“When I first went there I thought it was just awful,” one customer reflects. “It’s really bright and really loud, there’s so many signs and it is so full on.” Another sums it up as the absolute pinnacle of the paradox of choice. “I can’t find the thing that I wanted to buy, but I’ve walked into this store knowing that I have $20 to spend and it’s just wall-to-wall options,” she sighs. “It’s a little paralysing.” This, Lang says, is precisely the point. “It’s very, very easy to influence consumers in this sort of environment. You could not possibly keep track of what is the best deal, because there is so much information screaming at you from the shelf.”

For many, the gateway drug that got them hooked on the Chemist Warehouse in the first place was the offer of free prescriptions. “I saw that they had free prescriptions at the time and I needed some,” explains a North Shore customer, “so I went in and I was like ‘wow, this really is free’.” During the first few visits they just left with the prescription – “I was too overstimulated that I couldn’t really look around” – but then slowly began to pick up other products from the vitamin and supplement aisles. 

Michael Lee, associate professor of marketing at the University of Auckland, is one of the many who was first drawn to the Chemist Warehouse by this tantalising offer. He explains that the store enlists a “loss leader strategy” in order to dish out free prescriptions. “They are basically taking the cost of the prescription fee and absorbing it, in order to get masses of people in,” he says. “But then they have the counter way at the back so you have to walk through everything in order to get your free prescription.” 

Deals, deals everywhere. (Photo: Alex Casey)

Tricky layout choices are not unique to the Chemist Warehouse, says Lang, as they’re a “major driver” of how long you will spend in a store, which increases how much money you’ll spend there. “Grocery stores will place the most frequently bought items – the bread, the milk – at the back so people have to traipse all the way through the store to get to them, and of course they will pick up a few other things on the way.” Lee describes customers having to “navigate the maze” to get out unscathed. 

“On the way, you are going to pass the most attractive bargains at the end of each aisle, with the little stickers that reiterate how much people are saving if they buy right there and then.” 

But not all the Chemist Warehouse-heads interviewed by The Spinoff saw the prescriptions as the main motivator for visiting. “No, god, that is hell,” says a customer in Christchurch. “The wait times for their pharmacist area is horrible, every time I’ve needed a UTI pill it has taken an hour.” Another staunchly tells The Spinoff, “I don’t go there for prescriptions, I go there for junk. I go there for well-priced junk.” Others are more than happy to pay the small fee at their local chemist, usually near their GP, that they’ve visited for years. 

Lang says this aversion might come from the brand image as cheap, cheerful and fast – not always something people want to associate with their prescribed medication. “I think consumers may not always see the Chemist Warehouse as a full-on pharmacy but more as a Warehouse-type dispenser of personal grooming products,” he explains. “When people buy medicine it is often taken for really serious, sometimes life-threatening illnesses, and it depends on how safe you want to feel about the place you get that medicine from.” 

One shopper spoken to wasn’t hooked in by prescriptions at all, but by the impressive range of Fisherman’s Friend lozenges available. “I was looking for them one day and I thought ‘I should probably just get some supplements while I’m here’,” she explains. “Then I found the bargains, then I went back and there was more on sale, and next thing you know I am regularly buying a million supplements.” Another was lured in by cult skincare favourite La Roche-Posay. “They seemed to have the whole range, and for some reason it always seemed to be on sale,” he says. “I remember buying serum, toner, moisturiser and eventually just more and more and more.” 

The day he bravely ventured beyond the skincare aisles, he found the Chemist Warehouse sold even more products he didn’t know he needed until that exact moment. They had Brita water filters on sale, they had multi-purpose cleaner on sale, they had copious amounts of toilet paper on sale. “I couldn’t believe I could buy my skincare and my water filters at the same time, where else in the world can I do that?!” he asks. “I was a bit confused, like I didn’t really know why they were selling any of this, but at the same time… it was so cheap.” 

The trust in the Chemist Warehouse is partly established through its use of brand ambassadors, most recently former All Black Dan Carter, former Black Stick Honor Carter and influencer and The Bachelor NZ winner Matilda Green. “They do influence me because they seem really healthy and I’d like to know what supplements they are buying,” one shopper muses. For the Australian chain, it also helps to establish a stronger and more authentic local connection, says Lang. But for some, it is simply too much. “It makes me overwhelmed,” says one customer. “Dan Carter’s face is everywhere.” 

During Aotearoa’s various lockdowns, the Chemist Warehouse stayed open as an essential service, which is when many shoppers say their relationship with the store became even stronger. “It was my escape from the house and felt a bit like normal life,” says one. Another recalls looking forward to their lockdown trips to the Chemist Warehouse. “I remember bumping into a friend there during lockdown and she said she was just there to get out of the house and was just kind of hanging out there.” 

Dan*, who you will remember bought a water pick he didn’t even want, confessed to getting all three of his Covid-19 vaccines at Chemist Warehouse. “It’s a good place to sit down for 15 minutes and look at all the things that I can buy,” he laughs. 

