Helping Pharmacies Gain Profit with Planograms

9 mins read

Companies are always trying to keep up with constantly changing consumer demand by offering customers the newest and latest products. Planograms are designed to increase sales and profits, introduce new product lines and support merchandising approaches. These are crucial componentsof visual merchandising plans that help keep stores fresh and interesting while utilizing current trends in marketing. Unfortunately, few independent retailers and pharmacies have the resources to create their own planograms. Their merchandising plans have often evolved over time based on customer needs. If a shopper only gives a section of a store attention for up to five to six seconds, a planogram that is well executed might be the key for an extra sale that so many independent businesses need. You don’t want to miss selling something extra to the customer who only came to your store for one item. With the right or better product mixin front of your customers, better visual merchandising can lead to increased sales and profitability.

Attractive and organized displays draw the customers in

Some merchandisers suggest that if they can identify the parts of a store that have the highest traffic, and place product there, they can predict sales.But can they really? Is this accurate? Are they leaving dollars on the table? Industry research has indicated that at least fifty percent of independent retailers do not follow suggested category planograms with only twenty percent believing that sales will increase if they follow specific planograms.If you don’t have attractive or organized displays, how can you guarantee that the customer knows that you carry desired products or will visit that section of the store?Research has also shown that the endcap isn’t always the most profitable location but location does have an incredible effect on sales giving us the perfect reason to use planograms.Usually, onlytwenty percent of your sales are gained by features in special locations like endcaps. Every inch of your store needs to help you maximize your profits.

Planograms provide stores with a better understanding of different merchandising routes. Simple things like shelf height, product arrangement and product placement equally help increase sales.Both popular and profitable products need to be positioned optimally on shelves within the store. Make sure that fastmovers are visible and easily accessible. It is also important to change the mix routinely to give the right products priority based on your sales data. How your entire shop floor looks makes the impact.Losses can be significant if these basic principles aren’t followed.

It does take manpower to maintain a planogram. It takes time to re-ordering stock, make sure the items match the design plan, to analyze what is working and what isn’t. This is why studies show that planograms go out of compliance at the average rate of ten percent per week. The flip side however is thatif stores had one hundred percent reset compliance every two weeks, they could see an estimated seven or eight percent lift in sales and profit.All they have to do is keep products in-stock and visible. Another easy fix is to use shelf stickers and image tags.These have both been shown to reduce set times by as much as fifty percent and restocking time by thirty three percent. It isn’t surprising that accuracy dramatically improves by using shelf tags. If you think about your own experience, if you can identify an item’s name, information and price easily, you are more likely to buy it.

Plan your planogram resources wisely and increase your profit.

The National Community Pharmacists Association (NCPA) digestindicates that they are seeing per-prescriptionprofit decrease in independent pharmacies every year. With gross margin and profit dollars dropping as regulation changes forcemarketplace contraction, is it possible that you are focusing too much on back-end prescription dollars and leaving out front-end opportunities? According to Hamacher, front-end sales have remained strong with estimates of thirty to forty percent margin compared to losses in other areas. Two thirds of drug store sales come from pharmacies but the majority of the profit comes from front-end sales. If a Pharmacy could increase the basket size with impulse sales, they could potentially offset losing shoppers to other outlets. Some OTC categories such as first-aid, eye care, and smoking cessation products, etc. have shown stronger growth in independent pharmacies compared to chains.Here are a few interesting facts. Surveys indicate that shoppers go to the pharmacy for several reasons. Twenty-five percent go for prescriptions, twenty-five percent for over-the-counter with thirty percent buying consumables. Here is another miss. Forty-three percent of shoppers in pharmacy as a whole only went for one item and did no other shopping. Fifty-six percent of shoppers going for a prescription bought nothing else. One-out-of-six shoppers bought something while waiting at the check-out but seven-out-of-ten customers buy extra items at check-outs regularly. What else could you have sold that customer while they were waiting for a prescription, on the way to locate the desired item or waiting in the check-out? Could you add a few planograms to your front end to offset possible prescription losses?Many Pharmacies report that their front-end sales have grown by using both planograms and in-store merchandising plans.

Product placement and improved sales are just two very basic reasons a retailer should be implementing planograms in their shops. They help you assign value to every square inch of your store, reduce out-of-stocks and make it easier for staff to replenish products. Planogramsalso offer great sales data that will help you drill into your business needs. They tell you where your best sellers are positioned and which promotions sold best and from what location in the store.How effective your displays were or what types of displays worked?Where your profit is coming from? Which products and which shelf?Are only certain parts of a planogram selling?What is the shelf capacity and item turnover?What’s the cost of stock/inventory on each fixture and what your fixture will look like in the store before it is set?

Layout and in-store merchandising do make a difference. Try to understand the types of products your customers buy at the same time with cross merchandising and signage. Revitalize and rotate your displays monthly and offer fresh items that will capture customer attention. Look at what is selling and what isn’t by studying your sales trends and data. Retailers spend too much time creating and implementing planograms to let execution and inefficient maintenance undermine sales. A planogram is one of the best merchandising tools for presenting products to the customer. Design your floor plan to generate sales. If you aren’t using planograms and need some incremental sales, it may be time to start.

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