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Provide large selection, spotlight high-end frames for a profitable dispensary
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In the old days, stocking and operating a dispensary was not a very complicated process. Displays were divided into a sampling of men’s, women’s and children’s styles, with the majority of the stock kept behind the scenes. Today, the wide spectrum of styles, prices and level of quality, as well as the managed-care displays of frames, make it more difficult to determine how to stock a dispensary that will please all of your patients.
Some of these patients are taking matters into their own hands and striking the best balance of price and quality possible by frame shopping on the Internet, which raises questions of how to handle these cases should servicing be needed and how to determine what value to assign your time.
Provide a large selection
One of the surest ways to ensure that there is something for everyone in the dispensary, the experts say, is to showcase a sizeable number of frames from which to choose. “Everything should be out,” said Marc M. Berson, OD, MBA, who is in private practice in Allentown, Pa. “In the old days, we tried to show a few frames and have a lot of stock in the cabinets. We’ve tried to get away from that because of increased inventory costs. We want to try to have as many frames out as we can, but, again, not too many to confuse the patient.”
In his two busy offices, Dr. Berson said, the display may contain between 700 and 1,000 frames at a time.
Arthur De Gennaro, FNAO, an ophthalmic practice management consultant, said that the frame selection should complement the patient base. “The number of frames and how often they sell out, or have to be replenished, are part of the computation for inventory turns,” he said. “In my opinion, you should never have fewer than 400, because you must have a good cross-selection all the way around.”
Establishing the breadth of the collection determines how many frames and what styles will be included, and the depth decides the number of colors and sizes, Mr. De Gennaro said. “The breadth of the collection has to deal with the lowest point and the highest point,” he said. “These are questions that, when you build an inventory, you ask yourself in advance. Once you know the lowest price point and the highest price point, you must determine your average unit/frame sale target — the price point that you’re going to sell most often. That’s critical, because as you start to monitor the performance of the dispensary, you want to aim for that target more often than not.”
Understand practice’s demographics
To effectively put together an assortment of frames in the dispensary, become familiar with the customer base by understanding how its demographics work, suggested Mr. De Gennaro. “As a consultant, every time I build a frame inventory for a client, the first thing I do is perform a demographic analysis of the practice — patient population in terms of age, disposable income and how far they live from the practice. I match the practice’s number against the county and national averages; that gives me a good indication of whether this practice approximates the surrounding community or whether it specializes.”
Another way to familiarize oneself with the customer base is to look at the history of the practice — what has been established in the past provides a foundation for stocking the dispensary, said Warren G. McDonald, PhD, manager of the dispensary and contact lens practice in a solo ophthalmology practice in Jacksonville, N.C. “We try to keep a fair mix by reviewing our history on a number of frames,” he said. “We’re in a primarily rural area, and we don’t have a huge income base, so we’re not going to keep a large selection of high-end products. We have many middle-of-the-road products and some lower end products to meet the needs of those people as well.”
Track trends, work with vendors
Additionally, staying abreast of current trends in eye wear helps determine what kinds of frames to carry, said Irwin Shwom, OD, in private practice in Everett, Mass. “We’ll send a group of staff members to shows such as Vision Expo and EyeQuest to look for a new product or a different look in terms of color, materials, sizes, shapes, finish. Then, they get together and purchase a choice selection of frames,” he said.
Working with frame vendors also helps in keeping on top of popular trends in the industry, said Dr. McDonald. “I have a number of vendors whom I will allow to fill 25 spaces on the frame board. I tell them to stock products that are going to move,” he said.
“I only do that with about half a dozen vendors, because they know what the best numbers are with their lines,” Dr. McDonald continued. “These are people I’ve worked with for 20 years, and I’m very comfortable that they’re going to do the right thing. We keep an eye on them and try our best to make certain they’re doing what they’re supposed to do.”
Arranging the display
Many dispensaries have frames segregated into men’s, women’s and children’s categories. However, with more frames than ever available in a unisex style, the products will typically be separated according to price. Flattering lighting, mirrors and an attractive “exclusive” display highlight more high-end frames.
“We use many of the point-of-purchase displays the manufacturers provide,” said Dr. Shwom. “We change the lighting and create a separate shelf tiering system that builds up and moves toward the midpoint, which shows our top-shelf pieces.”
Showing a patient these more expensive frames first is preferable to starting out low and then moving up in price range, said Dr. McDonald. “It’s a lot easier to work down than it is to work up.”
Managed care vs. private pay frames
How should the practitioner handle a situation when a managed care company requires that the dispensary exhibit a tower of special, low-priced frames for patients covered under that insurance plan? Keep the smallest amount of those products you are allowed to carry on the display floor, urged Mr. De Gennaro. “You should try to have the minimum quantity of those that you can get away with,” he said. “For one, you don’t want to use all of your money in that collection, and, two, you don’t want to have such an attractive collection that patients don’t upgrade. In almost every single case, when I go to do consulting work, the practice has really not figured out how to make money efficiently under managed care.”
