The company behind Priceline Pharmacy expects retail will only get tougher and hopes its personalised service and in-store experience will help fend off any challenge from online giant Amazon.
Australian Pharmaceutical Industries chief executive Richard Vincent says consumer spending has been subdued since Christmas.
"There's no doubt in my mind that the competitive environment will only get tougher, and consumer confidence will remain challenging," he said on Thursday.
API has previously focused on improving the operational efficiency of its health and beauty stores, and will now turn to investing in customer experience to improve satisfaction and service.
The look of Priceline stores will be updated and API has relaunched its Sister Club loyalty program, which has 6.7 million members, to provide greater rewards and more personalised offers for higher spending members.
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Amazon's entry into the Australian health and beauty market will also not be underestimated, Mr Vincent said.
"What we've done already, in terms of the new store format, and creating playgrounds and creating that in-store experience, is critical to our customers remaining loyal to us," he said.
API's net profit rose 27 per cent in the six months to February 28 to $29.1 million, boosted by higher revenue at its enlarged Priceline chain.
It has opened 25 new Priceline stores in the past 12 months, contributing to seven per cent growth in total sales.
The Priceline network is expected to grow by another 12 stores before the end of the company's fiscal year in August, to 462.
API also expects its full year net profit to grow by at least 10 per cent.
The company has improved its market share in the health and beauty sector, with gains in the dispensary, skincare, over-the-counter health, and colour cosmetic segments.
Revenue from pharmacy distribution grew by 18 per cent in the half year, reflecting the effect of the new high-value hepatitis C medicines.
Shares in API gained one cent to $2.05.
NEW PRICELINE STORES BOOST OWNER'S PROFIT
* Half year net profit up 27.2 pct to $29.1m
* Revenue up 12.7pct to $2.02b
* Interim dividend up 1.0 cent to 3.5 cents per share, fully franked
