How to Sell Categories
Home health care (HHC) providers are learning what successful retailers practice in
category management: gross sales, sales per customer and profit all increase when they
merchandise product categories in direct response to the current and anticipated needs of
their core customers. These businesses become "customer-driven," providing the
products and services that are in demand instead of in supply.
Category management redefines each merchandise section as a self-contained
business entity with its own individual profit-and-loss concerns. The category's goals
become synonymous with the company's goals: attract customers, develop loyal customers,
control inventory, maintain in-stock positions and increase return-on-investment
(ROI).
Cross-selling related and impulse merchandise is the most cost-effective way to
increase retail sales either within a particular department or between two department's
"retail adjacencies." Most departments usually sell at least one demand product
that current customers return to buy on a regular basis, such as incontinence, diabetic or
wound care products in the HHC market.
Retail displays, located between the entrance and the demand
product(s) section,
must promote 1) related products that appeal to similar needs and 2) impulse products that
appeal to similar values. Shelf signs, talkers and flags can be used to remind demand
product customers of these other related products. Selling is a numbers game, and
according to retail marketing studies at least two out of every 12 customers will buy
these related and/or impulse products if provided with the sales opportunities.
The lifetime value of core customers becomes redefined by category management.
For example, diabetic customers spend $2,500 a year on home health care, which obviously
includes much more than insulin and test strips. Blood pressure monitors, foot and eye
care and sugar-free foods are the top selling related and impulse products to these
customers. Incontinence customers are major buyers of bath safety products, mobility aids,
hot/cold therapy products and aids to daily living.
Turnkey packages are available today from suppliers that include customized
demographic merchandising layouts and planograms, in-store displays and signage, automatic
reorders, increased turns and ROI. For example, McKesson Home Health Care now offers such
services for incontinence/urological category management through their partnerships with
Kimberly-Clark, Hollister and Convatec for the demand products and Rubbermaid for the
related products.
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