LloydsPharmacy’s acquisition of Sainsbury’s pharmacies reflects its bid to establish itself as retail’s most trusted healthcare specialist

LloydsPharmacy owner Celesio has acquired Sainsbury's pharmacies

Cormac Tobin, managing director of LloydsPharmacy and Celesio UK, says its aim is to be an “authority” on providing healthcare in a retail environment. And clearly Sainsbury’s believes LloydsPharmacy can fulfil that role.

Since stepping up to the job two-and-a-half years ago, Tobin has concentrated on what the business has to offer in community healthcare and moved away from competing on selling too many brands.

Around half of the SKUs stocked in LloydsPharmacy’s 1,550 UK stores have been slashed since Tobin took over.  

“We were wanting to be all things to everybody, trying to be a pound store,” he says. “But I decided we didn’t want to be selling 50 shampoos anymore.”

Tobin, who ran LloydsPharmacy’s Irish business previously, wants the UK’s second-biggest retail pharmacy to recognised as an “authentic” healthcare provider and offer a genuine service to the communities where it operates.

The corporate mantra at the German-owned group is: “We believe in reinventing health”.

Sainsbury’s deal

The £125m deal with Sainsbury’s will see LloydsPharmacy take control of the grocer’s 281 pharmacies, which will be rebranded as LloydsPharmacy. Around 2,500 Sainsbury’s staff will also transfer to the Celesio-owned company.

Tobin, describes the acquisition, expected to complete in February next year, as a “fantastic fit”. He says: “We are both passionate about excellent customer service and making a positive impact on the communities we serve.”

“Our relationship with the NHS and Government is getting stronger”

Cormac Tobin, LloydsPharmacy

And increasingly pharmacies are being seen as part of the solution in reducing the burden on a financially stretched NHS.

“Our relationship with the NHS and Government is getting stronger,” says Tobin. “The NHS is saying ‘can you give us solutions to keep people out of A&E and solutions to do more healthcare in the community in your stores’.”

Community and trust

For Dubliner Tobin, who began his career at Irish retailer Superquinn, building trust in communities is clearly close to his heart – and particularly when it comes to healthcare. He reflects on the fact that his mother has had the same pharmacist for most her adult life.

He is also keenly aware of the hit-and-miss advice that people get from searching for healthcare issues on the internet.

“I’ve sacrificed unbelievable amounts of sales in other areas. But our average basket is up”

Cormac Tobin, LloydsPharmacy

“On Google you get so many results,” he explains. “You get confused, worried and don’t understand. And after reading 10 of them you go and ring your mother, as we Irish do.”

He adds: “Now we’ve moved to be authoritative and authentic. I’ve sacrificed unbelievable amounts of sales in other areas. But our average basket is up and sales are up phenomenally.”

Tech inspiration

Tobin is a prolific tweeter and he namedrops Apple as an inspiration in the way he approaches offering healthcare.

In particular, he points to the impressive array of funky looking mobility scooters LloydsPharmacy offers under its Betterlife business. “We’re making it modern, we’re making it sexy to have a scooter,” he exclaims. “Why do health things have to be dry, drab and boring and ugly?”

Celesio’s latest results show that Tobin’s maverick approach appears to be working with a 7% growth in first-quarter group sales partly driven by a strong UK performance.

The business’s focus is likely to have attracted Sainsbury’s to hand the keys over to LloydsPharmacy.

Sainsbury’s boss Mike Coupe said working with a “specialist operator like LloydsPharmacy will enable us to grow and extend our pharmacy service to customers”. At the same time, it fits in with Sainsbury’s bid to sweat its assets to make the most of its properties.

The medicine tastes sweet for both parties as they embark on their new partnership.