If you want to learn how to do retail, go to Wal-Mart. No, don't laugh. It's good advice for home medical equipment providers, industry players say. The giant retailer has perfected the art of displaying, marketing and moving its wares, and a trip down its wide aisles can reveal much about successful retailing.
In an environment that hasn't looked kindly on the HME provider for some years, successful retailing could make the difference in whether your bottom line is black or red. Indeed, a successful retail operation can jump start your cash flow and reduce your dependency on third-party payers, according to industry consultants who, along with HME retailers, shared with HomeCare insights into how to beef up retail sales.
“If you want to learn the business, you've got to walk the Wal-Marts,” says Louis Feuer of Dynamic Seminars & Consulting, Pembroke Pines, Fla. “They are appealing to the over-50 population, and the learning curve would be so much shorter if [HME retailers] would just look at what some of these gurus are doing. Look at the wide aisles — there's room for a wheelchair — and the big black-and-white signs that you can see from a distance. The sales people wear blue vests or jackets and [thus] are easier to see.” The whole idea at Wal-Mart is to make it easy for a person to shop there, marketing experts say. But making it easy for the customer isn't always so easy for the retailer. According to providers and consultants, it takes capitalization, communication, education and evaluation to make HME retailing work.
The Capitalization Realization
“Everybody has misconceptions about retail,” says Jim Binson, owner of Center Line, Mich.-based Binson's Home Health Care Centers, now in its 50th year. “Inventory costs you, floor space costs you … there are all these hidden costs that people don't see.”
Feuer agrees. “You have to do it big or don't do it,” he says. “Retail is costly. You have rent, phone calls, advertising.”
You also have staffing costs, which can be considerable, says Roger Miller, president of Broadview, Ill.-based Dependicare.
“It's such an investment just in people to keep the retail site going,” he says. “You've got Saturday hours [to staff], overlap staff. I think you have to be very careful to look at what your staffing dollars are. In each of our [two] retail stores, we have two primary retail people. And then we have a method for backup. If there are eight customers in the store, [the retail people] have someone they can call on who can talk retail also.”
All these costs are in addition to the costs of a broad inventory. Most HME retailers and consultants will tell you that stocking one or two products — or even, in some cases, one or two brands — will not translate into a healthy retail business.
“You could have a store with only one item, and if that's what people wanted, they would come to you and that would be fine,” says Joseph Tenne, owner of South Bay Home Health Care in Torrance, Calif. “But I'm still looking for that product.”
Tenne's 4,000-square-foot retail store stocks everything from respiratory and rehab products to wheelchairs and pressure stockings. “The first time I got a call [for a product] and didn't have it, we had it the next time,” he says. “I lost that first sale, but the next time I got a call for that item, I had it. And that's how you fill up your showroom.”
Binson, who now has 24 locations with showrooms ranging from 2,000 square feet to 10,000 square feet, says offering what the customers want is the key to successful retailing.
“You have to have everything they want when they want it,” he says. “They don't want to wait. You have to have a lot of inventory if you go into retail. We have to have 20 items on the shelf because if we don't, they can't buy it. There are so many different ostomy bags, but if you don't have the one that people need, what good are you?”
It is critical for HME retailers to know who their audience is, says Colette Weil of Summit Marketing, Mill Valley, Calif. She suggests looking to your own employees and having a 10- to 15-minute conversation with them about who is coming into the store and what they are looking for.
“You'll find out a lot of information,” she says, and that can lead you to the appropriate inventory mix.
Whatever that mix might be, make sure you have enough capital to get through the slow periods. Binson notes that undercapitalization is a common error.
“It takes a while for retail to build,” he says. “It doesn't happen overnight. People have to know that you're there and that you're going to be there.”
The Communication Component
Binson's advice brings us to the communication component, otherwise known as advertising or marketing. For an industry that was built on referral sources and Medicare, these activities can be a stretch.
“Our industry is not used to spending money on advertising,” Weil says.
