Transcript
Page 1: Retail know how for pharmacy

Retail Know-How for PharmacyMike Hewitson, NPA Board MemberIndependent Proprietor

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Why is retailing important?

Not dependent on NHS business Generates cash-flowGenerates footfall for other servicesProjects your business image to your customers

Presenter
Presentation Notes
Ok, so most of you know all of that, but I thought it was useful to set the scene. When you consider the average NHS business has an approximate 90:10 split of NHS: retail income, it is easy to see why we don’t give retail much time...but how many of us give it no time at all? In an increasingly competitive environment, we all need to spend a little time getting our retail strategies right.
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Developing a strategy

Identify strengths and weaknesses of current performanceResearch the marketIdentify opportunities and threatsMake actions SMARTReview performance and if necessary refine the strategy

Presenter
Presentation Notes
Who in the audience has a strategy for their retail business?
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Information is Key

Do you know what is and isn’t working in your retail environment? SWOT analysis is a good starting point to develop a strategic planKey Performance Indicators (KPIs) are markers which you can use to assess the impact of changes on your businessResearch your market

Presenter
Presentation Notes
As with all things in business, the first step towards improving your performance is to look at what is and isn’t working. A tool I use in my own business is a simple SWOT analysis. Strengths (be realistic), Weaknesses (be honest), Opportunities, Threats. Despite it’s simplicity, it is actually quite powerful as it focuses your mind on just the key information, it can even form the basis of your strategy. In a moment we’ll write a SWOT analysis for a typical small community pharmacy’s retail offering, so get your thinking caps on! In larger businesses Key Performance Indicators (KPIs) are a commonly used tool to measure how well the business is performing - we use these internally within the NPA to make sure that we are offering a good service, but they aren’t just for big business. In essence they are the pulse of your business, but what if anything are you measuring? In a moment, we’ll all build a set of KPIs to assess your retail performance, so start thinking about them now. Research is fundamental, as the better informed you are, the more likely that your retail strategy is going to hit the right buttons. Look for emerging markets or growing sectors, it may be scarier in the short term, but in the long run its better than the slow death of clinging of a declining market.
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SWOT for Retail Pharmacy

StrengthsPersonal serviceCustomer knowledgeExisting relationshipTrustFlexible & responsive

WeaknessesPriceInfrastructureLack of brandingPoor/no marketingConfidence to invest

OpportunitiesOnline retailingOlder populationUp-sellingCross-sellingReward loyalty

ThreatsSupermarketsOnline retailersWider economy

Presenter
Presentation Notes
We’ve discussed some ideas, here are some that I came up with.
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Retail KPIsFootfallAverage sale valueTop-selling products by value/volumeMissed sales: frequency, value & productsStock-holdingKPIs are the pulse of your business - they aren’t just for large companies

Presenter
Presentation Notes
We’ve discussed KPIs, here are some that I monitor regularly.
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Researching the marketMarket trends & analysisLook at what competitors are doing.Look at changes in the local population or local shops -local media good potential source of informationSpend time, not money

Presenter
Presentation Notes
There is a lot of good information available in the public domain. If you look for it, you can find detailed analysis of major competitors and market trends. While full access can cost a lot of money, and for the purposes of most small businesses is probably not necessary, it is still worth looking because you will never know what you might find. In a minute we’ll look at some information I was able to find, free of charge which might help to inform our retail strategy. Large companies spend a lot of time and money doing their market research, fortunately for us, they then go and broadcast what they find! One great tip is to visit large competitors and see what products they’re introducing, how they are promoting them and their pricing strategy. As I suspect the majority of us in the room represent smaller businesses, I want to draw your attention to some of the Strengths and Opportunities from our SWOT analysis. One of which was flexibility. A Head Office based hundreds of miles away should not be able to offer the same degree of retail agility that you are able to offer. For example, pricing policies often leave local store managers no flexibility on price - which means that you can be cheaper on price where you need to be. This applies equally to supermarkets, who will almost certainly be checking multiple’s prices for key health and beauty products. We can use a lesson from generics purchasing: no single supplier has the best price on every single item. You might be surprised to see how your pricing stacks up versus even the most aggressive supermarket, it is often down to clever marketing and promotion to that they gain a reputation as being the cheapest, on the items that people are most likely to compare they might be, but is that true of the whole basket?
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UK Health & Beauty Market

