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Essential Merchandising Tactics to Increase Retail Sales

Essential Merchandising Tactics to Increase Pharmacy Retail Sales


September 27, 2021


It’s not enough to have the products your patients want. To get the most out of your inventory, you have to display it in a way that persuades shoppers to buy more.

The art of arranging your inventory is known as merchandising. Whether patients are looking through the store window or browsing the aisles, you can make sure patients know how to find the staple pharmacy products they expect and introduce them to statement products they may not have considered. ″The main goal is to connect the customer to the products and services you sell, and it has many touchpoints,″ said Nicole Leinbach Reyhle, founder of the retail publication Retail Minded and author of the book Retail 101: The Guide to Managing and Marketing Your Retail Business. “You want your inventory to be as strategically understood within your store environment by customers as it can be, and merchandising allows you to do that.”

Bob Phibbs, retail expert and founder of the Retail Doctor, sees merchandising as a ″silent salesperson″ in the pharmacy. ″It’s how you scratch the itch of a casual customer,″ he said. ″If a customer is waiting for a prescription, merchandising can help them discover something they didn’t even know they wanted.″ If someone comes in to buy conditioner but stops and looks at your carefully curated display, they might leave with more items in their basket than they came in for.

Merchandising comprises a wide range of strategies. You might put impulse buys next to your cash register or place the most sought-after products in the back of the store to encourage customers to see the other items on the shelves. “Merchandising efforts don’t fall directly under a specific sales category,″ Reyhle said. ″The goal is to optimize your sales through inventory.″

Merchandising creates opportunities to turn more inventory, and unlike discount promotions, it doesn’t cut into your profit margins. ″The reality is that all that merchandise sitting on your floor is your money sitting there,” Phibbs said. “You only make money if the merchandise turns over. Otherwise, you’re just filling up your store and your merchandise isn’t giving you a return on investment.”


 

Staples vs. Statements

Nicole Leinbach Reyhle, founder of the retail publication Retail Minded, encourages retailers to think of their products in terms of staples and statements. Staples are your standards. “Milk is a staple item,” said Reyhle. “But a statement item would be something more like oat milk or almond milk.” Pair a staple with a statement to introduce your patients to products they may not have considered. If patients frequently come in for bandages, display them alongside a specialty wound care product.


 

Break up your space

Reyhle recommends dividing your store’s space into categories. ″Where your customers check out, where they engage with inventory, or any other landing spot to make them spend more time in one place,” she explained. Use your point-of-sale system to separate each part of the store and track your merchandising efforts for each area. Investigate which products are succeeding, then use that information to optimize your merchandising strategy and get ideas for cross-promoting your products. ″You may even consider applying sales goals within each of those spaces,” Reyhle said.

Phibbs suggests thinking of how different products fit together to tell a story. You could put shampoo and conditioner, hair dryers, and hot oil treatments in different aisles, but when you put them all together in a display announcing “The Complete Solution for Frizzy Hair,” you create a much bigger impact. “Customers who need that and see the display will know they should buy all those items,” Phibbs said.

In addition to thinking about how products are divided up within your store, consider where products are placed on the shelves. Generally, products above eye level and below the waist won’t sell as well. “Take greeting cards, for example,” Phibbs said. “You’re going to put your most expensive greeting cards between the navel and the chin, because that’s where most people are going to look first.”

Killer displays

Just putting the right products on the right shelves won’t necessarily improve your sales and profits. Create a display that catches your customers’ attention by putting yourself in their shoes.

“I always say, ‘Look up, look down, look left, look right,’ because that is what the customer is doing,” Reyhle said. “Ask yourself how you’re visually supporting them. Are you offering them navigation that helps them get where they want to go without having to communicate directly with you?”

If you’re not sure where to start with creating a display, Phibbs recommends visiting a big box competitor to scope out how they do it. “Take your camera and take pictures. You’ll start to notice how they group things together,” he said. “You just have to be curious as to why stores put things where they do.”

