Providers still own the ADL market

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Saturday, January 31, 2004

HME providers may be conceding (and in some cases, actually referring) sales of some over-the-counter items to big box retailers like Lowe’s and Home Depot, but when it comes to aids to daily living and other assistive devices, they still own the market.

Whether that’s good news or not is up for debate, however. Questions persist about whether the ADL market is a worthwhile adjunct to mainstream HME or if it is a “necessary evil” that providers tolerate to appease customers. A recent round of interviews suggests that the jury is still out.

On one hand, ADL add-ons bolster the dollar total for scooter or rollator sales, but with miniscule margins don’t offer much potential as a stand-alone cash business. Still, nobody said they were abandoning the ADL category just yet.

“ADLs are products people need, so it’s our obligation to carry them,” said Tom Jones, co-owner of Portland, Maine-based Black Bear Medical. “We haven’t really thought about why it’s not a money maker.”

Don Fisher, president of Dallastown, Penn.-based Peak Mobility refers to ADLs as a “loss leader,” but says that they are still featured prominently – albeit at the back of the showroom.

“They’re displayed nicely, but the margin isn’t there for ADLs like it is for other items,” he said. “So customers have to walk past the lift chairs, scooters, stair lifts and other big ticket items to get to them.”

While ADLs are “mostly an ancillary thing,” representing a fraction of sales at Austin, Texas-based Desert Homecare, general manager Dan Hunt said circumstances might be a factor.

“Our store is not in what you’d call an amenable location for retail,” he said. “If we were to move to a high-traffic area, that situation could change.”

Public awareness is another piece of the sales equation. Heightened publicity could boost sales volume and subsequently profits, Jones said.

“ADLs in general are increasing, but it’s amazing how many people still don’t know they exist,” Jones said.

Yet taking steps to give these products more exposure is cost prohibitive, laments Richard Sutherland, president of North Texas DME in Plano.

“We need to increase sales volume of ADLs, but we can’t run ads because the margins are so slim,” he said. “The incremental cost is equal or more than the profit margin.”

Even as ADLs face a continuing recognition challenge, it’s not due to a shortage of products. In fact, Jones says Black Bear has beefed up its inventory to include a wider variety of brands and styles.

“We’re giving consumers a greater choice than ever, which is a bit of surprise to me,” he said. “Who would have thought that I’d be carrying four different stocking aids? We’re carrying everything from economy to deluxe models.”

Peak Mobility also has seen a spike in the amount of products, though Fisher says only a few are top performers.

“Bags sell better than baskets, and trays haven’t been selling well at all,” he said. “We’ve actually been getting a lot of sales on a lower-end wheelchair cushion. People like the cash-and-carry aspect to it. It’s thinner than the foam cushion but provides a lot of comfort and costs a lot less - from $22 to $60, compared to a couple hundred for the higher-end cushion.”

It’s not just about quantity though - manufacturers also are paying more attention to quality, Fisher said.

“The quality is improving,” he said. “Shoehorns, for instance, now have plastic handles, which are easier to use.”

Sutherland agrees, adding that vendors are offering more retail-friendly merchandise.

“They’ve responded to demand pretty well. They’ve been paying attention to what we’ve told them,” he said. “They have become very good at creating attractive packaging.”

A plethora of product may be a consumer boon, but it presents storeowners with an inventory challenge - namely how to keep from drowning in stock.

Patti Kelnhofer, manager of Home Care Medical’s retail store in Milwaukee, says lines are constantly being evaluated.

“We’re keeping track of trends in order to determine which product should be discontinued in favor of another,” she said. “We use request forms to get feedback from referral sources on which products we should carry. If we get a sufficient volume of requests for a product, we’ll bring it in for them.”

Although they merit their own category, bath safety products are typically considered to be ADLs and mass merchandisers are making competitive inroads by selling grab bars and bath benches. HMEs are surrendering some business to the chains, but those interviewed maintain that independent healthcare stores still have the advantage.

“They carry some bath safety items, but not the majority of ADLs,” Kelnhofer said. “We’re not threatened by them because we carry superior products, educate people on their use and provide installation.”

To be sure, HME providers present a one-stop-shop experience for mobility, ADLs and bath safety aids. And unlike the general retailers, they provide personalized service, Jones said.

“We have a 3,500-square-foot showroom and 40% of our business is walk-in retail,” he said. “What really sets us apart though, is that we’re willing to spend time with people to help them select the appropriate products. Even if it’s something as simple as picking out a cane.”

Installation, while serving as a source of additional income, is both welcomed and dismissed by providers. Fisher says he’s done “brisk business” installing support poles, while Sutherland says it’s not worth the trouble.

“I tell people to go to Home Depot for braces and grab bars,” Sutherland said. “Let them assume the liability for installation.”
Category: Aids to daily living
Key Products:

Long handled items (reachers, sponges, shoehorns, flatware), braces, grab bars, grips, elastic shoelaces, cushions, wheelchair and scooter accessories, stocking aids, extra-long straws, curved plates.

Marketing strategies:

- Position the business as a “one-stop-shop” that offers a complete solution for all mobility needs.

- Situate ADL displays at the back of the showroom so that customers have to walk past the big-ticket items first.

- Stay in touch with referral source preferences and carry those products, if possible.

- Conduct “trending” surveys in order to gauge product demand.

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