December 16, 2020
As a locally owned business, independent pharmacies can tailor their front-end selection to their patients. With a well-stocked gift section, they can take advantage of patients’ tendency to browse as they wait and open up a new revenue stream. “People like to shop while they’re waiting for their prescriptions,” said
Mandi Kyles, merchandise manager at Hobbs Pharmacy and Gifts in Sulphur, Oklahoma. Hobbs has 1,200 square feet devoted to gifts, with contents ranging from jewelry to clothing to housewares.
Kyles said a gift section not only expands your clientele, but also gets more out of your existing patients. “It can bring in more traffic, but you’ll also have the grandma who comes in for her medicine who might not go to a boutique but will buy something from the gift section. The two go hand in hand,” she said.
At Dedrick’s Pharmacy and Gift Shop in New Paltz, New York, about half the pharmacy is devoted to gifts. “It’s almost like a second store, or a business within a business,” said Jared Nekos, owner of Dedrick’s, which established its gift shop 15 years ago. “It’s wonderful to go into a family-owned shop where you know there are unique offerings and the gifts are going to be affordable. I think part of why the relationship works is that there’s always time. You drop off your prescription and you have a few minutes to wait and browse for gifts and cards.”
The gift section and the pharmacy can thrive off each other if you do it right. Some people may be attracted to the gifts, then decide to transfer their prescriptions over, while others might decide to splurge on something from the gift shop while they are waiting for their prescription to be filled. “If you advertise properly and get the message out to the community that this is a place where you can get cards and unique gifts for a loved one, there’s no reason why bringing people in to buy gifts shouldn’t also translate into sales in the pharmacy,” said Nekos. “Having a revenue stream from gifts and cards is a great way to boost your front end. We do especially well for the holiday season where we really see great numbers.”
At Hobbs, about half of the people who walk into the building are there for the pharmacy, while the other half are there for the gift shop. “Our locals stop in here to get gifts, and we also have a lot of out of town folks who hear about us on social media and come visit,” said Kyles. “There have definitely been people who have transferred over to our pharmacy because of the gift shop.”
If you’re thinking of expanding your pharmacy’s front end to add more gift items, these in-demand products can help get you started.
To decide what to purchase for his gift section, Nekos does his homework, and he pointed out that there is no dearth of resources for those who want to do their own research, with annual gift shows like NY NOW in New York City and magazines like Gift Shop Magazine that can help buyers identify trends.
“I think probably the best resource you can find is a knowledgeable rep from a gift company. The good ones will take extra time in your store to help you with everything from the product line, to popular products, even product placement and merchandising,” Nekos said. Last winter, reps pointed out that items with cardinals on them were really popular. “It doesn’t necessarily mean that they are going to be hot in our area, but at least we have some sort of direction on what we want to buy.”
Because Dedrick’s is located in an artistic community, representing those artists in the gift store is important to Nekos. “We’re constantly in touch with local artisans for everything from handmade soaps to handmade jewelry. We’ve even had some furniture here by a local craftsman,” Nekos said. With a combination of offerings from local and national sources, the pharmacy is able to curate and tailor their selection to their shoppers’ interests.
Hobbs Pharmacy is located near a booth mall for local artisans, so they see less demand for local products, but they still strive to bring in unique merchandise that can’t be found everywhere. “We have a lot of soaperie items like bath bombs, bath salts, and bath sugars, because there isn’t a place here in Sulphur that sells that kind of stuff,” said Kyles.
When deciding what to put on their gift shop shelves, the staff lets their own tastes guide them. “We started stocking our gift shop with items that we were drawn to,” Kyles explained. “We’d visit other boutiques and say, ‘I like those,’ and then decide to put them in the gift shop.” After they bring in new products, they refine the selection based on sales, and if an item doesn’t sell well, they won’t reorder.
Hobbs has made their gift section into even more of a destination by hosting registries for weddings, bridal showers, and baby showers. It’s a more personal experience than going to a big box store. Instead of getting a pricing gun or browsing through an online catalog, the people registering come into the store and walk through with an employee. “We have them shop in the store, pick up everything that they want. We walk through the store with them and set things aside,” Kyles explained.
