Compete with Online Retailers In The HME DME Business. As a brick and mortar store, you have real advantages over online retailers. Learn how to optimize your store for retail, leverage those advantages, and keep customers in your store.
How HME Dealers Can Compete With Online Retailers
Brick and mortar home medical equipment (HME) retail stores across the country are struggling to succeed in a changing retail marketplace. Because of Amazon and other online retailers, price competition is at an all-time high. Stores are reporting an increase in “show-rooming” which is when a customer comes into a store and learns about a product from one of the sales staff; the customer may even handle and test the product in the store, but eventually, walks out without making a purchase from the brick and mortar store. Instead, they order the product from an online retailer like Amazon. With free and fast shipping options, online retailers are taking more market share than ever before.
What is a Brick & Mortar Store Supposed to Do?
Is there a way to compete, or are we seeing the end of traditional retailers? The answer is that if an HME retail store is trying to compete with online retailers on price, they have a difficult road forward. That said, brick and mortar stores have some advantages over online retailers, and they can succeed if they start to maximize their advantages while minimizing their weaknesses. Here are a few ways that HME retail stores can maximize their advantages over online retailers and find success in the current marketplace.
Have a Unique and Curated Inventory Mix
Consumer Reports indicate that the best-selling products all share 3 characteristics. First, the products are unique. With all the commodity sets out there, finding unique items for your store is an imperative. According to a study on choice from Columbia University, customers need between 3-6 options to choose from in order to feel like they have enough information to make a wise buying decision. Again, the target to achieve that buying confidence is 3-6 options. What do consumers do if they only have 1-2 choices? Chances are good that they will check for alternatives online, or go to another store to see what other products are available.
We call this the Musical Chairs of Commodity Shopping. A customer goes to a second store, and maybe a third before realizing that they HAVE seen all the options they are going to see, and then make a purchase at whatever store they happen to be in at that time. You hope you are the 2nd or 3rd store in that scenario, but that means that brand loyalty has been so eroded that the customer sees all the stores as equal, and won’t go out of their way to buy from you in the future. Get more choices in your store so that they get that psychological reassurance that they can make an informed buying decision.
It’s important to stay within this range of 3-6 options because too many choices also have a negative effect on the buying decision. According to that same Columbia study, customers who were given 6 choices of jam were 10 times more likely to buy than customers who were shown 24 options to choose from. This is one of the weaknesses of online retailers. Because listings have a low opportunity cost for most online stores, they have overwhelmed their sites with options. There are over 51,000 hits on Amazon when “bedrail” is searched. When given this many choices, a customer can become overwhelmed, and will look for someone with expertise or experience to help them choose. (More on that later)
The next characteristic for a best-selling product is that it is stylish.
Every day, there are 10,000 people who turn the retirement age of 65, and their top priority is to Age in Place, which means that they want to spend their retirement years in their home, not in some assisted living center. This demographic has more discretionary spending power than any other. This creates a grand opportunity for HME retail stores as long as they can merchandise their stores with a curated mix of products with style. Keep in mind that this demographic is demanding higher quality and sophisticated products, with a critical eye toward how they look. Even though they may need HME products, they don’t want to be embarrassed by using products that look medical in nature. They want, and are willing to pay for products that look good. Make sure that your unique items have a look and feel that is superior to the standard commodity sets found in most stores.
The third thing that all best-selling products have in common is that they are high quality.
Consumers are becoming very smart these days and are insisting on quality products that are worth the money that they spend on them. These are consumers with decades of experience under their belt and a lot of flexible spending power. They are looking for products that last longer and function better than products from eras past, and they have the money to spend on those products.
When given so much choice, customers will turn to experts to help them. They will probably assume that the sales staff at an HME retail store has the experience to help them navigate through the many questions they have. Additionally, people will probably not do any research on Aging in Place until an event occurs that makes them realize that they need to act. A fall or a medical emergency will occur, and suddenly caregivers or adult children will be frantically trying to solve the issues. They will explore assisted living, and probably conduct an internet search about their options. They will have discovered that the average home remodel in order to Age in Place runs around $71,000 according to AARP, and that the monthly costs for an assisted living center can be over $10,000 per month! They will be coming into the HME retail store a bit rattled by the costs that they have seen, and they will look to the sales staff to help reassure them, to recommend solutions, and to educate them on options that they can afford.
