FINANCE: CREATING MORE REVENUE STREAMS IN INDEPENDENT PHARMACY

Independents are facing increasing pressure to provide services but the over-the counter trade should not be overlooked. So, here are some tips to help them bring more money in.

Customer service

Ensure your staff are well trained to provide excellent customer service and make a point to ask the customers if there is anything that the business could do to improve their shopping experience. This will help identify areas of weakness and provided you take on board the comments and implement changes, it should help increase the OTC sales and build customer loyalty in the process.

Customer relationships

Everyone loves a personal touch when it comes to services, and you should make it a point to know your customers. Customers with an established relationship or personal connection with the business are more likely to return on an ongoing basis, so every effort should be made to educate staff to engage with the repeat customers, such as greeting them by name, building relationships, assisting them with their shopping need and so on. This will also help the staff to upsell (see further below.)

Customer loyalty

You could create customer loyalty programs, offer discounts that could be used in future or even free giveaways to attract more customers. This will ensure a secure customer base and at the same time guarantee sales increase.

Pharmacy shop floor

You should analyse your shop floor lay out and identify areas where there is more footfall for example tills may have more traffic and therefore you should attempt to display more popular products nearby. Alternatively, rotate products to see which products generate more sales in the aisles or near the counters. Supermarkets have been known to display more expensive line items at eye level whereas own brand or cheaper alternatives are either above or below these shelves.

Complementary product display

Displaying complementary products together is one way to increase sales e.g., if daytime cold relief OTC medication is next to night-time cold relief, customers will most likely pick both up. Other examples may be bandages and antiseptic sprays, antihistamines and boxes of tissues, etc.

Use of services

Review the services that you offer to customers, and you could also sell various products linked to services you offer e.g., selling chewing gum or mints to those who you provide a stop smoking service. Offering health assessments may help you identify services and products that will benefit your customers’ long-term needs which will in turn help to secure long-term sales.

Upselling

When your customers trust your staff and their knowledge of the products you sell, it becomes easier to upsell products. Certain drugs are known to cause drug induced nutritional deficiencies and knowledgeable staff will be able to recommend health supplements to the customers. Give customers a choice of three different brands of supplements with three different prices and they will most likely pick the middle priced one.

Product sales analysis

If you use a point-of-sale (POS) system, you should be able to generate various reports which could help analyse your product sales. Analysis of POS data could highlight what products are the highest selling, or times of the day, week or month when sales peak so you could enhance sales by adopting various strategies mentioned.

Know your competition

It is important to know who your nearest competitors are and what they offer in terms of products. This will require some research, but the information will be useful in terms of helping you offer better products at competitive prices in order to attract more custom. You could offer different products through identification of gaps in the market for example if your nearest competitor is stocking up on baby care products and if these are not selling in your pharmacy, you may be better off minimising stocks on that line or discontinuing it and spending on stock that moves and generates cash flow.

Shop window

An attractive shop front will always attract custom. You do not need to have a shop window that competes with the likes of a multiple, but you could remodel it so that it is fresh and pleasing to the eye. Other options are to have a chalkboard with witty messages each day and displaying offers of the day to boost sales. Also ensure that your shop windows are cleaned regularly.

Promotions

Sales promotions do not need to be around Christmas and Easter holidays only to boost sales. You can have these all year round or monthly promotions for example Stoptober which is usually in October and aimed to help people quit smoking could help you boost sales on smoking cessation products. You could develop your own sales promotions to run during a particular period.

Online presence

Having a good professional looking website is key to attracting new custom. Potential new customers tend to look at the website and read reviews before walking into any establishment. It is important that you read the reviews and address any critical reviews in a positive way to enhance your pharmacy’s image in the public eye. This will create a sense of assurance for new customers.

Vaccinations

If your pharmacy is offering vaccinations e.g. travel clinic, Covid jabs, etc, then you will have a number of new customers walking in. If you can employ various strategies mentioned above, there is potential to convert the new walk ins into loyal customers.?If you have managed to boost your OTC sales, the next step would then be to look at reducing costs in order to improve profitability further. This is a continuous process and pharmacy business owners should regularly keep track of their sales and product mix as consumer needs are ever changing.

This article is based on current legislation and practice and is for guidance only. Specific professional advice should be taken before acting on matters mentioned here. Vinku Shah FCCA, is a Chartered Certified Accountant and a Partner at Silver Levene LLP.?He can be contacted on 020 7383 3200 or [email protected].