Blood glucose meters and strips are viewed as part of the entry into the lucrative diabetes market.
nd attract this important customer base. Statistics are encouraging pharmacists to give special attention to the care and management of the diabetes patient, who spends $2,500 a year on diabetes-related products. Patients with diabetes are said to be loyal customers, and spend eight times more than the average customer. It costs $92 billion a year to manage and treat the disease.
But when it comes to merchandising the meters and strips, pharmacists said the market is over-saturated with products and their margins have been squeezed tight due to competition from alternative channels.
"The market is saturated with meters and we're not making any margin, but we want the business of the diabetic patients," said a director of pharmacy with one West Coast combo chain, who asked to remain anonymous.
"We run specials on glucose meters regularly on four of five different brands," he said. Floorstands at this chain recently offered a free meter with the purchase of two bottles of insulin. The retailer also has run ads on Spanish-language radio stations to reach the Hispanic audience.
Other supermarket pharmacies surveyed are staying competitive with the replacement strips as well. "We have a policy of being competitive on the strips," said Joe Lahovian, director of pharmacy operations at Fred W. Albrecht Grocery Co., Akron, Ohio. "The whole category for that customer tends to be competitive, and the strips have followed."
With the average blood glucose meter user testing anywhere from several times a week to four or five times a day, however, supermarkets that keep the products in stock are ensuring that repeat visits are made to their chain, pharmacists concurred. Supermarket pharmacies are also using insulin as a loss leader to attract patients. "We list prices of insulin and use it as a loss leader," said Gilda Morin-Gomez, pharmaceuticals coordinator at Gerland's Food Fair, Houston.
But that's not all Morin-Gomez is doing to attract those patients. "By the end of the month, all seven of our pharmacy locations are mandated to have an endcap devoted to diabetes-related products," she said. "One of our stores does a tremendous business with sugar-free cookies, so we are bringing them into all stores and including them on the endcaps." But some retailers may be missing the boat by not stocking the full range of glucose monitors, which range in retail price from $39 to $120, to meet the needs of a variety of customers, said a manufacturer's trade marketing manager. Low-end models appeal to patients who have recently been diagnosed and are wary of investing in an expensive machine. "We carry both Boehringer Mannheim's Accu-Chek and LifeScan's OneTouch models in a wide price spread," said Barrett Moravec, director of pharmacy at Abco Foods, Phoenix, which operates 21 in-store pharmacies. "For the patient who is just starting to
monitor, ease of use is the most important factor. They then trade up frequently." Moravec said that LifeScan's OneTouch Profile, which retails for $99.99 with all its bells and whistles, is selling well at the chain.
"These units are expensive, but with rebates and trade-ins, the price becomes affordable," he said. The manufacturer's rebates on the $99.99 model cut the cost to the consumer in half.
High-value manufacturer's rebates continue to drive the consumer's final cost down to a nominal price. At Bashas', Chandler, Ariz., for example, one pharmacist said that most purchases are made with a coupon. "The rebates run from $10 to $30," the pharmacist said. New models aren't immune to aggressive promotion. Boehringer's new 12-second accuracy test monitor AccuChek Instant will retail for $35 but will carry a $30 rebate. The rebate system has allowed retailers to maintain a high ring at the register, while offering the consumer a huge price break.
The low profits made on related products have not stopped many chains from targeting their customers with diabetes on some level. The West Coast combo chain is using a mailing list of diabetic patients to target specialized mailings. Kroger Co., Cincinnati, owns 40% of the supermarket channel's glucose monitor sales, according to statistics from Towne-Oller, a New York-based research firm, which is a subsidiary of Information Resources, Chicago. The chain spends a lot of time educating pharmacists about how to reach the diabetic patient, according to industry observers. And H.E. Butt Grocery Co., San Antonio, has gained community awareness through its program for indigents, which offers free monitors to needy patients in conjunction with local clinics. Abco Foods has taken a lead in that direction in its market. Pharmacy director Moravec said the company has acted as a cosponsor of the American Diabetes Association Arizona chapter's update programs for consumers for the past five years. The payoff in customer awareness has been significant. But the story is different at other chains. Said one pharmacist of Grand Union Co., Wayne, N.J., "It's my dream to have an education program for pharmacists and consumers, but it's hard to convince a large chain of the benefits."
