March 15, 2019
As margins behind the counter continue to decline, independent pharmacies are looking to remedy their profit pains. And pharmacy retail experts are prescribing a simple front-end treatment: cross merchandising.
“Cross merchandising is a tactic that can increase sales, if pharmacies do it right and are consistent and committed to it,” said Tom Boyer, director of national accounts for Hamacher Resource Group (HRG), a firm that focuses on improving results across the retail supply chain.
Cross merchandising means positioning complementary items from different categories together to encourage add-on sales. Classic examples from grocery stores include ketchup and mustard next to hamburger buns and salsa next to tortilla chips. If you’ve ever moved facial tissue and lip balm to the cold and cough section, you’ve already tried cross merchandising.
Cross merchandising earns additional sales in two ways. First, it maximizes the number of needed items the patient buys from you, rather than forgetting something and buying it later somewhere else. Second, it provides the opportunity to sell additional items that weren’t on the shopper’s initial list. “It encourages impulse sales,” Boyer said. “Trying to get someone to buy just one more thing.”
Good cross merchandising makes life easier for the shopper. It saves a trip to another section of the pharmacy or even an additional store. For the stressed-out parent picking up cough medicine for a fussy toddler, a strategically placed thermometer or mentholated chest rub can really save the day.
“Cross merchandising has to start with customer experience,” Boyer said. “You’re really trying to help them while providing an environment that will lead to add-on sales.”
The best items for cross merchandising are products that already move relatively quickly off the shelves. Many good candidates for cross merchandising include products you may already sell as impulse buys: lip balm, hand sanitizer, snacks, and tissues. But your store may have different top sellers based on your unique location, demographics, and clientele.
“If a pharmacy hones in on what’s actually selling in their front end and even tap into their own personnel, they’d be surprised how many ideas they could come up with,” Boyer said.
Instead of simply assembling grab-and-go top sellers like you would with an impulse-buy section, find logical context to put together two or three types of these items. “There has to be a relationship or a reason to buy this additional product,” said Colleen Volheim, HRG’s category research and analysis manager. “Shoppers are going to purchase based on a need. Find out what that need is before they even know they should pick up an additional product.”
It can be tempting to use cross merchandising and other display tactics to promote slow-moving products, but resist that urge. While cross merchandising does get more eyes on a particular product, it also increases the amount of shelf space dedicated to a product.
“Every bit of shelf space that those products occupy equates to a dollar value,” Volheim said. “So if it’s not going to turn, if it’s not going to be a high-selling item or something that sells through quickly, if it’s not going to stimulate that thought, ‘Oh I need this, I’m just going to buy this one more thing,’ then those are the items you want to really stay away from.”
Volheim and Boyer both warn against trying to cross-merchandise higher-priced items. The sticker shock of a $40 blood pressure cuff, for example, is likely to make patients consider their purchase carefully rather than tossing it in their basket.
Boyer said it’s okay to spy on your competition for cross-merchandising ideas. “Nothing wrong with seeing what other people are doing,” he said. “Take their ideas and see how it works in your store.”
Cross merchandising isn’t just a one-time thing, a trend, or a fad. To do it successfully, you’ll need to make it a regular part of your front-end strategy until it becomes second nature.
When you’re ready to experiment, the potential for new combinations is practically endless. Volheim described one clever cross-merchandising move she saw while shopping the shaving and grooming section: bandages alongside the razors and blade refills. “I was like, what is that doing there?” she said. “You know, that’s really not out of place.”
Boyer’s favorite example of unconventional cross merchandising comes from the frozen food aisle. His local high-volume grocer cleverly placed Pepto Bismol in the same section as the frozen pizza, presumably for junk food fiends with foresight.
“The nice thing about independents, you can do what you want to do,” Boyer said. “You have a freedom most chain stores don’t. If it doesn’t work, fine. And you may come up with some crazy innovative idea.”
Hamacher Resource Group focuses on improving results across the retail supply chain by addressing dynamic needs such as assortment planning and placement, retail execution strategy, fixture coordination, item database management, brand marketing, and analytics.
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From the Magazine
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