During the recession consumer spending on Health & Beauty rose by 3% to £17.1bnCosmetics is a growing market +5.4% in 2010Skincare set to overtake OTC as the largest categoryUnderstand changing demographics:

Older people are a growing market and have specific needs and disposable incomeBirth rates are falling - lower demand for babycare, also, customers driven by value

Presenter
Presentation Notes
Here is some information I was able to find for free. The messages I was able to glean from a few hours research: - cosmetics - skincare - older people All likely winners with markets already growing or emerging. While babycare products are increasingly driven by supermarkets and cost. Much of this just affirms what we probably all thought anyway - perversely, older people are the future! My pharmacy is already geared to the needs of older people, we might need to tweak product choice a bit, but our target market is sound.
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Improving retail sales

Marketing to maximise footfallStaff trainingMerchandisingRetail layoutPricing strategy

Presenter
Presentation Notes
Small business owners can easily get too involved in the day-to-day operations of their retail stores to spend any time brainstorming marketing ideas or promotional events. Some retailers worry that marketing is too expensive, others may find it too time consuming. These are some ideas for improving your retail performance.
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Marketing your business

Attract and retain customersIdentify and communicate the benefits and USPs of your businessFlexible plan which can change if neededWhen consumer spending is tight, reducing spending on marketing is a false economyAvoid spreading budget too thinly

Presenter
Presentation Notes
The goal of your marketing should be to attract and retain customers. Footfall is the lifeblood of your business, it doesn’t matter how good your services or product selection are, if customers don’t come through your door you are in trouble. Think of advertising as buying customers, you should always consider a mix of media: from leaflet drops, posters, print media, increasingly online - for example do you know that Facebook, the world’s largest website has a range of advertising options which allow you to target your advertising precisely? Women, men, 18-24, within 3 miles of your business, people interested in a particular subject. It costs around 29p per ‘impression’, you can set how much you want to spend each day, but could prove to be a very efficient means of advertising. If you don’t attract new customers into your business, you will be limited to an ever decreasing circle of regular customers. Before you spend any money on marketing, take some time to think about your unique selling points. Lets think of some examples which might apply to pharmacy: - local, - independent, - knowledgeable, - trustworthy, - value for money, - good advice, - personal service, - unique product selection.
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Staff TrainingAre retail skills part of your routine staff development? Consider staff training to improve customer experienceTrain staff to up-sell i.e. offer other relevant products to customers already making a purchaseDevote time to review performance and offer individual feedback to members of staffConsider regular staff meetings to reinforce key sales messages or boost product knowledge

Presenter
Presentation Notes
Beginning with staff induction, how does your business train staff about retail sales? Do they understand the operational issues e.g. procedures, do they understand their sales function and the products that they are selling? Up-selling: When I talk to some pharmacists and pharmacy staff, they are almost embarrassed to offer customers additional products or services. Why? One particular large multiple does it all of the time, and very successfully, so why don’t independents? Lets think of up-selling differently. You’ve got a cold, your head is full of snot, you’ve come to the pharmacy to buy a decongestant. The assistant makes sells you some Sudafed. When you get home you realise that you’re paracetamol are out of date and you’ve only got one tissue left. By offering relevant products you are providing a service to your customer - not trying to fleece them of their last pound. Keep it sensible, perhaps within 25% of the original purchase cost if that gives you more comfort. Perhaps consider some up-selling suggestions at staff meetings.
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MerchandisingProduct displays should not be an afterthought, they are important to the image that your business projectsDon’t have to spend a fortune on new display materials: rotating merchandise, changing displays or changing signage can make customers feel that you always have something new to offerCross-merchandise i.e. position related items close together e.g. memory cards with cameras. Must be logical (and obvious)Understand human nature

