Opti
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Post by Opti on Jan 15, 2014 12:53:12 GMT -5
The numbers have to work for Loony, but Walgreens semi-regularly sells eggs for $0.99 with no additional purchase. Most store brand eggs are easily under $3 and many go on sale semi often as well. So if they are a cheap customer or know where to find cheaper eggs, the value is less than $3 for them.
Grocerie stores do promos like Loony's on a regular basis. They probably have enough tracking software that they know if they require a $25 purchase, how much that average purchase ends up being. And whether some people choose to buy something else because the eggs were free. I agree she should make sure it is value to her, but in HCOL NJ, I only spend $2.99 on eggs when I splurge on 4 grain eggs on sale or with a coupon. I usually spend $2 or less.
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NancysSummerSip
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Post by NancysSummerSip on Jan 15, 2014 12:59:45 GMT -5
The numbers have to work for Loony, but Walgreens semi-regularly sells eggs for $0.99 with no additional purchase. Most store brand eggs are easily under $3 and many go on sale semi often as well. So if they are a cheap customer or know where to find cheaper eggs, the value is less than $3 for them. Grocerie stores do promos like Loony's on a regular basis. They probably have enough tracking software that they know if they require a $25 purchase, how much that average purchase ends up being. And whether some people choose to buy something else because the eggs were free. I agree she should make sure it is value to her, but in HCOL NJ, I only spend $2.99 on eggs when I splurge on 4 grain eggs on sale or with a coupon. I usually spend $2 or less. That's true. However, at least in this region, you have to be a member of the Walgreens discount program, and have their discount card, to get that price. Granted, it's a free program. But you are very likely going to go into Walgreens for other things as well. The eggs are a loss leader for them. But the other stuff in that refrigerated case, like the sodas and milk, are not. Come to think of it, a gallon of milk is $2.99 this week at Walgreens, which is cheap by our local standards. I missed the $0.99 egg promotion last week.
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Opti
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Post by Opti on Jan 15, 2014 13:00:57 GMT -5
Milee, she may not be located in an area that is going to support enough high end traffic. Her customer mix is going to determine what can be profitable for her and given what she's posted cheap and good value might be her best demographic/market.
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Opti
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Post by Opti on Jan 15, 2014 13:10:10 GMT -5
Nancy, I regularly look for those loss leaders as Walgreens is an easy trip for me. One grocery store semi regularly runs promotions based on a minimum 25 dollar purchase. The items tend to be free or significantly discounted. The free items usually are in the $2 to $3 range. I sometimes spend my whole $25 there if I really want the free item. Since my grocery spending is low, the discounts rarely pay off for me.
But my point was value might be highly dependent on the area and demographics. Some areas support higher prices and cooler groceries. Others go under if they attempt that in the wrong location. She's not going to move, so she needs to figure out what product mix & price points work for where she is. Whole Foods might die a quick death by her, but a Trader Joes might make it for the cheap produce and wine.
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milee
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Post by milee on Jan 15, 2014 13:12:20 GMT -5
Loony, you are not necessarily doing any better now. You really have no idea how you're doing because you don't have adequate records. What you do know is that you had to take out the equivalent of a payday loan to float operations. That's an indication that your business isn't actually profitable, especially since you are only taking out $4k a month/$48k a year for your salary/draw. You and your husband work full time in this business for $48k total a year or $24k a year each? Plus you're not really even making that because you're having to get a loan to pay that...
If you want to survive, you either need to be high volume, low margin to compete with Walmart (good luck with that, not likely to happen) or you need to start attracting more of the caviar/rabbit crowd and the ones that will shop your store even if it's a little more expensive than the Walmart 1/2 mile away.
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milee
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Post by milee on Jan 15, 2014 13:15:00 GMT -5
Milee, she may not be located in an area that is going to support enough high end traffic. Her customer mix is going to determine what can be profitable for her and given what she's posted cheap and good value might be her best demographic/market. Agree, but she's 1/2 mile from a Walmart. Highly unlikely she can go toe to toe with Walmart on prices alone and win. If that's her goal, it's part of the problem.
Let the customers who are doing the hard core comparison shopping go to Walmart, find another way to compete or niche is my point.
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Sum Dum Gai
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Post by Sum Dum Gai on Jan 15, 2014 13:15:52 GMT -5
She keeps saying her markups are 50-100%. That's not cheap for food. It's outrageous actually. 7/11 doesn't get margins that high and their prices are 10% higher than other convenience stores. Which goes back to the question I've been asking her for three years now. Is she a convenience store or a grocery store? They're two very different business models. Convenience stores get larger markups on a smaller selection and don't do sales cycles. Grocers get tiny markups, 5-10% not being uncommon, and constantly run sales. They can afford it because they have a huge selection and loyal customers.