And yet, an ongoing advertising campaign is crucial to the success of an HME retail operation, according to Jack Evans of Malibu, Calif.-based Global Media Marketing.
“I stress the ‘ongoing,’” he says. “Most people advertise three or four times a year and that's it. Advertising is about repetition and frequency. You have to build up brand recognition so that when people need a health care product, they think of you.
“Think of advertising as an investment, not an expense,” he advises. “It's not a cost — you're investing in a return.”
Weil agrees. “A one- or two-time hit is not worth it,” she says. “Be aware that this is an investment — an ongoing investment in promotion.”
Tracey Wills, owner of The Women's Health Boutique franchise in Oklahoma City, advertises weekly in Oklahoma's state newspaper.
“It's one of the most expensive to advertise in, but it's been very successful,” she says, noting that she spends about $700 a week on advertising. She avoids what she calls “shotgun” advertising: “It's where you're not aiming at any specific target, you're just shooting all around.”
She chooses instead to select her advertising medium carefully, and, while this medium might be more expensive, it keeps her business' name in front of the public and generates newspaper, magazine and television interviews — another way of getting her company's name in the public eye.
TV, radio and newspapers are the mainstream advertising vehicles, but Feuer says there are other cost-effective ways of getting your name out there. He suggests advertising in newsletters, such as those that go to gated communities. “Senior living guides are wonderful ways to advertise products,” he says. Cable TV is another outlet for advertising, and retailers can get a lot of mileage out of attending senior health fairs, Chambers of Commerce events and other local activities, experts say.
Most successful HME retailers market their wares in a variety of ways.
“We do everything,” says Tenne. In addition to TV and newspapers, the company sends out flyers to a targeted mailing list, as well as to its existing customer base.
Miller says he regularly uses print media to advertise products he stocks in his 3,000-square-foot retail showrooms.
“We do a lot of advertising,” he says, noting that the company strives to feature as many products as it can during the course of a year. “We're in print media advertising almost every month. We've found that print media is the best for us. Radio doesn't work and we're going to dabble in TV a little this year.”
“We do newspapers, television, radio and fundraisers,” Binson says. “You have to.” Binson's advertising program targets the need. “We do whatever we want to do at that particular time, ” he explains. “If we have a lot of scooters in the warehouse, we're not going to advertise walkers.”
Feuer also strongly advises HME retailers to have a Web site. Among other benefits, he says, a Web site is a good place to run coupons that might draw foot traffic to your showroom.
“I think you've got to [offer coupons] in HME,” he says.
Educating the Masses
One of the tricks of the HME retail trade is teaching the public what products you carry, what the products do and how they work. It's important enough, says Evans, that it should be one of the first things you do when you open your retail division — and one of the things you continue to do.
“Educate your current customers that you also have these other products,” Evans says. “And that is as simple as mailing to your customer base and using bag stuffers.”
However, it's wise to broaden the scope of the education effort by holding open houses, sending a qualified employee to speak at senior centers and residences and participating in health fairs, Evans and other consultants add.
Such activities ultimately will pay off, Miller says. “Our two retail sites are in smaller, more self-contained markets,” he says. “And I think the key in each of those places is being integrated into the community — making sure that, from a marketing standpoint, you are creating a touch with community organizations. I think that does as much as anything in getting people to come through the door.”
Wills agrees. Her store periodically holds a women's health day, featuring guest speakers who discuss a variety of topics.
“It's two days, and we invite different people to set up booths. That includes some of our vendors and other people in the community,” she says. Refreshments are available and guests have a chance to see new products, peruse the store's other items — which, in addition to post-mastectomy bras, wigs and compression garments, include handbags, jewelry and books — and ask questions.
“We try to have something for any woman who would walk in so we don't have that stigma of only being for a woman who has cancer,” Wills says.
The women's health day is one way of getting that across to potential customers — and getting them in the door, she says.
Once the customers are through the door, you have an even greater opportunity to educate them about your business and the products you carry. That means having knowledgeable people on the sales floor. Given the choice, Miller says he would always choose a salesperson “who's been in the field and knows at least a chunk of the products out there.”