When the engaged couple or expectant parents have picked out everything that interests them, employees will display all the items on a table with a big sign that singles it out as a gift registry. “People can come in and buy off of it, and then we’ll wrap it,” Kyles said. “We also offer to deliver gifts to the wedding or the shower.”
To really get the most out of a gift section, Nekos advises that pharmacy owners and staff be ready to put the work in. “It’s not something you can do on a whim,” he said. “Selling cards can be a good revenue generator, but if you’re looking to go bigger, you have to spend a lot of time and resources to market and promote.” He recommends having at least one person on staff who is excited to be a champion for your gift section. Other pharmacies with gift sections can also be a great resource, so it’s crucial to reach out to your network. You can avoid pitfalls that other pharmacies have fallen into by asking about their successes and failures.
Kyles advice? “Just go for it!” she said. “If you personally like something, you’ll probably be able to sell it. So start with things that you like and grow from there.”
When it comes time to buy a holiday card or a birthday greeting, many people automatically plan to visit their local pharmacy. “Even before I owned a pharmacy, the first thing that came to mind when I needed to grab a card was the local pharmacy,” said Jared Nekos, owner of Dedrick’s Pharmacy and Gift Shop. “That was always my go-to.”
Because of this longstanding association between pharmacies and cards, Dedrick’s has a large card selection in the store’s gift section. They bring in a good margin for the store—around 50 percent—and they are perennially popular. One reason pharmacies are a particularly good destination for cards, according to Dawn Garvey, the chief financial officer of the card vendor Designer Greetings, is the foot traffic. “This type of traffic is exactly the incentive for a customer to pause and use that destination as the ‘one-stop shop’ where they can pick up a prescription and grab a card,” she explained.
There are many different vendors and lines of greeting cards, and Nekos recommends doing your research before committing to a line. “Different pharmacy resources and publications will offer different card vendors and arrangements,” he said. “Use your network and find out what other people have had success with.”
Some vendors will provide perks like bringing in all-new fixtures to display your card selection, though perks are often associated with a contract and an upfront investment. Make sure you read the terms carefully before signing. “We wanted to bring in a new line, and one of our former buyers didn’t realize when they signed the contract with the old vendor that they’d signed a three-year agreement,” Nekos recalled. “So we had to put a major change on hold for a couple of years.”
When bringing in cards, it’s important to think about the space you have available. If you have a large area that you can devote to cards, you can bring in multiple lines at different price points, and it could help generate more foot traffic in your gift area as a whole.
If your space is limited, you’ll have to be more selective about what you offer. “Go to your competition,” Nekos advised. “If you walk into a box store, most of their cards are four to five dollars apiece, but in the next town over, there might be a lot more competition from dollar stores.” If your main competition is a big box store, you may want to offer patients cards at a lower price point, but if there’s a dollar store down the road, a higher-end line might be more successful.
Designer Greetings tailors card selections for their clients based on their location and customer base. “We have collections that are developed based on market data which analyzes current trends taking place in the retail industry,” said Garvey. “Designer Greetings takes pride in working with the customer to develop a planogram based on demographic and other data information for the location so that the cards in the store meet the customer’s needs. We consistently upate our cards based on the retail industry inputs, so that our line is always reflecting current trends. An example of our flexibility is our publication of cards that respond to the need to give a ‘virtual hug’ during these challenging times of the worldwide pandemic.”
“Cards are in the highest demand around major holidays. Most seasonal cards that don’t sell, you can return for a full reimbursement,” said Nekos. This means the store can stock up on plenty of Mother’s Day or Christmas cards without worrying about eating the cost for the items that are still on the shelf after the holiday passes, although terms like this can vary based on your vendor and contract terms.
If you have a significant gift area, cards also offer an opportunity to cross-merchandise. For Nekos, taking advantage of that opportunity comes down to training employees. He explained, “We train employees so that if they see someone buy something that looks like a gift, to ask, ‘Do you need a card for that?’ You can also put signage around the store. Near our collectibles, we might have a sign reminding patients to buy a card.”
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.
Read more articles from the December 2020 issue:
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