Are supermarkets the best place for pharmacies?

Leela Barham casts an economist’s eye over the news that LloydsPharmacy is walking away from its 237 Sainbury’s branches 

As P3pharmacy reported last month, LloydsPharmacy has announced plans to withdraw from all of it supermarket branches this year. However, there is little clarity as to whether any of the Sainbury’s sites will continue to operate as pharmacies by the end of the year.

The LloydsPharmacy revelations were swiftly followed by the news that Tesco is to close eight in-store pharmacies, and Asda seven.

All this made for alarming headlines – but does it point to fundamental flaws in the supermarket pharmacy model, or cast doubt on the sustainability of the wider sector?

Why supermarkets? 

Why should we have pharmacies in supermarkets in the first place? After all, medicines are not ordinary items of commerce, as the GPhC mantra goes.

Well, convenience matters to an awful lot of people. This was the key pitch for lifting Australia’s ban on supermarket pharmacies, as academics found when they explored the debate back in 2019.¹ It will undoubtedly suit many consumers’ preferences to pick up their prescriptions along with their regular shop.

That same year saw the England- wide rollout of electronic prescribing, which made it easier for people to nominate the most convenient place to pick up their prescriptions. This could conceivably have incentivised some people to drop off and collect at the supermarket whilst grocery shopping.

But the looming Sainsbury’s closures could tell us something about why supermarket pharmacies are not always the best option.

When UK economists formally tested what matters most to those using community pharmacy in 2016, they found that location and available parking spaces were ranked as important but came below interactions with staff, which were ranked as the most valuable attribute. 

It’s worth bearing in mind that this research was carried out before the explosion in online pharmacies; a similarly robust analysis of people’s attitudes today could provide a useful update.

We do have more recent data in the form of an Ipsos Mori survey commissioned by NHS England last year, which showed that the most commonly contacted or visited community pharmacies were small chain or independent ones.

Forty-one percent (a weighted response to be representative) said they used a small chain or independent pharmacy compared to 15 per cent saying they used a pharmacy in a supermarket.² That could well be why some people stick with the branch they know – a sort of ‘sticky’ preference.

Of course, there are still big supermarket chains running a lot of in-store pharmacies, including Tesco (368 once its latest closures are carried out³), Asda (247) and WM Morrison (116). According to Christie & Co, supermarket operators – unlike other corporates – maintained their share of the overall market in 2022.

There will also be some interaction between the specific supermarket branch and the pharmacy. Sainsbury’s was rated as less popular than M&S Food, Tesco, Lidl and Aldi in Q2 2022, according to Statista.⁴

Tesco also still reigns when it comes to grocery market share against its supermarket competitors (27.5 per cent in November 2022), although Sainsbury’s is in second position (15.2 per cent), according to Statista.⁵

Changing conditions

LloydsPharmacy said the decision to withdrawn from all of its Sainsbury’s branches was a “response to changing marketing conditions”, with many commentators singling out public funding cuts in England as the main culprit.

The market is always changing – at least at the margin. Branches close, branches open. That’s the market at work, even in the context of a market with a big element of public service.

That’s why the decision to withdraw from Sainsbury’s, amid speculation that those branches may not simply switch to being run by someone else as pharmacies, has caused a stir. What does it say that all of them are being sold off?

Of course, it may not be about the supermarket location. It might be about LloydsPharmacy. The chain – which posted a £100m loss in 2021/22 – is selling up branches across the UK, as Pharmacy Network News revealed in February.

Devil in the detail

The devil is almost always in the detail, and the LloydsPharmacy announcement is no different. The fate of its Sainsbury’s-based pharmacies will be down to the details, as will decisions for others to take them over as pharmacies, or possibly replace them with different concessions. 

That’s the bigger problem for the community pharmacy sector in England and across the UK. The fact that the sector is under pressure is not in question, but which branches we should keep to deliver the public sector component of their work is the devil in the detail question that needs an answer.

Leela Barham is a health economist

References: 1 Mortimer,G.andGrimmer,L.(2019).Aloafofbreadandapacketofpills:how supermarket pharmacies could change the way we shop. Available at: https://theconversation. com/a-loaf-of-bread-and-a-packet-of-pills-how-supermarket-pharmacies-could-change- the-way-we-shop-122640
2 Ipsos. (29 December 2022). Public perceptions of community pharmacy. Available at: https://www.ipsos.com/en-uk/public-perceptions-community-pharmacy
3 Christie&Co. (16 September 2022). Pharmacy Market Review 2022. Available at: https://www. christie.com/news-resources/publications/pharmacy-market-review-2022/
4 Statista. Most popular supermarket chains in the United Kingdom (UK) as of Q2 2022. Available at: https:// www.statista.com/statistics/1135764/most-popular-supermarkets-in-the-uk/
5 Statista. Market share of grocery stores in Great Britain from January 2017 to December 2022. Available at: https://www.statista.com/statistics/280208/grocery-market-share-in-the-united-kingdom-uk/