Cash, Cash, Cash (and a Bit of Medicaid)

Las Vegas is well-known as the country’s prime spot for gambling and entertainment. It also has one of the nation’s highest foreclosure rates, highest unemployment rates and highest vacancy rates.

But Everything Medical is one family-run business that succeeds in the city’s midst and brings calm to the fervor. When you walk in the door, you might be welcomed by three generations of family: grandparents, children and grandchildren, plus the family dog. No customer leaves the store without feeling they have been helped to make their day — or their daily life — better.

Robert Kelemen moved to Las Vegas from Los Angeles after California’s Northridge earthquake in 1994. A pharmacist by trade, his 10-year-old wholesale supplies business (United Health Supplies) was wiped out in a flood caused by the earthquake. Robert seized the opportunity to move the family out of “Seismic Central” and decided on Las Vegas — a city of unparalleled growth, active senior communities and retirement centers, large hospitals, vacation homes, sprawling suburbs and continuous tourism.

Selling supplies runs deep in the Kelemen family. Robert’s mother-in-law Pearl Berman had worked in government purchasing and saw the opportunity to sell to school districts across the country in both health and athletic departments. So Robert rebuilt the wholesale business with young son Jeff, who worked for his dad during high school.

After college graduation, Jeff returned to the family business and recommended that they open a retail operation as a complement to wholesale supplies. And why not? They knew the products thoroughly. They knew who needed them. They knew how to provide personal service. So in 1997, the first Everything Medical retail store opened in a 900-sq.-ft. space in a nondescript strip mall.

The family dynamic remains today, including mom Joanne as the company’s CFO and Jeff’s wife Elizabeth, a registered nurse, making outside sales calls. The two businesses merged in 2007 to streamline paperwork and licensing, and in 2009, the family opened a second Las Vegas retail location.

Super Service, Selection and Price

Everything Medical is exactly that, everything medical. With over 25,000 SKUs, the stores likely carry almost anything customers need.

“We are staunch believers in offering a good-better-best selection,” says Jeff Kelemen, now 39. “We know our consumers want to know what’s available, the trade-offs — and if they can’t afford it, what they are missing out on.”

Even in an economy like that in Las Vegas, Jeff notes that when presented with their choices, customers will often move to the better or best selection, whether they are buying for themselves or another person.

If Everything Medical doesn’t have what the customer wants, the Kelemens will find it. They know that if they help a client find the exact right product, that person is highly likely to become a customer for life. Even if the product doesn’t work out, the goodwill generated by the store nearly always results in another visit and future sales, Jeff says, and gives the business excellent word-of-mouth referral.

“We will go out of our way to find the right item. The last thing I want is a customer to tell me, ‘You didn’t tell me about that,’” says Jeff, adding that the expansive selection offered by Everything Medical is hard to duplicate.

“Who else in Las Vegas carries eight wrist braces?” he asks.

Since their core expertise was in handling disposables, which involves extensive SKUs, it was only natural for the Kelemens to expand into more HME cash product lines. The retail stores’ top-selling categories are disposables such as wound care, ostomy items, urologicals and incontinence. The stores also offer compression hosiery, orthotics, lift chairs and scooters and all basic DME and accessories. Bath safety and mobility sales continue to grow with comprehensive selections on the floor for customers to try.

A commitment to employee education is also making a difference in sales. That knowledge brings the customer back over and over again. Employees are trained regularly in product information and service ethic both by manufacturers and by the Kelemens, who want customers to be treated as if they were a family member making a health care decision.

“Because we are a family business and are dedicated to our community, we understand our customers and have empathy for their needs. Each sale is our reputation,” Jeff shares. “Each sale is based on a trust between the customer and our business. This is completely different from an Internet relationship. Our business is still about empathy in health care.”

Retail sales have grown annually except for 2010, which was a flat year impacted by effects of the economic depression and Las Vegas’ situation. While the customer count was same as in 2009, Jeff says, the average sale amount declined. Customers were still coming in and buying, but just making more budget-conscious purchases.

Retail growth is back on track for 2011, however, with projections at 10 percent even as the economy continues to lumber along. Retail HME now accounts for 75 percent of the company’s business. Third-party sales make up the rest, with 95 percent of that in Medicaid.

Branding and Promotion

Everything Medical’s physical location is paramount. The county hospital is right across the street from its flagship store. Now encompassing 5,000 square feet, the store has expanded three times since its opening. The company’s 2,000-sq.-ft. satellite location is within a mile of three hospitals. Over the years, Everything Medical has established its brand as the “go to” location for retail medical supplies and equipment in Las Vegas with a service, selection and pricing combination that is well known.

The company’s marketing strategy includes promotional events and targeted advertising. The Kelemans work closely with manufacturers to provide in-store support for events, merchandising, co-op advertising materials and planogram help.

