2007 Retail Survey

If retail is not a big part of your HME business, why not? That’s one of the questions HomeCare asked magazine readers in our 2007 Retail Survey. One provider answered: “We see only a few people in our office. It has never been a focus for our company.”

While that mind-set toward HME retail would have been typical just a few years ago, on this year’s survey it proved to be in the minority. In larger numbers than ever reported, 77 percent of the providers participating in the survey said they intend to increase their retail sales this year. That’s a big increase over the 58 percent who answered that same question in 2003, the year our last survey on retail was conducted.

Their reasons are the flip side of those from the provider who is apparently content with his business. Today, providers told us, they want to see more people in their showrooms and they want more revenue from retail business.

The survey numbers reflect another shift that the majority of these providers say they have seen: 68 percent find their customers are willing to pay out-of-pocket for the home medical equipment and products they need. Recognition that this consumer need is there to be filled — and that it’s growing — is fueling retail plans for many of the home care companies in the survey group.

As a whole, these providers plan more advertising of retail products. About half as many of the responding companies say they participate in vendors’ co-op advertising programs (49 percent) as don’t (50 percent). Those that do overwhelmingly find these programs helpful (84 percent), but say that they would advertise on their own without any help from vendors (86 percent).

One-third have expanded or remodeled an existing showroom within the past three years, while a quarter have added a new location with a retail showroom. About product display, 22 percent say they change their showroom displays whenever new products come in, up from only 13 percent in 2003.

Significantly more current respondents also track revenue separately for retail customers vs. medical referral customers than did in 2003, 55 percent vs. 30 percent.

Even though it hasn’t completely turned yet — for these providers, Medicare represents the lion’s share of sales at 40 percent with retail contributing only 14 percent to the overall total — the retail tide looks like it is definitely coming in.

To see how your retail business stacks up against the average among that of other providers, check out the stats in this section. And for a real pep talk about the reasons you might want to consider HME retail, see “The Retail Connection in HME” on page 18.

Survey Fast Stats

• Just over half of the respondents (54%) describe their physical location as a free-standing building. Nineteen percent are located in a strip shopping center, and 16% are located in an industrial/office park.
• The median size of respondents’ locations is 4,000 square feet. More than half (56%) reported they do not have any off-site storage.
• Sixty percent of respondents said they have a front window display.
• One-third of the respondents have expanded or remodeled an existing showroom within the past three years, while 26% added a new location with a retail showroom. One in five respondents plans a showroom expansion or remodel in the next year, and another 24% are considering such plans.
• More than half of the respondents (56%) indicated they do not employ dedicated showroom salespeople.
• Respondents are evenly divided between those who allot showroom space based on product profitability vs. those who don’t (43% vs. 42%).
• Retail sales average 14% of respondents’ revenue. Seventy-seven percent of these providers say they intend to increase their retail sales this year.
• More than two-thirds of the respondents (68%) find that their customers are willing to pay out-of-pocket for products they need.
• Six in ten respondents (62%) advertise or promote their retail products, most often in the yellow pages (54%) or community/metropolitan newspapers (45%).
• Half of the respondents (51%) reported increased revenue from walk-in retail customers over the past year.
• A majority of respondents said they track retail sales by total sales volume (63%), while some use the inventory turn rate (41%) and profit margin (36%) for tracking.
• While two-thirds of the respondents overall (67%) plan to participate in Medicare competitive bidding, less than half of those with revenue under $1 million said they plan to bid (43%).

About This Survey

Data were collected Jan. 30-Feb. 11, 2007. Of 265 HME companies participating, 52 percent operate one location. Thirty percent reported annual revenue of less than $1 million, while 11 percent indicated revenue of $25 million or more. Not all respondents answered every question, and some totals may add to more than 100 percent due to multiple responses. Survey methodology conforms to accepted marketing research methods, practices and procedures. For a complete copy of the survey, visit www.homecaremag.com.