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milee
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Post by milee on Jan 15, 2014 13:25:15 GMT -5
She keeps saying her markups are 50-100%. That's not cheap for food. It's outrageous actually. 7/11 doesn't get margins that high and their prices are 10% higher than other convenience stores. Which goes back to the question I've been asking her for three years now. Is she a convenience store or a grocery store? They're two very different business models. Convenience stores get larger markups on a smaller selection and don't do sales cycles. Grocers get tiny markups, 5-10% not being uncommon, and constantly run sales. They can afford it because they have a huge selection and loyal customers. Or a third option - a specialty store. (I like this one, BTW.)
Specialty grocers are grocery stores that carry unique things that Walmart does not. They're more expensive and can draw customers from more than walking distance. They're not dependent on competing to the penny with Walmart. With Loony's rabbits, Amish chicken, caviar, etc. that's the route I'd look into. Try to start getting the word out about her specialty store and attract from outside the 'hood. She said there's a Nordstrom's somewhere nearby - those are the customers you want to find and draw in. Don't compete - specialize.
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Sum Dum Gai
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Post by Sum Dum Gai on Jan 15, 2014 13:32:06 GMT -5
True, I left that out. Right now it sounds like Loony is trying to do all three, and it won't work that way. The people that will shop a specialty store won't shop one that's a convenience/grocery/specialty/dollar store. She needs to pick one and go with it. You can't compete with Walmart on milk, eggs, fruit/veg, and throw some free range chicken in the back cooler and expect to actually draw foodies.
It's a branding nightmare.
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Opti
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Post by Opti on Jan 15, 2014 13:45:53 GMT -5
Totally depends what her Walmart is like though. The three Walmarts I go to do not have much in the way of groceries. Its easy to compete if you pick the right stuff because what they have is quite limited. Unlike what I see on People of Walmart, not a single store I know has cases of meat or refrigerated fruits and vegetables. And, Walmarts chips and sodas are generally more expensive than anyone else.
Anyone who sells produce for reasonable prices in refrigerated sections or even looks refrigerated on a daily basis is going to beat my only Walmart who even has some veggies. In cardboard boxes. In an aisle by the candy.
Being in Philly its also going to depend how easy it is to get there and how safe a Nordstorm shopper might feel going there. My guess she really isn't in a location that is going to draw foodie traffic. The amish chickens, rabbits could have a draw. I've been in parts of Philly. Getting around a big city is generally a PITA. The Nordstorms is likely in a mall easily reached by the interstate.
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Opti
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Post by Opti on Jan 15, 2014 15:36:42 GMT -5
Correct. But remember from previous postings when she determines what her cost is for inventory its only based on the actual cost of the item. I believe wholesale to retail in grocery is 50% markup in general. I can find items in the $2 to $3 range that are 50% more or less depending on where I shop.
You guys are advocating for a speciality store not having an idea if she is even making money on the Amish chicken and rabbits. As we know she doesn't tend to think about the gas and transportation costs to acquire them as part of the cost.
While Philly has some nice spots, especially some northern burbs, it is also known for a lot of cheap housing and not the best areas. I did some internet research on Nordstorms and Walmart locations. I stick with my assessment. Even specialty food stores usually survive on mostly local traffic.
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Rocky Mtn Saver
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Post by Rocky Mtn Saver on Jan 15, 2014 15:38:46 GMT -5
If Looney opens a dollar store, she can give away all the free dollar store crap she has and not pay anything for it because both stores are now all hers. Win-win!
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dannylion
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Post by dannylion on Jan 15, 2014 15:43:09 GMT -5
She could name the dollar store Cool Crap for Cheap #*&*$%ers. If it succeeds (work with me here), she could expand and then have her very own IPO! It could become the next Wall Street sensation.
Actually, if the dollar store is in the right area, it could do well.
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Virgil Showlion
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Post by Virgil Showlion on Jan 15, 2014 17:31:21 GMT -5
Try coffee (or tea) as suggested, along with something extremely sugary. Candy, baklava, cupcakes, etc. Serve the sweets (one per customer, with any purchase) along with some of the more exotic fruits that don't sell as well. If they happen to be sugary too, all the better.
The trick is to keep the customer in your store (or at least in the vicinity) for at least 25 minutes until their insulin spikes due to the sugar intake. They'll become extremely hungry, and a hungry shopper is an indiscriminate shopper.
If you sell the candies and the fruit in your store, the promotion might also help drum up interest in those products too. Most of the seniors I know are amenable to candies, tea biscuits, confections, especially if they come in small quantities.
If all goes well, increased sales volume will offset the cost of providing the coffee and goodies, and you'll have an added attraction to your store as a bonus.
That's my best guess, anyway.
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