Cash is king

Friday, April 30, 2004

YARMOUTH, Maine - DME’s retail environment has languished over the past 10 years with the rise and fall of the home health superstores and the move toward consolidation, but some providers are testing the big box waters again and opening locations within the world’s retail king, Wal-Mart.

Hutchinson Medical of Salem, Massachusetts was the first to take the plunge in October when it opened two Wal-Mart locations in Epping, New Hampshire and Waterford, Connecticut.

The Scooter Store and Apria quickly followed suite. Apria opened a pilot store at a Duncanville, Texas Wal-Mart in March, and The Scooter Store has five Wal-Mart locations in Texas, Florida, Alabama and North Carolina.

Hutchinson’s and Apria’s locations currently are cash and carry, with products like lift chairs, walkers, bath safety devices and ADLs. The Scooter Store’s locations will accept a mix of cash and third party payers for a range of power wheelchairs, scooters and lower priced retail items.

Industry watchers have looked at this growing trend with a skeptical eye, but some think the industry may be ready to jump back into retail.

“The retail portion of our business has diminished significantly because of consolidation,” said Ross Rankin, president of Representations, a manufacturer’s representation firm in Santa Ynez, California. “As a result it is more difficult for customer to get a variety of retail products, and they don’t know where to get it.”

Wal-Mart’s visibility within the community, with 138 million customers per week worldwide, may give the DMEs the recognition they need to be successful.

“All of these company’s that are located in Wal-Marts need to take advantage of that tremendous foot traffic everyday,” said consultant Jack Evans. “We know a large volume of pharmacy customers need home healthcare products, so the only question that remains is: Will they come and buy here?”

Pulling people into the stores will be no easy task, however, and some of the same problems that plagued the failed HME superstores are sure to arise here, say industry watchers.

“It’s the same thing I told the people who were starting the superstores: People don’t shop for DME. They are not going to drive across town to get the latest commode,” said Rankin.

But once you get them in the stores, then you can merchandise them, he added. That is where the remaining problems come into play.

At just 500-700 square feet, the DMEs in Wal-Mart have very little area to set up displays and inventory, said Rankin.

“The location [The Scooter Store] is in is very small. I don’t know how much retail they could even do out of it because they can’t carry a large inventory,” said Ken Steber, president of Gulf Medical Services in Pensacola, Fla., where one of the Scooter Store’s Wal-Mart locations is.

“I usually tell people you need a minimum of 1,200 to 1,500 sq. ft. to offer the product mix and selection necessary to give customers the choice they need,” said Evans.

Other problems include distribution, hiring knowledgeable personnel to work at the stores and being able to offer the services that are expected of DMEs, including billing and delivery. But, despite these logistical issues, industry insiders agreed the Wal-Mart concept could certainly be successful.

“If Wal-Mart is the No. 1 retailer and the current franchise operations in Wal-Mart are successful, then why not DME?” said Evans. “But is DME ready to go big time in the malls? It is too early to tell.”