Retail Trends: Buy Programs, Not Products
- By Angela Neville, Cynthia A. Parkman
- Oct 01, 1999
Learn Winning Retail Strategies at Medtrade Focus Session
ow can we compete against the chains?"
Independent home health care providers and pharmacists ask this question during most of my seminars. I listen to complaint after complaint about how the volume pricing gives chains and marts an unfair competitive advantage. Their pricing may be lower, but there is another issue concerning advertising and promotion that must be addressed.
Every national chain and mart includes promotional money in the wholesale pricing that they negotiate. These retailers are not simply buying products but rather buying or funding promotional programs that will sell-through these products. This distinction is crucial for retailers in achieving higher turns and return on investment.
Buy a Package
Here is a "power" list for retailers:
- Retail packaging
- Point-of-purchase displays
- Shelf talkers
- Floor samples
- Consumer literature
- Coupons and rebates
- Product training
- Co-op advertising
What is the difference between two similar products - one that comes alone in a brown box and one that includes the above list? The answer is profitability - the difference between dead inventory and monthly turns.
Are these value-added benefits included in the prices you pay for products? If not, then shop around until you find suppliers that include these selling tools at no additional costs. Each of the following should be part of your ongoing marketing and advertising programs if you want your retail sales to profit from annual double-digit percentage growth.
Let Packaging Sell for You
Packaging helps sell products by attracting people to striking visual graphics and national brand recognition. Merchandising research studies have documented that people like to look at people.
Packaging that uses lifestyle photographs, showing people using the respective product, are proven to outsell regular packaging four to one. Packaging that highlights strong user benefits also helps motivate the customer to buy.
POP Displays Attract Customers
Point-of-purchase displays are used to attract attention, educate customers, generate sales and identify with a corporate image or national advertising campaign. According to marketing studies, they facilitate the purchasing process by moving products off of the shelves and into customers' hands. Remember that when a consumer touches or holds a product, he or she is two-thirds of the way to making a purchasing decision.
Signs Point and Sell
Why do chain drug stores have signs everywhere? Because in-store signs have proven to increase sales by at least 10 percent. The goal of retailers is to facilitate the buying experience and make shopping a pleasurable experience for their customers. Consumers value the ease of finding products in any given store. Category and shelf signage are as important to customers as road signs are to drivers. When buying any product, look for collateral window, category and shelf signage to help increase sales for you.
Educated Consumers Stay and Buy
Why place a Starbucks in every Barnes & Noble Bookstore? Being trendy is part of the reason, but the bottom line is that consumer studies have shown every incremental minute that a customer spends in a retail store dramatically increases the amount of their purchases. Using consumer literature is another way of educating consumers (thereby enabling them to make an educated buying decision) and keeping them in the store longer. Brochures, fliers, product selection guides and catalogs are all valuable tools to use on the shelf.
Dangle the Coupon Incentive
Do you find yourself reading shelf coupons even if you do not need the product? That is why two out of three retail purchasing decisions are made in the store - people respond to promotions! Coupons and rebate offers help close sales by stimulating customers to buy. Statistically, they will double or triple sales of a particular product and increase sales per customer. Coupons satisfy the customer in two ways. First on an intellectual level by validating his or her choice of product for quality or price. Second, on an emotional level by either rewarding loyal customers for their continued patronage or rewarding cost-conscious buyers for their diligence. Even private label "Compare & Save" signs increase both sales of those products and retailer profit margins.
Train to Sell
Product knowledge is essential for employees to provide high levels of customer service. However, knowledgeable and caring employees are not necessarily good salespeople. Ensure that your professional staff has retail sales training and understands customer service. Teach them how to find out your customers' needs to demonstrate how your products and services will improve the quality of their daily lives.
Co-op and Save
Retailers view co-op advertising programs from manufacturers and distributors as another available discount. Their goal is to buy the highest quality products with the best available discounts. Co-op advertising programs work to lower customer retail pricing by providing rebates or discounts on promoted products. Every program is different and has specific requirements, so be sure to read the contract. The benefits for the retailer are worthwhile: 50 percent paid on any ad, 5 percent off invoice, 90 or more days dating, consigned floor samples, ready-made print ads or audio/video spots, and set promotional funds per campaign.
Co-op funds are invaluable because they increase your frequency and continuity in advertising. The basis of any successful advertising campaign is to sell more products and to build a business's name and image. By partnering with your suppliers through co-op, you can afford to run larger-scale ads more often - and thus increase your sales and profits significantly.
Learn Winning Retail Strategies at Medtrade Focus Session
Discover how its done from industry experts.
Are cash-and-carry retail sales important in operating a home health care business today? Yes! The average home health care provider generates between 20 and 35 percent of their gross sales from over-the-counter cash business.
This year's "Winning Retail Strategies" Medtrade Focus Session will host a panel of experts who will explain how home health care retailers are increasing both their profit margins and net profits. Internationally known educator, author and speaker Jack Evans will moderate this panel and highlight the latest retail market trends.
"The HME superstores were unsuccessful not because retailing home health care is failing but because their overhead was unsupportable," Evans said. "Their space was too large and too expensive, plus they were forced to staff too many professionals on their showroom floors. The few that survived and downscaled to 2,500 feet or less are very successful and profitable today."
Listen to veteran experts on this panel that include:
- Sue Chin, president of Ortho Nova-Med, who has successfully developed retail packaging and marketing tools to sell-through product
- David Fraser, senior vice president of home health care for Shoppers Drug Mart, who oversees a free-standing chain of retail home health care businesses for Canada's largest drug chain
- Rudy Guerra, a 16-year veteran who worked with Abbey Medical, a hospital-owned durable medical equipment and pharmacy/HME businesses and cannot keep his lift chairs and scooters on the floor long enough to create a display
- Frank Milatta, president of Health Care Depot, who has created a new retail home health care business that is very successful
- Paul Pankros, Walgreens' director of home care services, who has dedicated 40 years to building one of the leading national home health care operations
- Jim Sullivan, editor of HME News, who will present cutting-edge operating techniques from providers around the country
- G.J. Walley, national director of home health care for Bergen Brunswig, who has helped develop retail merchandising and marketing support along with products
This focus session will be on Nov. 3 from 9:15 to 11:30 a.m. and is sponsored by Bergen Brunswig and Nova. Viewpoints from every aspect of the home health care industry will be presented: manufacturer, distributor, independent provider, pharmacy/HME combination, chain business and journalists. Do not miss this rare networking opportunity to learn from your peers at Medtrade 1999 in New Orleans.
This article originally appeared in the October 1999 issue of HME Business.