The other day I went to the grocery store and bought a large rib roast. I had just finished reading something about the competitive bidding nonsense, so I must have been upset, and I may have taken it out on the check-out girl.

"That'll be $98.50," she said without looking up.

"$98.50 for a piece of meat?" I asked

"Yeah. That's what it says," she said, smacking her gum.

Somehow applying Medicare logic made perfect sense. "How about this," I began. "Fair market value of this roast is really only 60 dollars. So I'll give you 80% of 60 dollars."

"What?" she asked with a distant look.

"And," I continued, "if you don't try to collect the other 20% from the people coming to my dinner, I'll arrest you for fraud."

With the predicted effects of competitive bidding, many suppliers are contacting me to help shift toward a retail-based, cash-friendly business that's not beholden to any government program. They'll hang on until the end, waiting and hoping for a last-minute savior, but they're going to prepare for the worst and begin to lure customers into their stores and warehouses.

When you think about it, going retail does make a lot of sense. Gone are the rolls of red tape that come into play when you try to bill for a walker that you may not even get paid on. In the retail scenario, a customer walks in and asks, "Have any walkers?"

"Sure we do," you reply.

"I'll take one," he says.

"That'll be a 100 dollars."

"Here you go." And he slides you a crisp Benjamin.

I predict that one company will emerge over the next 10 years as the retail HME giant. And I don't think it's going to be a current national player, but someone with more vision.

Location, Location

Going retail is not easy or inexpensive. There are several factors that come into play when structuring a whole new way of advertising, displaying, selling, collecting, and servicing. The first issue is location. There are a few locations in the high foot traffic area, and a few in the industrial parks. Most DME companies fall somewhere in the middle.

Since retail success is based on effectively getting people through your front door, the closer those doors are to where people are, the more success you'll have. If you're fortunate enough to have great location, then a good cleaning and rearranging of display may be all you need to get started.

Eric Kline

However, if you're in a warehouse location, you may want to consider the real possibility of moving to a more central location. It's going to be difficult if you own your building and must sell. But if not, and that lease is coming up, find a nice little retail location near a grocery store or somewhere else that's easily accessible and guarantees foot traffic. And if you can't move from the warehouse, then you'll just have to find creative ways to reach out and get people to come see you.

If your warehouse location was like one I worked in several years ago, then you'll have to clear out the front office(s) to make room for a display area. Tear up old shag carpet, remove all the wood paneling, and send it back to the seventies. Then install hardwood floors, fresh drywall, and effective lighting—keeping everything as minimal as possible. Invest in display islands and shelving, and make sure there's enough room to scoot around.

When your guests walk through the door, you want to establish yourself as the best-kept secret, the hidden value, the off-the-beaten-path purveyor of quality products at warehouse prices. Your advertising should reflect the fact that you're "worth the trip." Targeted advertising, publicizing the location, will go a long way to get your clients to drive out the first time. The second time will happen only if they're treated right. And your revenue will be established only if the people working your store know how to sell properly.

Best Case Scenario

If people pass by your store every day, glancing in the window as they pass, then you're one of the lucky ones. You have a retail location on Main Street with a little bell on the door that rings when someone walks in. Your biggest problem is where to put all the inventory that's stacked along the walls since the storage space behind the desks is filled with years of accumulated clutter.

However, for years everyone has known you as the guy that provides oxygen to the elderly, so now you're going to have to change your personality to reflect cutting-edge medical equipment for the home, specifically, helpful bathroom aids and scooters. And don't assume for a moment that potential customers will frequent a cramped, overstocked, messy retail store just because it's on their way home. The way a business looks and feels says a lot.

As I travel and work with companies across the states, I regularly encounter buildings that, while functional for a delivery, may not offer the best first impression for retail customers. With a delivery-centric model, one of our priorities was to make sure the delivery vehicle is clean and safe, and give it a positive outward appearance.

Our delivery tech was clean, well spoken, and extremely helpful. Now when shifting to a retail operation, we need to bring those attributes into our store.