Don’t be afraid to get creative. A few inexpensive props can make a display stand out. “If you’re doing a display for window cleaning supplies, choose a few complementary products and place them inside a cheap dollar store frame. Add a squeegee so people get it really quickly—this is everything they need to clean their windows,” Phibbs said. “And then say something like, ‘Make sure you can see all the spring flowers this year,’ because that adds to the point of view.” Use contrasting colors to add intrigue to the display.

What you choose to display is just as important as how you display it. The products you highlight should be large enough to catch the eye, because if you try to call attention to something the size of a deck of cards, people might miss it.

You should also think about the price point. Putting a display together takes time and money, so choose items that have a decent margin to make the display worthwhile.


 

The 4 Cs of Communication

When merchandising products at the pharmacy, Reyhle encourages pharmacists to remember the 4 Cs of communication:

1. Clear
2. Concise
3. Correct
4. Courteous

The messaging received by patients—whether through signage or directly from a pharmacy staff member—should be easy to understand and delivered in a polite, nonjudgmental manner.


 

Signage and secrets

Communicating with your patients with signage is also a crucial part of merchandising. ″We really want to consider all touch points in which the customer engages through your signage,″ Reyhle said. ″And that’s going to ultimately lead your customers through a directional experience of your store.″

Like with your displays, Reyhle recommends owners apply the same “up, down, left, right” mentality. “How much signage you have depends on your square footage,” she said. “Mostly, the goal here is to make sure your customer is not confused. You want to keep your customer on a path to purchase. Once they get off that path, you risk losing sales.”

As for the content of your signs, Phibbs said the copy “should be short and meaningful.”

The appearance of the sign is just as important as the wording. “The font should be large enough for people to actually read. Consider the demographics of your audience. In a pharmacy, you may have clients whose eyes aren’t as strong as they used to be,” Reyhle said. “It may be easier for them to see bold, crisp letters rather than something like cursive.”

Many pharmacies put signs on the floor during the coronavirus pandemic to help patients maintain social distancing. These floor signs can still be useful to show people the best way to navigate your store, Reyhle said.

Merchandising musts

One of the most important parts of merchandising is ensuring it makes sense from the customer’s point of view. “A customer needs to be able to understand your inventory and how they can actually make a purchase,” Reyhle said. ″It’s super important to understand how the average consumer views your store versus how you see your store.″

Phibbs said to be intentional about which products you put next to each other. “If you put too many products out at once, the merchandise doesn’t relate to each other,” said Phibbs. “It’s just stuff on a table.” Make sure everything is clearly labeled with a price because your patients won’t buy something if they have to work to figure out the cost.

Don’t overlook the small details, because you may be missing out on opportunities that you hadn’t ever thought of before. Reyhle said, “Pharmacists may want to challenge themselves to look at their receipts. Ask yourself, ‘Is my return policy clear on the bottom of the receipt patients are getting?'” Every contact point with patients is a micro-opportunity to merchandise, so be sure to think about communication from many different angles.

Phibbs also warns against committing to a merchandising strategy that’s not working. If a merchandising effort is effective, you should see it right away. “People will be picking products up,” he said. “If people aren’t touching stuff, it’s not working. You can usually see that within a day.”


 

From the Magazine

This article was published in our quarterly print magazine, which covers relevant topics in greater depth featuring leading experts in the industry. Subscribe to receive the quarterly print issue in your mailbox. All registered independent pharmacies in the U.S. are eligible to receive a free subscription.

More articles from the September 2021 issue:

 


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PBA Health is dedicated to helping independent pharmacies reach their full potential on the buy side of their business. The member-owned company serves independent pharmacies with group purchasing services, expert contract negotiations, proprietary purchasing tools, distribution services, and more.

An HDA member, PBA Health operates its own NABP-accredited (formerly VAWD) warehouse with more than 6,000 SKUs, including brands, generics, narcotics CII-CV, cold-storage products, and over-the-counter (OTC) products.


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