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This article was originally published in The Tan Sheet

Executive Summary

RX-TO-OTC SWITCHES GIVE WHOLESALERS "CLEAR OPPORTUNITY" TO HELP RETAILERS make pricing and merchandising decisions, Dan Raftery, VP at Willard Bishop Consulting, said March 10 at the National Wholesale Druggists Association's marketing conference in Dallas. Raftery explained that Rx-to-OTC switches "are very complex products" requiring "some education by the wholesaler." This education should take the form of not only an "initial commitment," he said, but should also be seen as an "ongoing opportunity" to help retailers. Raftery said that OTC vendors without pharmacies are especially in need of education and support for Rx-to-OTC switch products. "They won't be experienced with prescription products, they won't know what to compare these items to," he explained. Such retailers also will have problems understanding the higher prices of switch products, Raftery indicated. He emphasized, however, that "you cannot use price alone in this area. As a distributor you have the opportunity to provide some value-added [service]." Retailers will need "to understand the complexities and applications" of products that were once behind the counter, Raftery said. Raftery was one of several speakers at the NWDA conference who encouraged wholesalers to help independent drug stores and food markets compete with drug chains, food stores, and mass merchandisers in OTC sales by providing managerial and technical assistance. For example, NWDA Chairman Dwight Steffensen (president and chief operating officer, Bergen Brunswig) said March 10 that drug wholesalers "must collectively design innovative approaches that will ensure that consumer products are available in broad-base distribution in all channels of trade, especially independent pharmacy." He said that "this can only happen when we commit to being players in the consumer products arena." As an example of what wholesalers can do for independent retailers, Steffensen suggested "helping customers implement point-of-sale technology." Industry consultant David Hamacher, D.P. Hamacher & Associates observed that "wholesalers can help encourage technology advancement" by retailers, particularly point-of-sale data gathering, which he said "will be key for independent retailers" in competing with larger rivals. Other areas where Hamacher said wholesalers can assist independent OTC retailers include assisting in inventory management "to cut down on out-of-stock items"; "identifying niches" where a retailer might build an advantage; and providing staff training. Superior customer service "is where [independents] can have an advantage," he maintained. Hamacher and industry consultant Anthony DiNicola, A and D Associates, also pointed to advertising, plan-o-gram development and maintenance; end-cap programs; and seasonal/promotional aisles.

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