Australian shoppers choose Chemist Warehouse over Wesfarmers-owned Priceline: Macquarie

Chemist Warehouse is dominating Australia’s pharmacy footprint, with consumers opting to shop at the discount juggernaut over its competitors Priceline and Terry White.

Chemist Warehouse began trading on the Australian Securities Exchange last month after shareholders approved the mammoth $34 billion reverse takeover of smaller-listed Sigma Healthcare.

The merged group now controls 950, or 16 per cent, of the nation’s pharmacies, compared with Wesfarmers-owned Priceline’s 470 stores and Terry White’s 600.

Investment bank Macquarie on Monday introduced its new data harvesting tool Fonto, which provides detail on market share, average basket size and frequency to explore consumer-purchasing trends, competitive behaviour and brand interaction as it relates to Australian retailers.

It revealed Chemist Warehouse was the driving force in the pharmacy sector, noting an “average spend per month more than 50 per cent higher than competitors Priceline and Terry White as it benefits from its broad offering”.

According to Chemist Warehouse’s latest financial results, total retail network sales hit $5.15b in the six months to the end of December, up from $4.56b recorded in the same period a year earlier.

It has opened 36 new stores since the first-half of the 2024 financial year, taking its total network to 658 across five geographies — including NZ, Ireland and China. It recently opened in Dubai.

Chemist Warehouse was officially launched in 2000, the same year it opened its first stores outside Victoria in South Australia and NSW. Founders Jack and Sam Gance, as well as Mario Verrocchi, have spoken of their ambition to add hundreds more in Australia alone.

Chemist Warehouse and Sigma shareholders in January overwhelmingly endorsed the mega tie-up, with Chemist Warehouse shareholders emerging with almost 86 per cent of the combined group.

Macquarie’s research found spending growth in the pharmacy and electronic categories continued into the March quarter, up 11 per cent and 10 per cent, respectively.

“By brand, Amazon appears to be leading the market albeit noting a broader category range relative to specialist electronics retailers such as JB Hi-Fi,” Macquarie said.

“On average, Amazon has not taken share from the bricks-and-mortar retailers noting volatility around key sales periods.

“From a frequency perspective, Amazon is leading due to easy-access (online specialist) and focus on subscription (Prime).”

Meanwhile, spending at off-premise alcohol remained soft, down 9 per cent, which likely pointed to continued shifts in consumption patterns and higher cost-of-living pressures.

The furniture category fell 6 per cent, suggesting ongoing weakness consistent with soft home building activity.

In the quick service restaurant category, Mexican-themed fast food chain Guzman Y Gomez and McDonald’s are winning.

“Noting headwinds facing the category, GYG continues to take share with its fresh offering while McDonald’s is also performing well, with feedback suggesting a heightened focus on value,” Macquarie said, adding Domino’s appears to be losing market share.