How Gance drives success at Chemist Warehouse
Jack Gance still reads weekly sales reports for every store. Psychological ownership is the invisible driver, and it is why a founder knows the buyers by name.
First published in The Weekend Australian, Wealth, 8–9 February 2025, p.32. Edited extract from The Founder Effect (Wiley), reproduced with permission.
From One Store to 500: The Chemist Warehouse Journey
Chemist Warehouse is Australia’s largest pharmacy chain, which grew from one store in 1972 in the outer suburbs of Melbourne into a group with over 500 stores generating annual revenues of US$2 billion today. In a conversation with Jack Gance, one of the co-founders and majority shareholders, it became apparent to me what was so starkly unique about his ownership mindset. Psychological ownership for Jack means staying close to his customers and paying attention to detail. By staying obsessively close to his customers, Jack has transformed Chemist Warehouse into a billion-dollar empire that has captured market share not just from pharmacies, but also department stores and supermarkets.
The Role of Buyers: Key Influencers in the Supply Chain
Jack relayed the story about one of his key suppliers, a global vitamin and supplements manufacturer that supplies his stores. Typically, the buying team at Chemist Warehouse liaises with the sales team from the vitamin manufacturer to decide the quantity and types of products it will buy. The ‘buyers’ in Chemist Warehouse, although not in senior management, are valued members of Jack’s team who are highly experienced and well paid. They are key influencers whose decisions also determine how much revenue the vitamin manufacturer will make from Chemist Warehouse. From what I understood of the conversation, it sounded like Chemist Warehouse represents a significant portion of revenues for the vitamin manufacturer, and therefore Jack’s buyers were very important to the manufacturer.
A Lesson in Connection: Jack’s Conversation with the Vitamin CEO
To emphasise the importance of Chemist Warehouse to the vitamin manufacturer, he told me a story.
One day, in conversation with the vitamin CEO, Jack asked the CEO if he knew the buyer at Chemist Warehouse.
The vitamin CEO replied that he did not.
Jack asked if the CEO knew the buyer from a major supermarket chain (another one of the vitamin manufacturer’s customers).
He didn’t. Feeling the pointedness of Jack’s line of questioning, the CEO explained that he knew the counterpart CEOs, but he felt he should not be expected to know the individual buyers of his customers. He had sales teams for that.
Business is Personal: Jack’s Approach to Relationships
Jack found this mindset completely foreign — he couldn’t understand how a CEO wouldn’t personally know the key decision-makers of such a critical customer, especially since Chemist Warehouse and the supermarket accounted for a significant portion of the vitamin company’s revenue. If it were Jack, he said, he would absolutely cultivate close relationships with the key buyers who drive those decisions. As he puts it, ‘business is a person-to-person interface, not numbers-to-numbers’.
Psychological Ownership: The Invisible Driver of Success
When I met Jack he was in his 70s, but his demeanour was more akin to a man in his 50s. Psychological ownership is an invisible driver that compels him to stay close to his customers. If he needs to roll up his sleeves, he does it without question. He still studies weekly sales reports for each store and strategises about the products he needs to stock and which suburbs he needs to expand into. A founder is not blinded by ego; they see the importance of engaging with staffers at all levels. No task (nor person) is below a founder.
The Long Game Requires Sacrifice
In theory, it sounds easy to be a founder, manager, and owner. In reality, a great deal of sacrifices may need to be made. Only those with a genuine sense of ownership are willing to make those sacrifices. When I met with the team at HyVision System in Korea, I learned that CEO and founder Doowon Choi lived near the office, while his wife and family lived in downtown Seoul, located 1.5 hours away. Being close to the office meant he would only see his family on Sundays, when he would attend church and spend the rest of the day with them.
He founded the company at the age of 32, and today the business counts Samsung and Apple as customers (developing testing equipment for cameras and sensors critical to smartphone applications, such as augmented reality). He had grown the company from scratch into a US$200 million market cap global business over the course of two decades while retaining 14 per cent ownership. An impressive feat, but one which required significant personal sacrifice that would not be visible on the surface. That demonstrates the work ethic and dedication required to compete on a global scale.
As a side anecdote to this story, when I asked about his succession plans, I was informed his children would be unlikely candidates to succeed their father. They were planning on becoming K-pop stars.