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Presentation Notes
Examine your customer’s experience from the street, when they walk through the door, when they browse, the counter, and the way out. Does your business leave a lasting impression. Is it a good one? Human beings have an instinctive tendency to turn right when they enter a shop, they also tend to ‘read’ displays like a book from left to right - displays should have small items on the left increasing in size towards the right. 80% of people are right handed and are inclined to reach for larger products with their dominant hand. Place more profitable items to the right of branded goods. As a rule customers scan displays at eye level and make the purchase at hand level, optimum selling space is generally between this height: between 3 and 5ft. Save your most profitable merchandise for these positions - this prime selling space. Even more basic than that, make sure your retail space is clean, tidy and uncluttered.
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Retail LayoutSeveral basic models for laying out your retail space

Straight - Good sight lines. Uses space efficiently. Basic design

Diagonal -Encourages customers to move around shop Mixed - uses a

variety of display types. Draws traffic to walls and back of shop

Presenter
Presentation Notes
We’ve all seen pictures of fantastic retail spaces designed by shop-fitting companies. If you’ve got a spare £100,000, you can produce some brilliant spaces which make the most of your customers and increase footfall. If you don’t, a simple option could be to simply move your existing display units to change the way that customers move around your space. This can draw their attention to different areas or types of products.
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Pricing StrategyUnderstand the difference between cost and value - make sure your customers doHigh prices could = high quality to some customers. Converse could also be trueSlashing prices can harm long-term profitabilityPricing tactics: Discounting, Loss leaders, Skimming, Penetration

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Presentation Notes
Cost and value are two different concepts Discounting works, and is often employed by supermarkets and large multiples. Loss leaders may help to attract footfall. Skimming means leveraging unique products or services, and charging a high price for them. Penetration means starting at a low price to gain market share raising prices when customer loyalty or competitive threats are removed.
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Strategy Review

When you have implemented your retail strategy, it is important to review performance regularly. Refer back to KPIs, and track performance. If necessary tweak the strategy. Don’t become complacent. The retail environment is constantly evolving, stay still at your own peril!

Presenter
Presentation Notes
Earlier, we discussed KPIs so you can quantify the impact of the changes you have made on your business. No strategy is ever perfect, so there will always be any element of course-correction, that is part of the process. Any good strategy will always close the cycle: learn, adapt, refine. Strategies should never be rigid, they don’t even have to be written down. But if you don’t even know where you are headed, how will anyone else?
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The Proof: Central Pharmacy, Cardiff

- High-end skincare, cosmetics

and fragrance. - £15k retail sales

per week. - Online turnover

c£10m.- Clarins salon.

OWNER: RAJ AGGARWAL OBE, NPA BOARD MEMBER

Presenter
Presentation Notes
Central Pharmacy in Cardiff is owned by my NPA Board colleague, Raj Aggarwal. It is an impressive operation, being judged Pharmacy Business magazine’s Health & Beauty Retailer of the Year. Refitted by Dollar Rae, turnover has grown substantially, and now boasts a weekly retail sales of approximately £15k and is experiencing double-digit growth in sales. More than half of his ground floor space is given over to perfume, cosmetics and skincare. He also has an in-store Clarins salon, and has four treatment rooms located above the pharmacy. Retail areas are light, easy to navigate and uncluttered. In addition to impressive retail sales from his premises, Raj also operates an internet perfumery which turns over around £10m annually. Here’s what one of Raj’s customers said about his pharmacy “Whilst the pharmacy is great, the cosmetics range is why most people attend Central Pharmacy”. Remember where we started today, with retail being used as a draw for your other services?
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“KEEP MOVING FORWARD, KEEP INVESTING, KEEP UPGRADING, KEEP UP TO DATE, KEEP LISTENING & TALKING TO CUSTOMERS” –

RAJ AGGARWAL


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