Employee Changes

Shifting to all (or partial) retail is going to require personnel moves. A few people will be eliminated, others will shift responsibilities, and some will remain in their current positions. At first glance, service techs and billing specialists would be the first positions affected, followed by customer service. Without insurance companies or Medicare to bill, there won't be any need for billing positions. And without equipment to deliver, service techs will have nothing to do. With every item as "cash and carry," follow-up after the sale would be completed by the retail staff.

Retail Staff

While I understand the desire to shift employees around to fill newly created retail positions, it may not be the best idea. The most effective retail salespeople have extensive knowledge of their products and are ready to sell.

Retail sales take a different approach than calling on doctors and asking for referrals, so your sales rep might not be the best choice to slide into this position. Interestingly, some of the most successful salespeople I've ever trained came up from service tech positions, so don't overlook the hard-working techs who might want to come in and help the customers pick out the right equipment.

Advertising

An effective ad campaign consists of several different, complementary approaches. With the focus on calling on physicians, HME companies spent the bulk of their advertising on lunches for doctor's offices, pens, pads, and trinkets. Now going retail, lunches are history, pens and pads can be given to clients, and the money saved can be reinvested in other promotions that target the end user—your new target. If you're in a small-to-medium market, search out the local AM station and work with them on getting airtime. There are opportunities to sponsor shows or traffic reports, or simply buy airtime and design your own commercial. And if that sounds too daunting, the pros at the station can help put something together for you.

Radio and TV are effective in reaching out to our market. Several years ago, I hosted a TV talk show that focused on social work, and each week I'd have new local social workers on with me to discuss whatever message they wanted to convey. It aired at different times over the week, but the exposure was incredible. Not only did I reach my target market of elderly people, I also reached the ones who sent me the business—the social workers. I tried this idea on local radio and had great success by teaming with local physicians.

Internet

Every day more seniors are logging on, and if we want to compete, we have to have a Web presence to be competitive. Online coupons, directions, and product catalogs are the minimum we should post. An online retail business can be built in less than an hour using some fairly easy tools. Microsoft Impressions and Pay Pal are two of the easiest programs to work with, and can turn a bland Web site into an e-commerce site.

Log on to GoDaddy.com to register your domain name, then have them host it for less than you think. These days anyone with basic computer skills can build a site ready to accept payments in a few hours. Then, to keep in touch with clients after their purchase, offer a monthly newsletter providing more coupons, specials, and success stories from other clients. Companies such as Constant Contact offer ways to develop and distribute effective e-mail campaigns. Keep the e-mail up to date with a calendar of local events geared to seniors—runs, nights out, openings of senior centers, or anything you think might be attractive.

Going retail doesn't mean waiting for the little cowbells on the door to clank. Going retail in our industry is a blend of reaching out to the community to spread the word about our mission and being there when the customers arrive. It's imperative that we have relationships with the local facilities that cater to our target market. It won't be as strong as a case manager/sales rep relationship, but that relationship cannot be overlooked nonetheless.

I once encountered a sales rep who sang every Tuesday at a local ALF. I was fortunate enough to join him for a day in the field where he took me to the facility, and to this day, I still have never seen a rep given the reception this one enjoyed daily. They loved him. The clients (seniors) knew him by name, and the staff couldn't get enough of him. The guy was nice enough, but nothing special. But every Tuesday he showed up to sing a few songs—and that didn't cost anyone anything.

Ultimately, the changes coming down the pike are nothing anyone foresaw years ago, so now a lot of providers are scrambling to determine how they're going to react. Many are going to shift to a retail cash-and-carry model where they can actually charge what they want and collect if they want. They will have the freedom that every other retail business has, without the stranglehold Medicare has locked around their necks.

The freedom will be welcomed, but the responsibility will be great. Retail sales models will be burdened with finding the right target advertising campaign, and hiring and training a well-informed retail staff.

Going retail means changing the direction of community activities to focus on the end user rather than the referral source. But if we staff our well-lit, clean, happy stores with knowledgeable sales staff who aren't afraid to ask questions, and target the right group using an effective media campaign, then we may evolve into a retail success story. Someone is going to be a retail HME giant, and it may as well be you.

Eric Kline is the president of HME SalesPro, a company that works with HME companies in the field and in the store to help generate revenue through a prepared, confident sales force. He can be reached through the HME Today editor via e-mail: .