Think retail. This is easy to say, but not so easy to do if you operate a traditional reimbursement-driven HME business. Retail businesses reach out to
by JACK EVANS

Think retail. This is easy to say, but not so easy to do if you
operate a traditional reimbursement-driven HME business.

Retail businesses reach out to attract and sell on a daily
basis. To retail is to sell. This means selling physically in the
store as well as via marketing and advertising within the
respective sales territory.

Following are a few guidelines to consider when retailing
HME.

  • Location

Retail businesses offer physical locations that are highly
visible, easy to access and convenient. They are easy to see, easy
to turn into, easy to park at, easy to shop and easy to check out
of and exit. Just visit any national fast food chain or drug store
location to see how these components fit together.

Aside from visibility, another way to attract customers to a
retail HME is to locate adjacent to or nearby a related business,
such as a chain drug store, major shopping center, hospital or
medical center. Any of these health-related businesses translate
into a 10 to 20 percent crossover of their customers/patients into
becoming your HME customers.

Retail space does cost more than industrial or commercial space.
Plan accordingly by using your retail location only for selling.
These activities include a showroom, customer service area
front-and-center, fitting room and minimal storage. For all
non-retail functions such as rental equipment, warehousing, billing
and delivery, use a garage, warehouse or other location that is
priced accordingly, i.e. at industrial or commercial rates.

  • Showroom
  • A retail HME business devotes half or more of the total space to
    a showroom that prominently displays the product selection. Not
    rows of rental equipment. Not row upon row of gondolas. Simply
    create a wide open showroom floor that highlights a wide selection
    of products within each of the core categories sold.

    In HME there is an interesting correlation between products and
    sales: The more products displayed, the higher the sales. Most
    retail HMEs generate $1,000/sq. ft. in annual gross sales. This
    means a 500-sq. ft showroom will only generate approximately
    $500,000 per year in gross sales, while a 1,000-sq. ft. showroom
    generates a minimum of $1 million per year in gross sales.

    Think Brookstone, Sharper Image and department stores when
    designing a retail HME showroom. Display every core product fully
    loaded, with every accessory that you carry. Display related and
    add-on products adjacent to these core products. Create room sets
    such as bedrooms, bathrooms and living rooms to demonstrate
    visually how HME products are utilized together to help improve the
    end-user's daily quality of life.

  • Product Selection
  • The key to successful sales, turns and profits is matching the
    categories with your customer demographics. There is no
    “one-size-fits-all” for an HME showroom. Given the high
    costs of retail space and large inventories, HME companies can no
    longer afford to carry every product. Stock the products your loyal
    customers buy on a repeated basis, and any other products that
    might also appeal to their same needs or values.

    For example, baby boomers who buy diabetic supplies on a monthly
    basis would also buy diabetic shoes, socks, skin care, compression
    stockings and orthopedic supports. Female seniors who buy
    incontinence products also may need mobility and bathroom safety
    products. Patients needing a hospital bed or oxygen set-up will
    also need mobility and bath safety products plus ADLs.

    Given that the front third of a retail store generates 80
    percent of the sales and profits, analyze your customers and
    markets before merchandising. Then, allot the largest areas to your
    core HME categories that meet the home health care needs of your
    primary customers and patients.

  • Just-in-Time Inventory

    Do people know what you sell?

  • Take a lesson from Wal-Mart: Just replenish what you sell! You
    do not need a 1,000-sq. ft. warehouse stocked to the ceiling, with
    all of your marketing and advertising monies tied up in old
    inventory. Use the distributor's warehouse as your own. Every
    product has a carrying cost attached, and the longer it sits in
    your warehouse, the more it costs you.

    Don't forget your front showroom windows!

    Whether you order direct from vendors or from distributors, the
    inventory goal is what is called “high service levels.”
    This usually means next-day delivery to replenish your sold
    products. Do not think that distributors cost too much to take
    advantage of this service. Although products might cost a few
    percent more to purchase, they will turn almost twice as fast by
    always being in stock.

    Retail businesses cannot afford to be out-of-stock of their most
    popular sellers. Why? When a customer cannot find the product for
    which they are searching, they will go elsewhere to shop. If they
    find — and buy — the product easily at your
    competitors, then the next time they need an HME product, where do
    you think they will go? So not only do you lose a sale but a
    potential lifetime customer as well.

