How many “core” retail products should you stock?
One of the most important questions for any retailer (and pharmacy is no different) is how to decide what products to carry in your shop.
Customer survey results tell us the following reasons why customers choose your pharmacy:
Service and Staff
Price or Promotional activity
The exercise of deciding on your product range should not be taken lightly – it is one of the key deciding factors in why customers will shop with you - or not!
Our analysis of hundreds of pharmacies shows that the average pharmacy carries 5000 retail products, but that 80% of their sales come from just 1500 of these. These 1500 products make up the “core product range” which every pharmacy should carry, and the remaining “long tail” of products should be considered “discretionary”.
Focus by applying the 80:20 rule
By putting more focus on the “core products” you can make shopping easier for customers (and for your staff) leading to increased sales and profit margins. Pharmacies who have adopted this discipline across their OTC categories have experienced more than 10% increase in sales – which means it is worthwhile cutting the 2000 slow-moving products out all together.
There will always be some slow-moving products that you decide to carry as a customer service to meet an urgent need (e.g. a breast pump or an elbow wrap). But in most cases the fact that you can place a “special order” will satisfy these customers. There should be a well-defined process in your pharmacy for recording customer details and phoning them when their goods arrive – so that staff consistently offer this service.
It is common for pharmacy staff to believe that you should carry all variants and brands of products, even when many of them are copycats of the best-sellers and really don’t justify being ranged.
The best way to change this belief is to prepare a pharmacy “formulary” of the 1500 Core Products grouped into each Category and Sub-category – so that staff can be confident that you do carry the best solution for each need.
I have helped several pharmacies to prepare this formulary of core products and the staff love it! Imagine how much easier it is to provide product advice to customers when you are confident that the Glucosamine, Heel Balm or Cough Lozenge on the shelf is the best one for their needs.
Selecting a core range of products for your retail pharmacy is a powerful way to differentiate your business from the supermarket, webstore or discount outlet. What you say “No” to in business is very often the best way of defining what you really stand for. Done properly this approach will enhance your levels of service and customer satisfaction.