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Helping the health care industry boost revenue through more and better retail offerings appears to be the prescription for growth for Simply Retail, a Minneapolis consulting and management company.
Growing, especially growing faster, is critical to Simply Retail founder Mindy Thompson-Banko as she braces for larger competitors to enter the health care retail field that she and her company pioneered.
After all, while much of the rest of the economy tanks, retail spending on cash-and-carry retail products (nonprescription items that insurance companies don't cover) is a $500 billion a year business, according to Thompson-Banko.
We're not talking about just volunteer-run hospital gift shops, pharmacies or small closet-like cubbyholes that carry just a few products. The market she has in mind includes specialty products for the large number of people who have chronic diseases, for surgery patients who have wounds to care for, and cancer patients who need items such as nonmetallic deodorant.
"You're not necessarily going to find that in your Walgreens or Targets," Thompson-Banko said. "You've got these environments with lots of people ... with product needs, and you've got the health care industry that needs to generate new revenue. Bottom line, they need to drive more value-added services to very sophisticated consumers who are also patients."
So, a key focus for her in 2009 will be looking for partners or investors who can help the company prepare to expand from a projected $2 million in revenue this year to at least $15 million to $18 million in the next three to four years.
"The business and the growth and the opportunity are sitting there," Thompson-Banko said. "We fortunately are in a position where we have the most research, the most data, the most hands-on experience. Yet we're fighting against time because there's competition coming."
Since 1999, Thompson-Banko has advised health care executives concerning more than 100 major retail initiatives, now generating more than $100 million in sales a year. That's when Thompson-Banko, sensing the opportunity in health care, redirected her company to focus exclusively on providing retail consulting for that industry.
Before then, Simply Retail, founded in 1994, had consulted for independent and national retailers, malls, manufacturers, e-commerce websites and franchises. Thompson-Banko has more than 25 years of retail experience, holding senior positions at Dayton's and Marshall Field's and other companies.
She applies what she calls "the science of retail" to develop projects in hospitals, clinics, surgery centers and other health care facilities. She has summarized her approach in a book titled "Beyond the Gift Shop: Boost Revenue, Your Brand and Patient Satisfaction with Strategic Hospital Retail." The book, published by the American College of Healthcare Executives, is available at Simply Retail's website.
"We've spent the last 10 years researching, gathering data and really quantifying how to apply sophisticated retail science to the health care industry, which is really the last of the retail frontiers," Thompson-Banko said.
Simply Retail's services include consulting on plans for health care retail projects, carrying out those plans and managing the retail space.
Thompson-Banko said the company introduced a service this year, Simply Merchandising, that recommends health care retail products. The company will focus on expanding the service to new and existing clients in 2009. Another service, Simply Products, includes a website where clients can find and buy those products.
No longer recession-proof
While people often think of the industry as recession-proof, health care is facing challenges. Getting capital for new technology or construction projects can be difficult and some providers are reluctant to take a chance on adding or updating their retail space, she said.
"It's more of a risk than some conservative health care folks want to take on," she said. "The health care mind-set is not-for-profit, which is obvious and makes tons of sense. Yet retail is all about profit, accountability and measuring and tracking our consumers and customizing what we do for them. Health care is still learning from all those things."
Simply Retail, which has consulted with Allina, Park Nicollet and other local providers, worked with West Jefferson Medical Center near New Orleans to develop three retail spaces: a gift shop, a floral shop and a women's and children's shop.
"They provided a great value to us in helping us understand health care retail, which is totally different from health care," said Tim Bracey, senior director of external operations at West Jefferson Medical Center, a 400-bed nonprofit facility.
The shops opened last year, Bracey said. For the past six months, Simply Retail has worked with the medical center concerning management and merchandising issues. Sales have been rising in recent months, and the hospital expects them to be profitable next year, Bracey said.
The expert says: John Sailors, assistant professor of marketing at the University of St. Thomas Opus College of Business, said Simply Retail needs to move with some urgency to secure clients before general retail consultants move into the field.
"The message here is that, in the past, these retail spaces in hospitals have been largely an afterthought," Sailors said. "If there's an opportunity for them to leverage those better to the benefit of the bottom line, if this becomes acknowledged within the health care domain, you're going to see an explosion of business in that area. If there's nothing that prevents traditional retail consultancies from tapping into this, Simply Retail needs to move as quickly as possible to get this locked up sooner rather than later."