Lang says this strong relationship built over the Covid-19 lockdowns makes sense. “It is a temple of consumption, and for some people consumption is essential to their existence,” he explains. “If you are suddenly cut short of it and you can’t consume at Sylvia Park or wherever, being able to visit some of these temples of consumption gives you a sense of normality.” 

But this growing devotion to the Chemist Warehouse has left small pharmacies struggling to survive. The Chemist Warehouse’s discounts on prescriptions have had a “devastating” impact on their business, one central Auckland chemist tells The Spinoff. “We definitely have lost customers to them,” he says. “They’ve had a hugely detrimental effect on pharmacies, if you walk around you’ll see little pharmacies like myself that have had to close down because they just couldn’t stay open any more.”

Pharmacy Guild of New Zealand chief executive Andrew Gaudin says discount pharmacy chains like the Chemist Warehouse distort the traditional focus of the community pharmacy sector – which is “providing services to keep New Zealanders healthy and well, and out of hospital” – to “one which is more focused on retail sales to make commercial profits”.

Some customers are choosing to abandon their regular chemist for a discount pharmacy with free prescriptions, says Gaudin. “The government collects the $5 prescription charge from a pharmacy whether or not the individual is charged,” he explains. “Discount pharmacy chains offset the losses incurred from waiving prescription charges with their focus on maximising commercial profits from retail sales.” Community pharmacies that can’t afford to do the same are then put under even more financial pressure.

The central Auckland pharmacist interviewed for this story has encountered this first hand – customers will bring in their prescriptions to be filled, and then balk at the end of the process when they are presented with the additional $5 charge. “They say they don’t want to pay for it, and that the Chemist Warehouse is free so they will go there,” he explains. “That leaves us out of pocket. I’ve done all the work and then I have to undo that prescription and delete it from my system… I’ve spent a good 10 minutes preparing it and I have nothing to show for it.” 

He now tells every customer at the beginning of each transaction that they do not do discounts, but still encounters regular “moaning and groaning” from those who say they would rather go to the Chemist Warehouse and get it for free. 

Recent headlines show a growing amount of pressure on smaller pharmacies.

Because of this growing pressure, there are now calls from the industry to abolish the $5 prescription fee altogether. “The guild believes that discount pharmacies should not be manipulating the government’s co-payment policy as a marketing tool for commercial profits and dictating the shape of pharmacy services,” says Gaudin. “This directly conflicts with the government’s health system reform direction that is seeking to provide more health and wellbeing services at a local level through community pharmacies.”

Not only would the removal of the fee even the playing field and reduce the growing “monopoly” that the Chemist Warehouse has, says the pharmacist, but it would also make prescriptions more accessible for all. “We see some people who are actually cherry-picking their items, because nine times out of 10 they can’t afford it all,” he explains. “And we see they are leaving out some important ones.” 

Gaudin from the Pharmacy Guild agrees that removing the $5 prescription charge would improve both “patient access and pharmacy viability” across the country. He says it would help the most vulnerable New Zealanders, “those who are least able to afford to collect their prescriptions due to the cost, namely Māori and Pacific people, low-income earners, and disabled people”. 

At the time of publishing, neither the Ministry of Health nor the Chemist Warehouse had responded to requests for comment.

While the industry waits for policy change, Gaudin encourages people to support their local owner-operator pharmacies wherever possible. “They are an integral part of their community and have been for many years,” he says. “These pharmacies truly care about their patients’ health and go the extra mile to support them to stay healthy and well.” A local pharmacy owner echoes the same sentiment – “I’d just like to make a plea for the general public to support their local pharmacies, otherwise they are going to lose that service.” 

But if you remain a moth drawn to the fluorescent allure of the Chemist Warehouse, there are some tips that might make your shopping experience less chaotic. “Classic advice to avoid impulse purchasing is to have a list of things that you actually need,” says Lee. “If it’s not on the list, you probably didn’t need it – don’t get conned into buying it just because you think it is a good deal.” Those who are budget-conscious should be clear about what they need, do their research and wait for specials, says Lang. “If deodorant is suddenly 25% cheaper, you might as well buy a couple more and put them in the back of your cupboard.” 

Above all else, a key driver in poor decision making at the Chemist Warehouse is doing things in a rush. “Being really strategic in how you shop is really important,” says Lang. “From studies of consumer behaviour, we know that people can only do one of two things well – they can either make a fast decision, or they can make a good decision, but they simply cannot do both.” 

*Not his real name but the name of Chemist Warehouse ambassador Dan Carter

Mad Chapman, Editor
Aotearoa continues to adapt to a new reality and The Spinoff is right there, sorting fact from fiction to bring you the latest updates and biggest stories. Help us continue this coverage, and so much more, by supporting The Spinoff Members.Madeleine Chapman, EditorJoin Members

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