If you are able to help them during those first vulnerable moments with your expertise, you can win a customer for life! No online retailer can give them that expert support. If your store is prepared, you will have a competative advandate over Amazon. So how do you make sure you have experts in your store?
First, make sure that you have the right team.
Sales staff should be friendly and eager to solve problems for customers. They should be able to connect the dots (cross-sell) between a mobility issue in the bathroom, and similar issues that the customer may be having in the living room or bedroom. They should be educated on the various options in the store, and they should be confident. After all, if that sales associate can help outfit a home with HME products for only $4,000–$7,000, then they will look like a hero to the customer! This takes continual training, and education. Successful store owners understand the value of well-trained staff. This training includes, but is not limited to Top Down Selling, and “Good, Better, Best” techniques.
One of the challenges that many HME retail stores face is the fact that for a long time, retail best practices were not required for success. Reimbursements and long term contracts made up the bulk of their operations, so the occasional retail sale was a perk, but not necessary. Now, thanks in part to competitive bidding and continually sinking reimbursement amounts, cash retail sales have become critical. Yet many stores simply lack the foundation to succeed in retail sales. Displays, signage, promos, trained sales staff, and professionalism are more important than ever.
Think of how you want your store to be perceived, and recognize that every touch point wivth a potential customer is either supporting this perception, or eroding it. First impressions are critical, and spoiler alert!– these first impressions are probably formed long before the customer actually steps inside your store. Are your advertisements reflecting the quality and expertise that you want to project? If a customer makes a call to ask questions over the phone, are those calls handled in a professional way? When they drive up to your store, is the parking lot clean, and is the storefront a good representation of how you want customers to see you?
Once a customer comes into the store, it is important that your merchandise is displayed in a pleasing way that allows the customer to see and interact with the product. Make sure that the shelving and displays in your store are professional, and clean. I’ve walked into stores and observed papers, excess product, cleaning supplies, and even garbage that were left on shelves.
Never leave pegs or shelves empty because you ran out of product.
Have an inventory re-order system that anticipates sales and allows you to get more product coming before that last product is sold. Having empty shelves doesn’t give the impression that you are doing a lot of business, and that is not the assumption consumers make. Instead, it makes them think that the store is not doing well, and worse yet, might not be able to afford to support them in the long run. This will increase their worry that your business will not be around to answer questions and supply them with product for years to come.
Adjust your store layout to maximize sales
Look for shelving units that stop the flow of movement through your store. If you have high price or high margin items, perhaps you want store traffic to slow down in that area. Before that slow-down however, you want them to get deeper in your store. You can do this with well thought out displays that draw the eye, or perhaps overflow into areas where a customer might naturally walk through. Making small changes to your store’s layout or displays can also encourage customers who may come into your store often suddenly look with fresh curiosity at product that they may not have paid attention to before.
All in all, your customers need to trust you, and feel like your advice comes from expertise and experience. Your store should then signal those traits through signage, layout, and professionalism to customers before they even talk to a sales person.
Ways to Stand Apart
When you think of online retailers, you are probably thinking of all of the advantages that they have. Perhaps you lament about their lower overhead per product since they don’t have a showroom. With large warehouses, they can stack more product per square foot, and adding new products just require a new page on their website or listing.
I bet that you haven’t thought about the advantages that brick and mortar stores have. Did you know that Amazon has some brick and mortar book stores, and as of the writing of this article, those stores are thriving? Brick and mortar stores have built-in advantages since the product is right there, ready to be taken home. Having a location in a community strengthens connections to the people who live there. Questions, problems, and advice are more easily handled in a local physical location, so there can be a higher level of trust that a customer might feel if they can get to know the people who are selling them a product. These are just a few of the natural advantages that a brick and mortar HME retail store has over an online retailer like Amazon, and in the next few sections, we’ll talk about some of the other ways to capitalize on these natural advantages.
One of the most important things that a customer may need from your HME retail store is consultation. For customers and caregivers thrown suddenly into the mobility market, their confidence in making a good buying decision will erode as they browse the hundreds of thousands of possible products that they might need. Perhaps they are overwhelmed by the scenarios each new product conjures in their mind, and they feel stress that they are not thinking of every potential pitfall that could come up. They come into an HME retail store to get advice. If a cane is needed, sales staff should understand the likelihood that a bedrail could also be essential. If a lift chair is needed, then there is a good chance that there are some fall risks in the bathroom, and a good sales associate can give them the counsel that they need in order to feel like they have made the right decision. In sales training circles this is called cross-selling, and as you can see, it really means understanding the issues deeply enough that sales staff can see connections between what a customer comes in asking for, and what they will probably need without even knowing it yet.