“The customers ask questions that are extremely precise,” he says, “[such as] ‘I'm using this in this way, and how I can I use it best?’”
It takes someone with solid knowledge to show customers the best uses of products, to introduce customers to new items that might be of help and to ensure that the products customers are using are appropriate. It also helps to allow the customer to handle the merchandise, retailers say.
“I wish I could just have pictures,” Tenne says. “But they want to touch [the product], to try it.”
Mobility aids such as walkers, wheelchairs and scooters need to be accessible — and your aisles need to be wide enough — so people can try out these products.
Samples of items that usually are packaged, such as eating utensils, should be available so people can handle them.
“It's hard to merchandise [aids to daily living],” Weil says. “It's an important category, they've got all these small items, but they need to be demonstrated. Take one out of the package and tie it to the counter so people can try it.”
Binson says amen to that advice. “You don't want to buy something you can't use,” he explains.
The Evaluation Equation
All of the above either won't happen or it won't be effective unless you evaluate continually the state of your retail business. That might sound like compulsive behavior, but it is key to being successful, retailers and consultants say. The constant monitoring can prevent major problems, allow you to capitalize quickly on smart ideas and keep your business from stagnating.
Experts point to a variety of areas that deserve special attention:
Inventory mix
“When you have too much inventory and the product is not turning over, that's when you know it's not working” Weil says. “Watch for a slackening and be prepared to re-merchandise a mix of products.”
Remove products that are outdated from the shelves, Feuer says, and “don't store stuff that's not going to fit the needs of the customer.”
Be open to adding product lines, too, Miller says. His stores recently added uniforms to the mix of products. The benefit could be two-fold: increased sales from selling to a different audience — the professional caregiver — and perhaps increased referral sales. It's still too early in the game to say whether the latter is happening, but in the meantime, the uniform sales are strong, he says.
Clientele
Knowing whether your customer base is changing in age, product need or gender is important. It can decide your product mix and your advertising target. “Take a close look at who you're trying to reach, the geographic area you're trying to reach and the [product] category,” Weil says.
Miller also tries to ascertain how many new clients he is seeing in a month. “The key statistic to me is, how many new people do you have coming into your store each month?” he says. “You can't get repeat customers if they don't come in the first time.”
Window and showroom displays
Displays should be attractive, clean and appealing, with prices clearly marked. Make sure that your showroom is a showroom, Evans says.
“The storeroom is not a showroom,” he says. “It's just rows and rows of products. If you go to a department store, that's a showroom. If you go into a chain drug store, that's a showroom.”
Don't be afraid to borrow ideas from other retailers. Wills, for example, toured Victoria's Secret stores to get ideas for making her store inviting to the clientele she needs to attract. “It's a safe little haven,” she says, adding that she is always on the lookout for ways to freshen the look and draw people in.
Window and showroom displays should be dynamic — in other words, creatively designed and frequently rotated. People like to see new things, whether a new sign or a new product, Miller says.
Wills takes this advice even further. The way you showcase your products can make or break you, she says. “If people don't have that knack for doing a display or creating a window, I would encourage them to hire [someone who does]. It makes all the difference in whether you succeed or fail.”
Staffing and hours
HME retailers need at least one dedicated sales person, Evans says. If you can't afford to have one all day, find out when your busiest time is and staff the floor with a dedicated sales person then, he says. “I see sales that grow 20 percent [with the addition of a] dedicated salesperson,” Evans says.
Hours are important, too. Stores need to be open at convenient hours during the weekday for the working folks and they need to be open on Saturday, too, HME retailers and consultants say. Indeed, Saturday likely will turn out to be your best day. “Saturday is the day when most people do their shopping,” Binson says. His stores are open from 7 a.m. to 6 p.m. weekdays and 8 a.m. to 3 p.m. Saturdays.
Location
It's wise to reassess your location and how it fits your business' needs. Is it large enough to house your particular inventory? Is it convenient for customers? Are you in a location that gets foot traffic?
