Manage your customers, not just your categories Print E-mail
Written by Amy Kasza   
Amy, retail health care industry writer and professional knowledge management specialist with Hamacher Resource Group LLC and its UK subsidiary The Hamacher Group Ltd. Hamacher Resource Group is an international company that has been providing business intelligence and merchandising advice to community pharmacy for more than 25 years. Kasza is a In collaboration with the NPA, the Hamacher Group Ltd produces monthly category management guidance through the Front Shop Strategies programme.

It may come as a surprise to hear that category management in the front shop is not a magic pill that increases pharmacy’s profits. Implementing the steps of the typical category management process simply will not in itself generate greater income. Instead, managing the customer’s experience by way of manipulating in-store categories is a more direct and effective approach. Attracting the right shopper to the right pharmacy section at the right time – with the right products, price and promotion – is the key to creating a front shop that becomes a shopper’s destination and not just an afterthought.

Some pharmacists, who already are well schooled in category management, may read these words and say: “It’s about time!” Customer-centric category management is a concept whose time has come in community pharmacy, perhaps more so than at any other retailer. Broadly defined, it involves indirectly directing customers, capitalising on pharmacy’s unique position, and knowing how to shape customers’ expectations. In the front shop, developing a customer’s shopping experience is key to profitability. Quite simply, the more that customers like their experience, the longer they will stay. The longer they stay, the more they buy. Therefore looking beyond the process of category management is paramount. Pharmacy must see it not as a linear, one-time event but a continuum involving observable customer behaviours and preferences.

Not the same old category management


Say the words “category management” to community pharmacists and they may conjure the image of a flowchart illustrating a series of complex steps in the typical category management process. Maybe the words evoke a picture of a planogram showing where to place certain products on the shelf. Or maybe the pharmacist envisages columns of closely printed ePoS data and syndicated sales numbers, not to mention the dull and dry hours it requires to analyse them.

None of these images is particularly inspiring, certainly not to the pharmacist who also wears the hat of businessperson serving the public. By its nature, category management is not very compelling to one whose job includes practising people skills. Yet at the same time community pharmacy needs category management to maximise profitability. Peaceful co-existence of the purely analytical with the people-oriented is possible, however, when customers are brought back into the category management process.

In the beginning…


In the 1990s category management emerged as a means of selecting and arranging the correct range of products to maximise sales for a retailer. The basis of good category management in the beginning was, quite logically, the consumer. “What do shoppers want?” asked category management practitioners. “Where do they prefer to shop? What can retailers do differently to influence consumer purchase behaviour?” These questions led large retailers such as supermarkets and pharmacy multiples to design a process that had as its goal the smooth flow of products into the hands of consumers.

While the focus on category management has made for more profitable retailing and better organised stores, it has in some respects come to be an end in itself rather than a means to an end. In other words, retailers can become so intent on the process of defining a category, assessing its performance and implementing good merchandising that they overlook the most important factor and resource – customers.

1. Direct your customers, indirectly


If traditional category management begins with category definition, proceeds to category strategy, then ends with category implementation, where is there room to consider the consumer? Even the best programme cannot yield maximum results if it does not take consumers into account. Their wants, needs, preferences and prejudices must be monitored continually and evaluated in order to create categories that attract them again and again.

It’s fine to apply the basic principles of category management to achieve this goal. But one must overlay the intent of creating an optimal customer experience. For example, when defining a given category, know what the pharmacy’s customers in that category typically want, what their questions are and what else they might want or need to go along with those purchases.

Consider a shopper in the cough and cold category. She wants a cough suppressant and something to take away the aches and pains that go along with her seasonal cold. What she also needs – but might not express in any overt way – is some intensive moisturiser to heal her winter-dry skin.

This customer enters the store with one direct need in mind: relief from an irritating cough and general discomfort of a cold. The pharmacy could take this one need and create any number of logical pathways to other products. Shelf signage and cross-merchandising are just two common and effective techniques to carry the customer effortlessly from one area of the front shop to another. No staff intervention is needed, and the implementation of this technique is no more complicated than one’s own common sense.

2. Capitalise on pharmacy's unique position


Supermarkets and mass market retailers adapted category management to the business of retailing to serve a specific set of needs. Observe the shoppers in one of these outlets for just an hour or two and a clear pattern of behaviour can be noted: shoppers want to serve themselves. Of course there are times when a customer needs assistance, but the prevailing preference is to enter, shop, pay and leave, more often than not with no interaction beyond the exchange of a brief pleasantry and money.
Pharmacy shopper behaviour is often markedly different, but the wise pharmacist will not be fooled into thinking these shoppers are a group entirely separate from supermarket shoppers or mass market retailer shoppers. The middle-aged woman who spends 15 minutes talking with the pharmacist about her medicine may well have a bootful of groceries in her car, all of which she just purchased without exchanging a single word with any supermarket employee. The 20-something man asking the pharmacy assistant about a £3 bottle of pain reliever could have just purchased an expensive portable stereo and half a dozen CDs at the local mass market retailer without once consulting a store employee for advice.

The difference between customers of one retailer versus another is not the customers themselves. Instead it is their expectations of different retailers, their attitude when shopping there and their view of how the retailer is positioned to serve them. Happily, pharmacy has the ability to influence all three of these perceptions.

3. Know what customers expect - then change it


Customers know they can fill their prescriptions at community pharmacy. That is the most obvious conclusion. Unfortunately what they may have learnt to expect through repeated experience is that pharmacy does not have much for them beyond prescription medicine. All too often in the past the community pharmacy has had a somewhat disorganised assortment of over-the-counter (OTC) products filling the space not needed by the dispensary. In the minds of many shoppers the front shop became the not-always-welcoming foyer to the main living space – the pharmacy counter. But the days of differentiating a “patient” who purchases a prescription from the dispensary and a “consumer” who may self-select products for purchase are long gone. These are, in fact, the very same person.

Pharmacists know that the front shop is more important than ever, especially as the new contract expects pharmacists to support self-care, medicines use reviews (MURs) and enhanced services. Consulting with a customer about healthy lifestyle choices requires reference to and recommendation of any number of OTC products that improve overall health. Pharmacists can effectively change what even their long-term customers expect. Knowing and accepting what the average customer perceives is more than half the battle. Communication, both direct and indirect, can and will change how customers shop at the pharmacy.

Steps forward


Nothing at all is wrong with the basic principles of category management. They are effective tools to choose and arrange products for the purpose of profitability. But by taking these principles one step further, the pharmacy can harness their energy to create the ultimate in “shopability”. After that, simply review, revise and repeat as needed.

 
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