When a managed care patient walks into the dispensary, he said, he or she often already has a preset price range for a pair of eyeglasses in mind and may be unwilling to change it. “Managed care is still an enigma to many practitioners, because it does require a more skilled merchandising policy, a more skilled marketing effort and a more skilled salesperson to sell successfully to a managed care patient,” Mr. De Gennaro said. “Managed care patients often come in to get their eyes examined and to get their ‘free’ glasses. That’s a different mindset. For you to successfully make money in managed care, you have to break that person’s conception of ‘free’ glasses.”
Explain high vs. low quality
One way to do that is to spotlight the difference between a high-quality and a low-quality frame, said Dr. Berson. “When they all look the same, patients don’t have a clue what the difference is,” he said. “You have to show them the better materials — the spring hinges and silicone nose pads, titanium and other, lighter more durable materials. Another selling point is the warranties available on higher quality frames. Many patients will go for the frames their plans cover, but at least they’ll be educated consumers. If you show them those differences, it is hoped that they will opt for the higher quality merchandise.”
Placement of the “tower” and a low-traffic location, as well, helps distract a patient from the frames it showcases. In fact, it may end up serving a different purpose than that for which it was intended, said Dr. Shwom. “It is not organized well, it is not arranged well, it is not lit well and it’s not convenient to get to,” he said. “It’s present, and it’s fully stocked, but it has allowed us to sell some of the mid-priced pieces. So we actually use it as a tool to meet the criteria that we’re supposed to, but it also allows our salespeople to step up and try to trade over some sales into at least the mid-priced products.”
These patients may end up using the lesser quality frame as a second pair and choosing a more profitable frame for everyday wear, said Dr. Shwom.
Internet frame shopping
Selling quality frames to patients will become more difficult than ever if they pursue the trend of purchasing eyeglasses from the Internet, however. While Internet frame shopping is not a predominant movement yet, some practitioners are preparing their practices for the future.
“I find it less of a threat than buying contact lenses over the Internet, where the contact lens is a known item and you know exactly what you’re getting,” conceded Dr. Berson. “However, the only way we can deal with patients buying glasses off the Internet is to charge them a fee for measuring, dispensing and adjusting, which we traditionally have not done.
“Make that fee reasonable, and make it clear even in writing that if there’s a problem with the glasses related to the manufacturer — the frames, the lenses and everything that goes into making them — that you will not be responsible for it in any way,” he continued. “Advise the patient to be sure that whomever they’re dealing with online is reputable and that they have a reasonable return policy that is built into the cost.”
Patients may be unaware that the dispensary is not responsible for the servicing of these eyeglasses, said Mr. De Gennaro, whether in terms of problems or general maintenance. “If a person brings in something from the outside and hands it to us, we have no idea what condition it’s in,” he said. “It could have an internal flaw or a manufacturer’s defect; the only thing we can do is hand it back to them. They have to take it up with the person from whom they purchased it. We’re not warranting it because we didn’t own it. That’s going to be an issue we’re going to have to work our way through.”
Practitioners may determine which patients will take their business online by the questions they ask and their keen interest during the fitting procedure, said Dr. Berson. This makes it easier to know when to charge a patient a fitting fee. “If they tell you up front that they’re going to look online and they write everything down, tell them there is a fee for fitting.”
While this practice is not common yet, the practitioners advised planning ahead and placing a value on your time. “Your professional time is money,” said Dr. McDonald. “You have to charge for that service. You can’t give your time away.”
For Your Information:
- Marc M. Berson, OD, MBA, is in private practice in Allentown, Pa. He is also an adjunct faculty member of the Pennsylvania College of Optometry. He may be contacted at 31 South 9th St., Allentown, PA 18102; (610) 432-1500; fax: (610) 391-1288; e-mail: Mbersonod@aol.com. Dr. Berson has no direct financial interest in the products mentioned in this article, nor is he a paid consultant for any companies mentioned.
- Arthur De Gennaro, FNAO, is president of Arthur De Gennaro and Associates, LLC, and can be reached at 145 East Circle Dr., Lexington, SC 29072; (803) 359-7887; fax: (803) 359-3996. Mr. De Gennaro has no direct financial interest in the products mentioned in this article, nor is he a paid consultant for any companies mentioned.
- Warren G. McDonald, PhD, manages the dispensary and contact lens section for a private solo ophthalmology practice. He may be reached at Jacksonville Eye Clinic, 825 Gum Branch Rd., Ste. 135, Jacksonville, NC 28450; (910) 346-2444; fax: (910) 347-6663. Dr. McDonald has no direct financial interest in any of the products mentioned in this article, nor is he a paid consultant for any companies mentioned.
- Irwin Shwom, OD, is in private practice as well as an associate professor of optometry at the New England College of Optometry in Boston. He may be reached at 421 Broadway, Everett, MA 02149-3435; (617) 387-1904; fax: (617) 387-1904; e-mail: Bubba421@aol.com. Dr. Shwom has no direct financial interest in the products mentioned in this article, nor is he a paid consultant for any companies mentioned.