Merchandising, product selection, and anchor properties are just three of the many variables that can help HME providers maximize cash sales in the Baby Boom era.

"Cash Is King" has long been the oxymoron of the HME Industry. Like "jumbo shrimp," this phrase was a contradiction in terms. We always felt that CMS was king and we just got reimbursed. However, providers are quickly realizing that retail has a place in an HME business.

The future of HME retail sales is about growing and growing is about change. After accreditation and competitive bidding, things will be different. Some differences will be good, and others not so good.

Providers have taken one of three positions during this transition. Many have been actively engaged, and most recently submitted their bid. Others have been sitting on the sideline. They know the elephant is in the room, but they ignored it and hoped it would go away (it didn't). Some have taken a seat in the grandstands hoping the bid won't touch them for several years. Each position has its own risk and reward, but no one can ignore that things have changed.

Early adopters of retail have also seen tremendous change. The customer is more different than ever before. The change in the customer can be seen in all retail, from cosmetics to yard equipment. Don't be puzzled by this change; you're a part of it whether you like it or not. We are more educated, demanding, savvy, and better shoppers.

All around the world, customers have morphed into super consumers, and the retail stores have had to change or be replaced by those that did change—or replaced by the Internet.

From all the statistics that are out, the Boomer tsunami will not end until 2030. That's two decades of Boomers, and then watch out because Generation X and Y are on the way. If you think Boomers are super consumers, Generation X and Y are super consumers on steroids.

Over the next 5 years, households headed by 55- to 74-year-olds will increase by 15%, and Boomers will retire with annual incomes of $100K or more. This all suggests an emerging market for new products and services. Watch your television and see how the commercials have changed to focus on the Boomers.

Fifty years ago, life expectancy was 69.6 years; 10 years ago, it was 75.8 years; and today it is 77.9 years. Many believe that Social Security will eventually extend the age to start receiving benefits to 85. There are many factors to consider in this, and one of them is the Boomers. Financial advisors may plan life budgets to 100 years of age. This is another indication that the retail HME business will boom.

PLUG THE CASH LEAK

When you think retail, think existing customer base. As a provider, you are serving numerous customers with your current offering who are buying health care products they need elsewhere. In retail, this is often referred to as cash leakage. Providers can plug the cash leak by offering these health care products to their customers.

Providers have a tremendous opportunity to offer products with greater service. How many of your existing customers are you delivering to in their home? More than likely, the majority! Do any big box stores deliver products to the home? Not where I live they don't. This is a selling advantage for retail sales. A customer never even has to set foot into your store to buy cash-and-carry products. We can deliver them right to their door, and with a friendly service technician that they know. This is just one way to differentiate your business from the big box movers.

As the Boomers come of age, there will be an estimated 34 million informal caregivers. These informal caregivers are generally between 45 and 64, and two thirds are women. The informal caregiver may be a family member, a friend, or a hired assistant. Providers with a retail operation not only serve the customer, but the caregiver as well. A recent study by VHA, Irving, Tex, found that more than $256 billion is being spent annually on out-of-pocket, cash-and-carry health-related products and services, and this figure is estimated to grow 10% annually.

CONSUMERISM COUNTS

Ty Bello

To quickly understand consumerism, look at coffee and drugstores. Coffee is not new, but the delivery of the product is, and thus the consumer has changed. Similarly, drugstores must know something, because in my neighborhood there is a drugstore on every corner—actually they are on opposite corners. Retail businesses can learn a great deal from this "corner-to-corner consumerism." The draw for coffee and medications is so huge that retail locations can be on opposite corners, and coffee shops sometimes on the same block. On a recent shopping trip with my wife, I estimated that I could hit a 5 iron to all three coffee shops from where I stood. In one case, I could have used a pitching wedge. Consumerism (how they buy) can be summed up as: easy access; friendly service; and less travel distance to your location. This tells us that we must conduct a solid due diligence on our market and consider multiple locations.

HME RETAIL 101

Three topics of importance include location, merchandising, and the "if we build it, they will come" factor. When considering location, you will need to review neighbors, traffic, accessibility, and signage. Your neighbors are important, not just because we want to have good neighbors, but because we would like to have neighbors who offer products or services that complement our offerings. You see this all the time and may not realize it.

Think of a big box store that is popular in our country. Now think of all the stores that seem to pop up around that store the minute it is announced that they are breaking ground. This is often referred to as the anchor property. You can either be the anchor property or move near one. What defines an anchor property may vary from provider to provider, but an anchor property typically has: 1) high traffic flow; 2) complementary products; 3) some similar products; 4) easy access from the anchor property to our location; and 5) the anchor property either is well established (national chain) and/or has no intention of moving.

To find out if the anchor property is going to move any time soon, ask the store manager. They typically are willing to talk. Recently, I worked with a retail location whose anchor property moved, and their business suffered a 40% decrease in sales. When I asked the store manager of the anchor property when they knew they were moving, the manager said he knew more than 2 years ago. The retail location I worked with moved in just 6 months prior to the move, and they never asked the question.

