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Simplifying retail pharmacy

A robust strategy for dealing with the burden of staff shortages is no longer just a nice-to-have, it’s necessary for retail survival.

 

Staff shortages are here to stay and the last four years have seen a significant loss of expertise and experience on the shop floor, not just in the dispensary. Doing more with less has now become the norm.

 

Range rationalisation is a strategy which can improve financial performance, streamline the way you manage pharmacy operations and enhance the customer experience. Let's delve into how range rationalisation benefits pharmacies and customers.

 

Understanding consumer behavior

Pharmacy owners are acutely aware households have limited spending power and shoppers have less time and attention when they are instore. With consumers demanding more value for their money and enjoying a plethora of shopping options, pharmacies must rethink their product selection strategies.

 

A significant portion — roughly 80% — of pharmacy sales stem from a few best-selling products which make up the top 20% of the product range. This revelation underscores the need for pharmacies to focus on their highest-performing items to maximise profitability.

 


Trimming the fat: selecting a core range

With many pharmacies stocking over 5,000 products, the abundance of choices can overwhelm customers. To combat decision paralysis and promote ease of shopping, a curated core range approach is recommended.

 

The core range consists of the best-selling products in each category, typically limited to three or fewer brands. This deliberate selection process simplifies decision-making for both customers and staff, employing a good-better-best ranking system.

 

The benefits of range rationalisation

1. Simpler management: By focusing on a core range of products, pharmacies can streamline inventory management processes. With fewer products to track and replenish, staff can devote more time to providing quality service to customers.

 

2. Easier shopping experience: A curated selection of products makes it easier for customers to navigate the pharmacy shelves. A simplified product offering means customers can find what they need quickly and efficiently.

 

3. Improved service levels: Clearer recommendations based on a core product range enable staff to provide more informed assistance to customers. This results in improved service levels and a higher level of customer satisfaction.

 

4. Enhanced profitability: By concentrating on top-selling products, pharmacies can get economies of scale through larger orders of fewer stock-keeping units (SKUs), bolstering profitability.

 

Implementing a core range strategy

Successful implementation of a core range strategy involves focusing on approximately 1,000 over the counter (OTC) products. Larger pharmacies can supplement this core range with discretionary categories such as beauty, gifts, and fashion products.

 

When selecting core products, pharmacies should consider factors such as product efficacy, popularity, profitability, supplier relationships, and marketing support. RPM Retail has developed a free core range decisions flowchart and a pharmacy category tree, available at www.theipg.co.nz/resources to help you make informed choices.

 

By aligning product selection with nationwide sales rankings and product effectiveness, pharmacies demonstrate their commitment to being customer-focused. Learning to decline unnecessary products and ranges reinforces the pharmacy's reputation as a trusted destination for superior solutions and expert advice.

 

Moving forward

Range rationalisation represents a transformative strategy for retail pharmacies, offering a simpler, more customer-centric approach. By embracing this methodology, community pharmacies can unlock new levels of efficiency, profitability, and customer satisfaction in an increasingly competitive market landscape.

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