Effective pharmacy sales are, after all, retail sales much like in any store. Although, as an independent community pharmacy owner or manager, it may be tempting to fall back on the sale of prescription medications to boost your store earnings, the fact is that gross margins on prescriptions are dropping for most stores, lowering profits, while front-end sales continue to be strong and stable. This is according to the National Community Pharmacists Association (NCPA).
Part of the reason for falling profits in drug dispensing is the increased use of generic drugs rather than higher-priced name brands. To bring these profit discrepancies more into focus, consider these findings by the Hamacher Resource Group (HRG). According to an HRG report, there's an average 38% profit margin on pharmacy front-end sales while the gross margin on sales generated behind the prescription counter (as reported by the NCPA) averages only 23%.
It should be noted here that over-the-counter (OTC) items continue to be important to shoppers and that, again according to the HRG report, a number of OTC categories are showing stronger sales growth in independent pharmacies than in the larger chain stores. Some of these categories include smoking deterrents, first aid products, eye- and ear-care items.
The Importance of Product Placement in Pharmacy Design
Since approximately 85%-90% of independent drugstore profits come from prescription sales, you already know that most customers entering your doors will be making their way back to the prescription counter. In addition to having your prescription area located to the rear of your store, you should also display your “everyday items” deep in the interior or toward the rear of your merchandising area.
Your pharmacy design efforts should be geared toward making it as easy as possible for your customers to walk by as many of your product displays as possible as they stroll to the back of the store. You want them to see items they may impulsively decide to purchase. Pharmacy design, in this instance, includes:
- Installation of display shelving that creates a natural footpath customers will feel comfortable taking through the store.
- Specific placement of products and adjacencies on these shelves, thereby controlling what customers see and how they see it.
- Placement of signs, special offers and promotions that are interesting and tempting, with the objective of having shoppers take time to browse, spending more time in the store, which means they'll likely buy more.
- Effective positioning of your checkout counter, giving you one more opportunity to offer additional items to shoppers before they walk out the door.
Checkout Counter Intelligence
Placement of your store's checkout corner is an important factor for several reasons. As customers enter your store, they should be able to see the checkout counter located on their left, but not too close to the store's “decompression zone.” You don't want it located on the right side of the store because this takes away valuable area best used for your “power wall” and other hot-selling product displays. Customers generally look left then turn and walk right when entering a store and you don't really want them walking by the checkout counter until they're on their way out.
Your pharmacy design should allow for a large checkout counter, so shoppers have plenty of space to place their purchases and other items they may be carrying. Tasteful use of compact POP displays may also be placed on the counter-top and freestanding POP displays should be in close proximity for shoppers to view as they wait to check out.