To gain more inventory space and parking, Tenne moved three times. He's been at his current location for nine years. Miller recently moved his Elgin, Ill., store to a location that offered “more and better” retail space.
If you end up determining it's time to move, Evans has some advice. “If you want to run a retail operation,” he says, “you have to have a location where there is retail traffic. Find that chain drug store and get as close as you can, because [that store will] be your primary referral source. Next to a Rite-Aid or a CVS, you've got ready-made traffic.”
Followup
If you are not following up on sales, you're missing out on greater revenue, industry players say. “I think in HME retail, there's a whole after-sale follow-up component,” Feuer says. “My trainer is the car industry. When you buy a car, they are begging you to fill out that evaluation. You bring in the car for repair and they are calling you a week later to see how the service was. We need a dedicated follow-up effort.”
Weil agrees. “Always follow up,” she says. “Always get the customer's name and follow up in a non-intrusive manner — e-mail, direct mail, customer reminder call, something creative.”
Tenne isn't obnoxious about it, but he says he continues to keep his company's name in front of a new customer. “We follow up a sale with a satisfaction letter or call,” he says. And after that, the customer will get at least one mailer a year. “Once he came in, that's it!,” Tenne jokes.
Are You Ready for Retail?
If you're considering opening a retail branch of your home medical equipment business, Louis Feuer of Dynamic Seminars & Consulting, Pembroke Pines, Fla., suggests considering these issues first:
Are you able to manage retail as a separate component of your business? For example, do you have an appropriate computer software system, that allows you to post daily revenues apart from third-party pay sales?
Can you separately calculate all your costs of doing retail business, including air conditioning, floor space, cleaning service, etc.?
Have you created a sales and marketing plan separate from the rest of your business?
Do you have a system for determining if retail sales have led to non-retail sales revenue? For example, can you track that Mary Jones bought a designer cane as a gift for her mother, then returned some time later to purchase bathtub rails?
Do you have the right products for your clientele?
Can you calculate a separate return on investment in inventory for retail versus nonretail?
If you can answer “yes” to these questions, you're on the way to managing a retail business successfully, Feuer says.
Help is on the Way
If breathing new life into the retail arm of your home medical equipment business seems daunting, take heart. There is help out there from a variety of sources, retailers and consultants say.
The manufacturers of the products you stock are obvious sources for guidance. “Manufacturers want to build momentum and build visibility for their brand,” says Colette Weil of Summit Marketing in Mill Valley, Calif. They often will provide everything from brochures and marketing advice to co-op advertising and in-house training, she says.
Exeter, Pa.-based Pride Mobility has put together a package that goes beyond even that. “We offer a full merchandising program free of charge in which we have merchandisers throughout the country who are experts from the retail industry, who help to maximize showroom effectiveness,” says Mark Miller, vice president of marketing.
While this might be done over the phone, the merchandisers sometimes will come to your store. The company also offers help in putting together a long-range sales strategy, Miller says. “To help with retail sales, we have a [public relations] team that will work with you on your PR efforts. Our staff is going to sit down with you and … formulate a marketing plan to maximize sales over the long term. We have advertising consultants who work as media buyers. And … we have a customer service team that really works hard to adjust to the needs of each provider. [The program] is set up to maximize sales within the showroom.”
Roger Miller, president of Broadview, Ill.-based Dependicare, believes that manufacturers can offer valuable help to HME retailers.
“Listen to the manufacturers,” he says. “They know how to market their products. Then selectively use the ideas you want to use. You can get good help from them. There's no way you can know everything about every product.”
Tracey Wills, owner of The Women's Health Boutique franchise in Oklahoma City, says if a manufacturer has a retail display unit, “it's worth your while to invest in it. It makes a difference in whether [the product] moves or it doesn't.”
She also subscribes to retailing newsletters and regularly scans Web sites devoted to retailing, in search of new ideas.
Retailing help also is available from HME consultants, as well as from purchasing groups such as Lubbock, Texas-based The Med Group and Van G. Miller and Associates of Waterloo, Iowa.