    Note: Automated inventory control software systems are
    vital in operating any profitable retail business. Depending upon
    the cost and size and turn of a product, stock two or three units
    and then automatically reorder when you are down to your last
    piece. Scan the new products into your system when they are
    delivered, then have your point-of-sale system automatically
    generate a reorder list from daily sales.

    • Controlling the Sale

    Every day, customers walk into HME stores to rent wheelchairs,
    beds and oxygen for their loved ones. They are asked what insurance
    the patient uses, the billing intake is processed and the products
    delivered, so the customers depart satisfied.

    But this is not retail.

    In a retail HME business, customer service representatives view
    every Medicare and Medicaid patient as a retail sales opportunity.
    Instead of asking which insurance company covers the patient, they
    qualify the customer by asking a few probing questions, such
    as:

    Who is the end-user?

  • What is their medical condition?

  • Do they have any special health care needs?

  • Do they have any special lifestyle concerns?

    With every rental wheelchair, the customer is asked questions
    concerning the end-user's daily needs to determine if they need
    related products. These include ramps, cushions (from egg crate to
    gel), trays, backpacks, pouches, oxygen tank holders, cane holders,
    urine collection systems and auto lifts. The result is that every
    rental — whether for wheelchair, bed or oxygen system —
    generates from $200 to $600 in cash, add-on sales.

    Sell high. If someone wants a walker, start by demonstrating
    rollators first, rolling walkers second. In retail, over half of
    customers find a personal benefit they prefer in an upgraded
    product. If a senior still insists on their Medicare entitlement,
    use an ABN to offer them a discount on the upgraded product they
    liked.

  • Marketing & Advertising
  • A retail business can rarely rest on its laurels and assume
    customers will continue to patronize their store — a
    “build-it-and-they-will-come” mentality.

    How are retail businesses successful in marketing and
    advertising? Frequency and repetition is the key. Never stop
    delivering your branded message:

    • Your name and logo;
    • Your specialty;
    • Your reputation; and
    • Your location.

    Find the medium that will work best for advertising by asking
    your current customers about their preferences. What newspaper do
    they read? Which television show and/or station is their favorite?
    Which radio station do they listen to? Then advertise as often as
    possible to build your brand.

    Note: Booking daily spots on radio and TV is not
    necessarily the best option to produce results. If you know the
    station that your customers listen to or watch, advertise as often
    as possible within a two- or three-day period to ensure that you do
    not miss them.

    But the best advertising is often free publicity that results
    from a good marketing program. Here are a few recommended guerilla
    marketing activities that work:

    Hold quarterly open houses.

  • Sponsor monthly support group meetings.

  • Host booths at health fairs, county fairs and other community
    events.

  • Host health care programs on local public access cable TV.

  • Visit assisted living centers on a monthly basis with lemonade
    and cookies and HME to show-and-sell your core categories.

    Retail means ongoing marketing and sales. Hesitate and you lose.
    Examine your competition and then self-examine your own business.
    Where do you excel in location, showroom, product and/or
    service?

    Take this advantage and run with it — and don't look
    back!

    Jack Evans, president of Global Media Marketing, Malibu,
    Calif., is a home health care educator and marketing specialist who
    works with HME providers, pharmacists, distributors and
    manufacturers to develop both business-to-business and
    business-to-consumer marketing and advertising programs. His retail
    HHC programs include showroom design, demographic merchandising,
    product and sales training, marketing and advertising. Evans can be
    reached at 310/457-7333 or at www.retailhomecare.com.

    Do people know what you sell?

    • Is your sign visible from the street?

    Do you have “medical equipment,” “home care
    products” or some other variation of HME in large,
    easy-to-read letters? Note: In new retail businesses, what you
    do/sell is more important in attracting new customers than what the
    company name is or what your logo looks like.

  • Do you have HME paintings, drawings, photographs or actual
    products on the front of your building that will instantly tell
    potential customers what products you sell?

  • Do you have enough parking spaces reserved for your
    customers?

  • Do you have a handicap parking space adjacent to your front or
    rear door?

  • Do you have automatic front doors, or at least an extra-wide
    entry door?

    Don't forget your front showroom windows!

    • Your windows are silent salespeople that sell 24/7 for
      you.

    Rotate product on a monthly basis at minimum.

  • Use risers and halogen lighting to make products more
    visible.

  • Use mannequins to display orthopedic supports and compression
    stockings.

  • Use electric timers to display lift chairs rising and
    reclining.

  • Display big-ticket products such as lift chairs, scooters,
    transport chairs and rollators.