September 22, 2019
So Why Scan?
When we talk to most single store or even multiple c-store operators they usually view scanning as an expense instead of an investment in enhancing the future profitability of their stores. The question they usually ask first is “how long will it take me to recapture the investment I make in the equipment, the training etc”. Then we ask them some questions of our own such as the following:
- When you’re not here watching your store are you sure that your clerks are charging the customers the right price for everything they buy?
- Can you tell us “what are the top ten selling items in each category in your store”? Do you have your products grouped into categories?
- When you ran that last Pepsi promotion can you tell me how much you sold by day, by package, by flavor or on the weekend? How long into the promotion did it take you to breakeven? Did you even have a breakeven number going in? When did you start making money?
- When you promote anything; beer, soft drinks, coffee, sandwiches, etc., can you tell me what price you need to be at to maximize sales or maximize margin versus doing nothing?
- How do you re-order? Do you re-order based on what you bought? Based on what you think you need or based on some build to number that you established in the past?
- How do you determine how to add and delete items?
When we are actually having the conversation it usually ends here with the retailer saying please stop – I get your point. However, the value of scanning does not stop here. This is only where it starts.
We are not going to attempt to make our point on all of the above questions, but let’s take question number one. Let’s make it simple. Take cigarettes and soft drinks. Just cigarettes and soft drinks. How many different pricing tiers exist on cigarettes if you are on contract with the major cigarette companies?
You already know where I’m headed. First, there’s premium cigarettes with Camel, Marlboro, Winston, Salem and whatever RJR has on deal that month. Then there’s Newport and then GPC and Viceroy, not to mention Old Gold and Basic. Same price? Do you carry American Spirit? If you do, there’s another one. Are we having fun yet?
How can you sleep at night not knowing if the clerk you just hired is going to charge the customer the right price? If he charges too little you lose money. Too much for those Pall Malls, and you lose a customer! You gouged him!
Now let’s multiply that by soft drinks. What’s the price for a 20 ounce, versus a liter, versus that new 16.9 ounce water you just added from Sam’s Club? Ice Mountain, what a buy! You can sell it two for a dollar all day long and still make 50% plus margin, provided that you actually charge a dollar. Then there’s Dasani versus Aquafina.
I don’t understand why they aren’t the same price and Figi, that damn Figi! That’s the water of the stars. We’ll bet that they must have custom cup holders in their cars to accommodate that square bottle! Ever wonder, when you’re lying there at night worrying about your business, how many people buy one bottle of Figi and keep re-filling it with Ice Mountain? If you get to that point you are probably scanning!
- Senior Management