Signage is also important. You must qualify up front what you can display and where you can display it. Do a walk-about or drive-by. Look at every entry point and exit from your parking lot. What can people see—and not see—who are walking, riding a bike, or driving a car. Before you sign the bottom line of your lease, make certain you know about your signage. One sure way to help with this (less any zoning issues) is not to rent or lease, but to build your own store. If this is possible, you can reap great rewards from residual rent and other businesses that can locate in your building.

MERCHANDISING

The key to every great retail store after location is merchandising. How will you display, light, showcase, and promote the products customers want to buy? This has become an art. There are many creative and handy providers who have a kindred spirit with Bob Vila, and believe they can build anything. As an outsider and a friend, let me tell you—no, you can't. This is a profession that has been carefully crafted and studied over the years. I always recommend a professional when it comes to merchandising.

IF WE BUILD IT, THEY WILL COME

If we build it, they will come—no, they won't. If we build it, how do they know? This is where a well-crafted and aggressive marketing plan must be developed long before you consider retail sales. There are three components to a well-developed retail marketing plan: 1) retail due diligence; 2) manufacturer partners; and 3) the marketing plan.

Your due diligence for a retail operation must not only include return on investment (ROI). Due diligence is something that should be done by both new retail and existing retail operations. Consider these items when performing your retail due diligence:

• staffing costs;
• your floor plan and its cost;
• store traffic (internal);
• number of people who visit your store;
• time of day customers visit;
• market pricing (secret shop the big box stores, and even your competition); and
• a medical community survey to determine what products and brands you should stock.

MANUFACTURER PARTNERS

Not every product is the same, and not every manufacturer is the same. The support you receive from your manufacturer's representative, whether independent or a direct representative, can produce dividends.

Make sure you know what you are getting, not only the products you buy, but the support you receive. When you have a list of products that you decide to carry, make a list of manufacturers that carry these products. Contact each of them, and provide them with the list of products you want to stock.

Make sure you share what you believe is the market potential based on your due diligence. Ask them what they believe the market potential is in your area. From here, you can begin the price negotiations, shipping options, and support services. Have a list of interviewing questions that you want to have answered. Consider doing business with a manufacturing partner who can offer you more than one product line. This will typically lower the cost of product acquisition and shipping.

MARKETING PLAN

The marketing plan is the dog that wags the tail of sales. Too often in medical sales in general, we reverse this and the tail wags the dog. When this happens in a retail operation, it can produce grave consequences. Have a marketing plan and stick with it.

There are several essential elements to a great retail marketing plan. Use the following list to help guide you:

• mailers, fliers, e-mail, and fax blasts;
• advertising (radio, senior publications, newspaper, television);
• know your customers' zip codes and e-mail addresses; and
• sales calls to specialist offices.

HME RETAIL BOUTIQUE

No one can tell you what to carry in your retail store. Why? We don't know your location. We can, however, suggest some areas to consider based on a global view of the market. Having been in this industry for nearly 20 years, I devised my own equation built on a national market analysis of population demographics. This has produced a list of products that have been widely successful for HME retailers from coast to coast.

Consider the following "low hanging fruit of retail": incontinence; oral supplements; bath safety products; allergy products; wound care products; and defibrillators. Other product offerings also need to be considered, but only after a due diligence is performed for your market. These products are tied more directly to the customers you are already serving, and can be marketed to those you desire to serve.

Incontinence and oral supplements are products that your existing customers are buying elsewhere (cash leakage). You have a tremendous advantage in gaining market share by informing your customers about this product offering. Combine this with being able to deliver incontinence and oral supplements directly to their door, and you and the customer win.

Why does delivery make such a difference? Two reasons: discretion and weight. Have you ever seen where the big box stores display their incontinence products? Typically, in a poorly lighted corner. Those who buy the products often put the packages on the bottom of the cart to attempt to conceal them while they continue shopping, and also during checkout. Oral supplements are not as private to the consumer, but they are heavy. With a home delivery program, you can provide the customer both discretion and ease of getting the product to the home.

Bath safety products are in vogue. Available styles are better than ever. These customers don't want their bathrooms looking like those in hospitals. Shop around and select a manufacturer that can offer you more than just bath safety. By doing this, you will also be helping your DME purchasing power.

Allergy products are on the rise (and I don't mean nebulizers). Try bedding products, better breathing air cleaners, filters, mold sprays, and cleaning supplies. These products transcend every generation you serve and some you're not serving today. Search for a good partner—one who can provide a full line and support this developing market.

Many providers shy away from wound care products, but you can do this business. Yes, the majority of customers using wound care products are being served by a home health agency; however, there are many who have completed their care plan with the agency and still need products. Also, consider serving your community of home health agencies. This was done many years ago, and seems to have come full circle again.

Remember our initial discussion about the economic impact that Boomers will have on retail? Well, defibrillators are one of those products that Boomers will be willing to buy for their home. You see these in every public setting—airports, sporting arenas, and conference centers—and the consumers see them too. The advertising campaigns have just begun. Don't wait too long to catch this wave.

Ty Bello is president and founder of Team@Work LLC, Fort Wayne, Ind. He can be reached via e-mail: .