– Taras, an optical store in a pharmacy is not uncommon. But, as a rule, it is a state within a state. I understand that you have a special approach to such a neighborhood in your Biomed network? What is the essence of it?
This is certainly a new format in the Ukrainian market – the model of “pharmacy – optical store” under one brand. There are no such networks as Biomed not only in Ukraine, but also in the world. And the point is that one team serves two different product categories in one premises. When our experiment first started, there was a rather prosaic goal – to reduce rental costs and reduce staff, in particular by combining the two back offices. The business plan contained fairly simple arithmetic. There are licensing conditions according to which the total floor area of a pharmacy must be more than 50 square meters. With the same rent and equipment costs as our competitors, we get twice as much profit per square meter. In general, the profitability of the business doubles.
As for customers… Anyone who is involved in the optical business will agree with me: attracting them requires tremendous effort and expenditure on advertising, marketing and loyalty programs. People go to a pharmacy 10-20 times more often than to an optician. And the optical market is not as powerful as the pharmaceutical market. At the same time, about 10 out of 300 pharmacy visitors are “converted” into optical customers. At the same time, the profit of such a complex institution is about 50/50. But all this is only provided that competent advice is provided and the right commercial offer is made. As a result, the pharmaceutical establishment as a whole has a positive image.
And a legal nuance: according to the same license conditions, pharmacies are prohibited from subleasing premises for opening opticians to other companies. And what you mentioned in your question is most likely a violation of the regulations. We have found a legal solution – pharmacies and opticians are registered under one legal entity.
– So those pharmacies and chains that are seriously thinking about development, growth of margins and profitability can safely recommend the way of merging with opticians?
By no means are we giving a one-size-fits-all recipe. The stars have to align. And I didn’t just randomly decide to move in that direction. Ask me why? Firstly, you need to be very well versed in the rather specific business of selling optics and entrust it to a specialist, a professional. I took it on myself, as my first education was as an ophthalmologist. At the beginning of my career, I sold sunglasses on trays, made glasses as a craftsman and… for almost 15 years I studied the optical business from scratch, being both a buyer, a courier and a medical consultant. I not only know but also love this business, and I will never let it be second to pharmacy retail. In terms of profitability, optics is not inferior to pharmacy, but only with a professional approach. Secondly, you have to be prepared for additional and considerable expenses at the start: on goods, the cost of a unit of which is on average two or three times higher than that of a pharmacy unit, on optical equipment, on paying for the work of an ophthalmologist. Thirdly, it is necessary to understand the differences between sales in a pharmacy and in an optician’s shop. In the first case it is speed, in the second case it takes half an hour or an hour for consultation, examination, selection and transaction. And a salesperson requires a completely different level of qualification, skills and knowledge than a pharmacist or pharmacist. Therefore, the staff will have to be specially trained. At the same time, an interchangeability strategy works well in an optical pharmacy with well-trained staff: an optical salesperson can perfectly cope with serving customers who have entered the department with medical products, cosmeceuticals, etc. A pharmacist or a pharmacy technician can easily refer a customer for a consultation in an optician’s office or help to choose a frame for eyeglasses. As a result, the number of visitors served per shift increases.
Despite all these “achtungas”, strengthening the pharmacy with optics is a much cheaper option than opening a new outlet. A great way out for those who are interested in such an idea can be the purchase of a franchise. And in the near future, Biomed will be ready to provide such a service in response to numerous requests from pharmacies. In this case, it is possible to franchise the optician to the legal entity of your pharmacy.
– In general, you have a lot of confidence in yourself and your abilities. Didn’t a single decent rake happen on your way?
They say you learn from mistakes. To be honest, it is very expensive and difficult. Therefore, having turned on your business intuition and barely caught a hunch of that very mistake, it is better to involve professionals. At each stage, the problems can be very different, and everyone has their own: some have sales, some have logistics, some have marketing. And for this there are consultants, lawyers, programmers, logisticians, etc. We do this and get more efficiency and organized business. The main thing is to identify a person in the company who is responsible for a particular area. For example, the consulting company Apteka Leader helped us implement auto-ordering and category management. As a result, we freed serious cash from product balances, got rid of 80% of point-of-sale rejections, reduced the number of frozen balances, increased turnover and expanded our assortment. Importantly, the program provided has a very user-friendly reporting format that is easy to work with for staff at all levels – from owner to front desk manager. In addition, it provides a quick understanding of what is happening with logistics and category management, which in a Biomed network of 10 or more pharmacies can even form a permanent revenue stream. And what is important, the program adapts to any business environment, even such a non-standard one as “pharmacy plus optics”.
– Were there any obvious failures?
I can remember three optical stores I opened, which… closed down after six months. Having analyzed the situation, I realized that my children lacked an effective management system in general and financial management in particular. How to set goals and objectives? How to check implementation? How to plan activities and analyze them? How do you resolve critical situations, incorporate crisis management and get out of non-standard circumstances? And then I decided that I needed to learn on my own and began to look for various technologies and methods, engaging various consultants. I found a company which, in my opinion, is the best at implementing business management technologies today. This is the International Association of Entrepreneurs WISE, which also has a representative office in Ukraine. It helps to build the Hubbard Management System management technology, which helps to solve the problems of business administration and increase its efficiency.
But it was at the stage of translating the technology into real pharmacy life that most problems were discovered: it involved setting up all the internal processes, from logistics to staff motivation. By trial and error, I managed to find a consulting company that is the best at implementing the Hubbard Management System worldwide. And to my great joy its office turned out to be in Kiev – it is a profound and time-tested project “School of Business Owners Visotsky Consulting”.
– And what are the preliminary results of your work?
Today, the Biomed network includes 16 pharmacies, 21 optical stores and a medical center. Most importantly, we constantly test the success of all our business breakthroughs, including the introduction of the “Save on Health!” discount program, on our visitors. Their loyalty has increased significantly over the last two years.
Chronology of the company’s development
- Lviv company Biomed (medical practice) was founded in 1993
- The first self-service pharmacy in Lviv was opened in 1996.
- The first optical store – 2003. Medical center – 2005.
- Unification of pharmacies and opticians into a single network – 2011.
- Merger with Angelika chain of pharmacies – 2013
