Are you maximising OTC sales?

Over-the-counter medicines sales are an integral part of pharmacy business. Increasingly, large pharmacy multiples and supermarkets are taking a bigger piece of the OTC pie as customers seek out the lowest price. Colin Stuart, director of commercial finance, Boots the Chemists, says that independent pharmacies in particular are finding it difficult to compete.

“The grocers, in particular, are making OTC and toiletries increasingly competitive marketplaces, with falling prices and increased promotional activity,” he says. Mr Stuart explains that counter business is typically a much smaller source of revenue than that gained from dispensing, but says: “Nevertheless, it has good margins and is an important part of the offer. The issue is, how can the independents remain competitive against this huge buying power and supplier-funded promotions?”

Trevor Gore, Reckitt Benckiser’s training and development manager, says that pharmacy’s OTC market has declined by at least 2 per cent in two years, whereas the grocers’ has grown by some 2.6 per cent. “You are losing your OTC business,” he warns.

Advice is key

Mr Gore describes people’s shopping habits as “sophisticated” — they pick up medicines as part of their weekly shopping and do not consider many minor ailments to be illnesses.

However, he believes that when people are unwell, they are more likely to go to a community pharmacy than to a supermarket to buy their medicines.

Providing people with advice can be the key to a community pharmacy’s OTC success, Mr Gore suggests. He makes it clear that pharmacists should not try to beat supermarkets on price.

“Beware price cutting as a way of adding value … Before long you will be selling products for nothing,” he insists. “If they are going shopping in a supermarket they are probably looking for price; if they are going shopping in a pharmacy they’re looking for advice.”

Unfortunately, it appears that many people who go into a pharmacy wanting advice do not receive it. Mr Gore claims that only about one in 10 pharmacy customers are offered advice without asking for it — and their main reason for choosing to shop in a pharmacy was to obtain advice.

Retaining custom

Mr Gore believes that community pharmacies lose repeat business to supermarkets because they do not ask the right questions. He presents a common scenario:

A pharmacist will use his or her best communication skills when a customer presents with a problem, and sell them an OTC product. The customer, appreciating good service, comes back into the pharmacy to buy the same product next time.

Rather than receiving further advice, they are asked “is it for you?” or “have you taken it before?”. Invariably the customer says “yes” and is sold the product. In future the customer will buy the product from a supermarket where he or she can get their medicines at a lower price.

So it appears that many customers want advice when they come to the pharmacy, but when asked a closed question, they will opt for the easiest answer. In such cases, what the customer thinks they want to purchase might not be the most appropriate product this time around. Asking open questions, such as “what kind of symptoms do you want to treat?”, can open the door to a health care transaction that is beneficial to both parties — and to future business.

“Find out what the person is using it for on that occasion and, where possible, add value — advice, alternative products, additional products,” says Mr Gore.

Selling the benefits

According to Mr Gore, customers have been shown to be more willing to purchase a product when they are told the benefits that the product will bring. Pharmacists — and their counter assistants — tend to tell customers what a product contains, which, unsurprisingly, does not mean very much to many consumers. They just want something that will do the job.

Mr Gore says that customers buy benefits, but pharmacy tends to sell features. “Customers do not buy products for what they are; they buy them for what they do,” he explains.