On survey recently, a DME owner complained about his retail showroom and how little business the beautiful, well organized space generated for the company. “It seems like a waste of space”, he opined, “and I’m frankly thinking about giving it up and moving into a smaller space with offices and warehouse only”. Looking around his store, my initial reaction was that the space looked very good, his staff was friendly and helpful, and the location was on a major road in close proximity to other retail establishments and also a hospital and bunch of physician offices. Furthermore, his business had a lot of foot traffic from CPAP customers coming in for set up instruction and oxygen customers coming in to exchange portable cylinders. So, why was the retail side of his business languishing?
A deeper dive revealed a possible explanation. Although the displays were bright and clean and well organized, the product selection left a lot to be desired. There was a bathroom safety display with a tub and toilet set up. It took up a lot of room and offered only a couple products: grab bars and a shower chair. There was an entire aisle dedicated to catheters, ostomy supplies, and wound care products. A noble gesture for their customers, but why take up space in the retail showroom for these specialized products which people don’t typically “shop for”? Finally, the back wall of the store featured nebulizers from the 1980’s, an old IPPB machine (google it if you don’t know what that is!), and at least fifteen or sixteen continuous passive motion (CPM) machines which take up a lot of room and aren’t as widely used as they were back in the day.
In short, the product mix, while clean and well organized, were not typical items that people would browse and shop for in a retail setting.
During the course of the survey, we chatted about retail settings and the DME industry, including the latest trends. Retail was king for decades, but fell from favor at some point. Many of the old, traditional pharmacies and DME stores that sold what were referred to as “sick room supplies” closed because of declining reimbursement, and licensure and accreditation requirements which were cost prohibitive for smaller companies doing only a smattering of DME billing. There is a resurgence in retail going on in the industry as DME organizations look for ancillary and related items to sell. Cash is king and DME stores are again looking to retail sales to at least supplement their core rental business.
So, what are some of the products that do well in a retail setting?
There’s no perfect formula and a lot of it depends on your customers and the local market. But generally, these are the trending product lines that can succeed in a retail setting:
- Aids to Daily Living (ADL’s): These are the sundry items such as reachers, fork and spoons with extra-large handles, and pill organizers. Think of these as items that make life easier for aging or disabled folks. Some are very simple, but they can be life changing for the right person. They keep people independent longer and ease the strain on caregivers.
- Lift Chairs: Some DME companies gave up on these chairs when the reimbursement changed. Many years ago, Medicare and insurances paid for these products given a medical necessity and physician order. Now, the mechanism is partially covered, but that’s a fraction of the overall price of the product. However, aging baby boomers recognize the utility of the chairs. Again, they keep folks with mobility issues in their own home longer and help them maintain some level of independence. Lift chairs take up a lot of room and are an expensive item to inventory, but having a few examples for people to sit in can lead to increased sales. Selling one from a brochure with a fabric swatch can be done, but it sure is easier to make the sale if the chair is there to sit in and “take for a test drive”.
- Travel CPAP Units & Portable Oxygen Concentrators: If you provide PAP and O2, consider these items. They are considered luxury items and generally not covered by most insurances. But for ease of travel, they can’t be beat and many PAP and oxygen customer/patients recognize their value and have the financial means to purchase them regardless of insurance coverage. You’ll need physician orders to sell them. If your PAP and oxygen customers come in to buy supplies or trade cylinders, having a display of these items so they can see just how small they are might lead to sales.
- Scooters: These are covered under some circumstances and by some insurances, but the scooter business has largely become a “cash business”. Like lift chairs, having an example or two on hand for potential customers to see is a must. Ordering one out of a catalog or from Amazon is certainly a possibility, but actually trying one out is preferable.
- Adult Diapers & Incontinence Supplies: Rows and rows of these items are not necessary, but place some in the retail store so your customers know they are available. This is a huge business. Aging populations who live longer experience urinary incontinence at higher rates than years prior.
- Scrubs and Lab Coats: You could fill a big box store with racks of these and still not have adequate stock. Although on line shopping has changed this business significantly, there are still customers out there who prefer to shop local and be able to try on items prior to purchase. Think about this: having a customer base of local doctors, nurses, and other healthcare professionals that come through the store to buy uniforms and work clothes can only help your reputation in the community. Win these customers over and they’ll remember you when it’s time to refer a patient somewhere for DME.
Retail business comes with a whole host of challenges. Retail tends to do well in retail shopping areas in the community, which are typically more expensive real estate. Whether you rent or own your store space, expect to pay at least a little more than you’d pay for comparable space in a more industrial neighborhood. You’ll also need safe and adequate parking for customers.
The key to success in this area includes not only location, inventory, and how you display products, but also your staff. If you are going to do retail business, keep in mind that the ultimate goal is to win over repeat customers. The front-line employees that greet and help these retail customers will be the first and lasting impression on the customers. They need to be knowledgeable about all the products in the store. They should be prepared to answer questions about the products and also understand insurance coverage (or lack thereof) for the products. They should be responsive and friendly as well as professional at all times.
With the right products, a retail setting can supplement your DME business. Retail customers come back for more and if they like the in-store experience, they’ll think of you when they need other DME products and services in the future.