Cardinal deepens services to include hands-on makeovers
DUBLIN, Ohio —Looking to help independent pharmacies better compete in today’s competitive marketplace and bolster front-end sales, Cardinal Health is ramping up consulting services available to independents as evidenced by the makeover of My Pharmacy in Miami.
“Cardinal has offered these types of programs for a long time, but we have never [placed such a great emphasis on them as] we do today. And that is not only by sharpening the actual program offering, but being able to have a sales force that is specifically trained to help grow the front end because that is what we’ve recognized the independent customers need,” said Jeff Thomas, vice president of retail product management and consumer health at Cardinal Health.
Through Cardinal’s Leader Total Pharmacy Manager’s Sales Suite—which focuses on driving front-end traffic, sales, cash flow and efficiency—Cardinal offers independent pharmacies specialized teams of consultants to identify and meet the retailer’s specific needs. The company now is beefing up those services to offer retailers a turnkey makeover solution.
Making headlines as the first retailer to undergo such a makeover is My Pharmacy in Miami. A Cardinal Health retail marketing consultant led the effort, looking at the size and demographics of My Pharmacy, observing shopping patterns and then creating a three-phase “stair step” plan for the implementation of the front-of-store program.
“On this kind of a scale, My Pharmacy is really the first one.… We have done demographic analysis and made suggestions to hundreds or maybe a 1,000 pharmacies. But to go in and really do the makeover ourselves was a little bit of an experiment, and My Pharmacy was the first one,” Thomas said.
Thomas added that the results were showcased at Cardinal’s annual Retail Business Conference in July in Boston.
Since that time, Thomas said Cardinal has been “inundated with requests” by other independent pharmacies seeking a makeover. Cardinal is in the process of determining how best to commercialize the program going forward. “We would probably like to line up some preferred vendors for construction services and things like that,” Thomas said. “We are working on that now.”
He noted that at independent pharmacies, front-end sales typically account for less than 10 percent of sales. However, with such a program, that number could increase to more than 10 percent. “We think there are huge opportunities for independents to capitalize on the front end of the store offering,” Thomas said. “We would consider [the program] a success if we could get it into the double-digit percentages. When you are dealing with things like home health care and the higher-end dollar items, you can definitely get into the 20 percent range.”
The 30-day makeover at My Pharmacy, which wrapped up in July in time for Cardinal’s RBC event, was comprised of the following phases:
Phase 1: Private-label and signage assessment to make sure the store had the right mix of high-margin private-label products with customizable signage and décor to drive sales. The result: My Pharmacy specializes in home health care but had no clear signage letting customers know where they could find such products. The Cardinal Health team recommended and implemented 4-foot signs for such areas as bath safety, respiratory care, diabetes care, foot care and personal care. The assessment also identified a need for a value store, more prominent exterior window signage and endcaps to promote seasonal and advertised specials. All of that signage was ordered as well.
Phase 2: Merchandise planning and multimedia advertising, whereby Cardinal conducted a demographic analysis to determine pricing zones and product mix to best meet that pharmacy’s needs. In this case, My Pharmacy also received training to learn how to take advantage of free marketing support offered by Cardinal Health, such as bag stuffers and TV commercials. The result: Two end caps were added near the entrance of the store to promote seasonal items; a home health care “destination” was created within the store using signage ordered in Phase 1; and a general merchandise “dollar store” was created.
My Pharmacy’s original floor plan featured a wide selection of incontinence products in the center aisle of the store. These products were moved back to the home health care area, leaving room for the center aisles to feature items for the new “dollar store”—which features 56 total feet of items including candy, school/home/office items, cleaning supplies, household items and beauty care.
Phase 3: Now that My Pharmacy has implemented Phase 1 and 2, it is considering moving to the next level, which is the implementation of a front-end management system. This would help it boost inventory turns, account for seasonal trends, provide detailed reporting to track sales per square foot and monitor sales per category. It also would automatically reorder products and handle automatic monthly pricing updates for Leader private-label brand promotions.
“Today’s environment is different. The [retailer] needs to sell one more thing when that consumer is in the store. You have [the consumer] there for the script, what else can you sell them?” Thomas said. “Today, with gas prices and things of that nature, the consumer is less likely to go to three stores to get the deals in the circular if they can pick it up in one location. That is what we are driving toward.”