Las Vegas is an unusual market, with its 2 million population served with one telephone book, making the Yellow Pages an important reference tool. Everything Medical has a full page, color ad that displays its local dominance. In addition, the company advertises in specialized magazines such as nursing journals and health magazines in doctor’s offices and on local television and radio. TV and radio ads use the Kelemens’ voices and feature turnkey co-op ads provided by several vendors.

Four key promotional events are held throughout the year, including a free Mobility Tune-Up Day, two leg health days and a winter promotion featuring holiday gift items. The Mobility Tune-Up Day is considered a public relations service event; there is no charge for the tune-ups, which include basic service and maintenance. This event also generates broad-based community goodwill and is an opportunity to feature the store and its services without a cost for consumers to participate.

Jeff Kelemen manages Everything Medical’s advertising and promotion spend, currently under $150,000 a year, and does not use an outside advertising agency. The situation could change, however, as the company looks at expanding its digital presence.

Who’s the Competition?

The Kelemens realized early on that their core expertise was not in handling Medicare.

If Medicare patients come into the store, staff members explain that they don’t accept Medicare and refer those customers to a list of local Medicare providers. Jeff doesn’t view Medicare HME providers and pharmacies as his competition, he says, noting that often they are a source of referral for Everything Medical.

His real competition, he says, is the Internet.

About 150 to 200 customers walk into the two retail stores daily. Jeff notes that not a day goes by when someone doesn’t show an item they have found on the Internet that is cheaper than his price. Everything Medical’s staff is trained to address these customers by simply explaining that the price is not a comparison of apples to apples.

“The actual Internet cost with shipping, handling, self assembly and set up, no warranty support, no repair service and cost of returning an item through the mail or shipping service, plus waiting for the item from five to seven business days, shows the difficulty comparing local service with the Internet,” Jeff points out. After explaining the differences, he says, “The customer can then make an informed decision, which is usually in Everything Medical’s favor.”

Sales employees also review the product’s features and benefits with customers, along with any available options. Very often, Jeff says, the customer chooses the upgraded model — and is grateful someone took the time to explain it.

Retail Merchandising Drives Revenue

Merchandising 25,000 items is a continual challenge, Jeff says, with streamlining the shopping experience always the goal because many odd-shaped and irregular-sized HME items can create a cluttered look. Recently, all sick room items were moved to the back of the store to leave the front entry more open. Jeff reasons that improving the ease of shopping helps the customer, helps sales personnel more easily offer and cross-sell recommendations and also makes reordering and restocking significantly more efficient.

With manufacturers’ assistance, the Kelemens remerchandised the front of the store, decreasing the number of fixtures and opening up the view to make products featured in the entry clearly visible.

“After remerchandising, one customer asked me if we were going out of business. Where did all the clutter and fixtures go? Ironically, there was more product out on the floor in the new merchandising plan,” Jeff says. “It was just more organized and easier to see. We did not need any back stock.

“The proof was the increase in sales of the remerchandised categories — an increase of up to 40 percent. Management and our manufacturers were both happy about that,” he says.

He’s also happy about the improved productivity of his staff in stock replenishment and reordering, the store’s increased inventory turns and overall margins.

Digital Expansion

Typical of many small HME businesses, the retail operation is currently high-touch and low-tech. Jeff notes that it has been difficult to modernize while maintaining a high level of service. But changes are coming, he adds.

Everything Medical has concentrated on personal service since the early days, and service is and will continue to be its core strategy. But as more customers use the Internet for research, the company is making 2011 the year to embrace the digital world. Plans are shaping up for website expansion, search engine optimization, social media strategy, search engine marketing and more.

The Kelemens want to be ready for the next generation to tweet about the business and post the latest deals online for all their friends. In the meantime, the grandkids work weekends on the register or greeting the clientele who have supported the business for nearly 15 years.

Colette Weil is managing director of Summit Marketing, Mill Valley, Calif., a consulting firm specializing in strategic marketing and program development. You can reach her at [email protected] or 415/388-5303. You can “Like” Summit Marketing on Facebook.

Everything Medical’s Business Stats

• Stores sales: $6 million
• 2011 retail sales growth estimate: 10%
• No. of employees: 22 (14 retail)
• No. of SKUs: 25,000
• Philosophy: Service, service, service, plus complete product selection and value pricing
• Revenue mix: 75% retail, 25% third party (of which 95% is Medicaid)
• Locations: 5,000-sq.-ft. flagship store; 2,000-sq.-ft. satellite store; 10,000-sq.-ft. wholesale warehouse
• Retail categories:
• • Wound care
  • Ostomy
  • Urologicals
  • Incontinence and skin care
  • Orthopedics
  • Sports medicine
  • Compression hosiery
  • Bathroom safety
  • Mobility and accessories
  • Lift chairs
  • Vehicle modification
  • Diagnostics and physician room equipment
  • Cushioning
  • Vitamins
  • First aid equipment
  • Rehabilitation products