Is Retail Always Profitable?

HME providers often call and ask an interesting question: Has a retail HME ever failed, and if so, why?

There are several factors that affect the success of a retail HME business. On average, most new retail HMEs break even by the 10th or 12th month, averaging between $40,000 and $60,000 per month at that time, with their full-time employees generating $150,000 in gross sales annually. When a new store does not meet those benchmarks, there is probably a problem or forgotten issue.

• Insurance vs. Retail: When customers walk into a retail store, they are usually greeted and then asked if they need help. Retail HME businesses are no different. Unfortunately, when HME staff must also process insurance, they are often bogged down with paperwork or on the phone for verification and unable to help customers who walk in. If a customer is ignored or abandoned when the salesperson runs to answer the phone, he or she may walk out. Not only have you lost a sale but you have probably lost a lifetime customer who will now be shopping at your competitors.

  In a retail HME, the staff needs to be dedicated to retail sales, 100 percent focused upon customers in the store to greet, help, educate, demonstrate, sell and service them.

  If insurance is accepted at a retail store, then several other options exist: A biller from corporate can be relocated to the store to continue billing functions but also to help with customer intake and verification. Customers can sit down and speak on the phone with a biller at corporate who will then process their insurance. Or if both locations are within a 30-minute drive of one another, customers can be asked to drive over to corporate where all insurance is processed.

• Advertise Beyond the Grand Opening: Most retail businesses need ongoing advertising to generate new customers, who can then be converted via superior customer service into loyal, repeat customers. There is no right or wrong medium for advertising, as every community has its own respective mix of newspaper, TV and radio with media stars and popular programs, personalities, columns and writers.

  For a retail business to establish its brand and generate sales from new customers, advertising must be frequent enough to saturate a given market. This generally means utilizing print ads two or three times per month, radio ads alternating weeks or months and TV ads two to three weeks per month. The average retail HME's advertising budget ranges between $800 and $1,500 per month, depending upon monthly sales and the size of sales territories.