It reminds me of an experience that I have had too many times. Years ago, I bought a 100 year old house, and started fixing it up. On the weekend, I’d head to the hardware store and buy what I thought I needed to replace the bathtub, or widen a doorway, or some other project. I’d get 30 minutes into the job and realize I had forgotten something from the store (most likely, I didn’t even know I needed it until I was stuck, unable to finish the project until I had it), so I’d head back to the store, get the supplies I had forgotten, and return home. Fast forward a few minutes, and yup, sure enough…I had forgotten something else. By the end of the day, I had visited the hardware store five times, and after a whole day’s worth of work, I had only been able to work on my project for an hour or two. The rest of that time was spent driving. What I needed was an experienced sales associate who had enough experience with projects like mine that that they could recommend these items to me and help me get everything I needed in one visit. I would have been grateful, and so will the customers of your store when your staff are knowledgeable about the issues that the customers face.
Store Events and Workshops
This is a great way to build a store’s brand and show the expertise of the sales team. Advertise in places where people with limited mobility or other needs congregate like senior citizen centers, orthopedic surgeon offices, and other community gathering places. Maybe your store could put on a “Tips for Aging In Place” event where manufacturers, doctors, and other professionals talk about places in the home that pose the most risk and various products that can help. Do demonstrations of products that might not be well known or are expensive enough that people have hesitated to purchase. Offer give-aways and other promotional activities to give the event the energy of a fair. This will help create positive feelings and loyalty towards the store, and perhaps lead to purchases of some of those demonstrated products.
You can do training workshops for other issues that customers may be facing like recipes and cooking techniques for people with arthritis, or maybe even a workshop on how to work that darned complicated remote control (okay, that one was a joke, but I swear my dad needs that workshop!).
Kits and Starter Packs
One place that you have potential to offer a valuable service over an online retailer is by packaging products that customers might need together. This is effectively pre-packaged cross-selling. If someone has started to have mobility issues, there are easily 10-15 products that will help them. Create a sales sheet with all of those products listed with reasons why they are needed. Train sales staff on the advantages of retro-fitting the entire home, and perhaps offer some package discounts to encourage the purchase. Knowing that an expert has done all the thinking necessary to protect a person with mobility issues will give the customer peace of mind.
This is a big one. Imagine a customer comes into the store and needs a few products to prevent falls or increase stability in their home. Perhaps they get a lift chair, a security pole, some grab bars, and a bedrail. What a service it would be if a professional came out and installed it all, then did a quick audit of their house where the installer could identify other risk areas, recommend product, and if they have a van stocked with the most common items, add those to the order. This is a service that most people who are in the market for HME products are in need of, and it is a service that will totally set you apart from an online retailer. If an HME retail store has this capability we recommend stocking a couple of MRVs, or Mobile Retail Vehicles to service homes, and maybe even do annual maintenance checks to make sure everything is functioning properly. Some companies have warranties that are so customer friendly that if a problem is found, a quick replacement could be done immediately, making the customer’s loyalty even stronger.
Speaking of warranties, unless you are returning the product quickly after purchase, even the very user-friendly Amazon can’t compete with a brick and mortar’s warranty policies if that store has built relationships with the right manufacturers. For instance (and I will do a bit of log rolling here) Stander has a warranty so strong that if a customer comes into your store years later, with any problem at all, you can confidently replace it for them right then, in the moment, and we’ll send you a replacement for that product. Imagine that! No online retailer will do that. We have HME dealers who confidently sell for significantly more than online retailers and are successful because they are able to paint a picture of a partnership with that customer, a long-term relationship. For a few extra dollars, the customer will be taken care of by someone they know. You’d be surprised at how important that is to the retired demographic! If all you are doing is competing on price, you’ll lose every time. As Sun Tzu says in the Art Of War, “Avoid what is strong and strike at what is weak.” Don’t compete with online retailers like Amazon with what they are best at (price), instead, highlight the things you do best, and build your brand around that. If you do, you’ll be able to weather this new and changing marketplace.