Grocery loses share as health and wellness spending moves to pharmacy

The shift is strongest in OTC medicines, vitamins, skincare, and personal care products.

Pharmacy is increasingly taking share from grocery as consumers shift health and wellness spending into the category, driven primarily by price competitiveness, product availability, and convenience, according to a report by Fonto.

This structural migration is becoming the dominant growth story for pharmacy retail, with other performance trends reinforcing how the shift is playing out across retailers, channels, and services.

Pharmacy retail spend per customer reached $219 in the March 2026 quarter, up 11.6% year-on-year, broadly consistent with the 11.7% growth recorded in the prior year. This indicates stable category value growth, but also confirms that the main driver is no longer volume expansion, but higher spend per visit.

Frequency and penetration remained flat, showing that the volume story has plateaued. Growth is now primarily coming from higher spend per occasion, making pricing, ranging, and in-store execution increasingly important.

Chemist Warehouse is the clearest beneficiary of this shift. It added around 450,000 customers year-on-year and increased purchase frequency by 7.5% and basket size by 3.9%, delivering $166 spend per customer across roughly 3.5 visits.

Nearly half of Australians aged 18+ purchased from Chemist Warehouse in the quarter, reinforcing its scale advantage. However, it continues to rank lower on customer satisfaction metrics, placing 8th, 10th, and 14th, highlighting strong price-led growth but weaker experience performance.

Meanwhile, Priceline Pharmacy had a weaker quarter, losing around 340,000 customers year-on-year and seeing a 1.9% decline in purchase frequency. Spend per customer grew only 0.9%, despite a 2.8% increase in basket size, indicating softer traffic but slightly higher value per remaining shopper.

Its key advantage remains loyalty engagement, with around two-thirds of customers using a loyalty card at checkout. This provides some defence despite declining customer numbers.

The broader shift is visible in ongoing migration from grocery into pharmacy for categories such as OTC medicines, vitamins, skincare, and personal care.

Consumers consistently choose pharmacy for price, availability, and convenience, making the channel more competitive versus supermarkets.

This is reinforcing pharmacy as the default channel for everyday health and wellness purchases, particularly for value-led retailers with broad ranging and aggressive pricing.

Delivery platforms are also accelerating channel change. Grocery’s share of delivery app transactions rose from 14% to 28% between September 2025 and March 2026, while restaurant and QSR declined from 75% to 64%. Pharmacy remains small but is starting to appear in non-food categories like health and beauty.

As consumers normalise delivery for non-food essentials, pharmacy has incremental upside rather than replacement risk, especially for retailers with strong fulfilment capability.

Pharmacy is also taking share from GPs in low-complexity care such as vaccinations, health checks, and medical certificates, where convenience is the key driver. This shift is being reinforced by telehealth expansion and integration across healthcare platforms and delivery ecosystems.

Longer term, AI and automation will further reshape the sector by improving dispensing accuracy, reducing clinical risk, and freeing pharmacists for more patient-facing care.

In pharmaceuticals, AI is expected to shorten development timelines and increase product turnover, raising complexity and execution demands at retail level.