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The Corner Drugstore: A Thing of the Past or a Retail Goldmine?

By: Maria Werner-- 2016-02-16 1:39 pm --

With so many chain pharmacies sweeping the nation, the corner drugstore is thought to be a dating artifact. In fact, the number of independent drugstores has been cut in half over the course of the last 30 years. Yet, despite the decrease in independent drugstores, they still outnumber major chains. As chain pharmacies continue to gain ground, will independent pharmacies be able to prosper? Well, there’s good news and bad news.

The Bad News
Some pharmacies have been facing financial difficulties that are making it difficult to keep their doors open. Yet, these financial difficulties aren’t due to competing drugstore giants, but rather due to insurance companies. It’s harder for small, locally-owned pharmacies to accept as many forms of insurance as the large chains. Since most people only go to pharmacies that accept their insurance, this has led to drastically declining sales for many independent drugstores.

Despite the insurance issues, some drugstore owners feel that by providing personalized service, they still have leverage over competing chain pharmacies. Independent pharmacist Jerry Grimmitt says that by treating customers with a level of service and care that exceeds the chains, he is still able to generate strong revenue, despite insurance problems.

The Good News
While insurance companies are making it harder and harder for independent drugstores to generate revenue, the economy for drugstores is actually starting to improve. The average independent pharmacy creates about 90 percent of its income from prescriptions, and the percent of Americans on prescriptions has been rising, inevitably having a positive impact on the sales of large and small drugstores across the country.

In fact, from 2011 to 2013, gross margin sales grew from 22.1 percent to 22.7 percent for independent pharmacies, showing strong potential for the industry. The median income of pharmacists also remains high, even as they battle the insurance companies. In 2013, the average drugstore owner earned about $247,000, and that’s assuming they owned only one drugstore.

What Can Pharmacies Do to Improve Sales?
There are a lot of things that independent pharmacists can do to take control over their own profits. Perhaps the most critical factor is accepting as many forms of insurance as possible, so the drugstore can cater to a wider range of customers. Additionally, providing exceptional service and care can give small pharmacies an added advantage over the chains. Another way to boost sales is by decreasing overhead expenses. By purchasing all nonprescription medicine and supplies in bulk and from the most competitively priced wholesalers, pharmacists can reduce overhead spending and increase ROI.

Operating an independent drugstore may seem daunting, particularly given the drugstore giants that have monopolized the industry. Yet, industry research shows that overall sales have actually been increasing for small drugstores, despite the fact that insurance companies are making it more difficult to stay afloat. By accepting all major insurance companies, offering exceptional customer service, and purchasing your supplies and supplements in bulk, you can increase sales and earn more profits throughout the year. Click here to search for high-quality supplements at the lowest cost per item, and begin reducing your overhead expenses today.