Ask a Grocer

[ybbor]

Yes, we always have IGA, Wal*Mart, and Mad Pricer call us asking for prices of certain items. We are no longer allowed to give out prices over the phone. Although my own company goes into their stores and checks their prices manually.

are there any legal restrictions or regulations about this? Do you have to decalre that you are from Kroger?

 

[Godwynn]

are there any legal restrictions or regulations about this? Do you have to decalre that you are from Kroger?

I don't believe there are any regulations on this. Otherwise a lot of people should be fined.

 

[ybbor]

if someone asks if you're from Kroger are you allowed to lie?

 

[Godwynn]

if someone asks if you're from Kroger are you allowed to lie?

I don't know, but I bet everyone would.

 

[Maimonides]

I read somewhere that the profit margin of a grocery is really low, like 1 or 2 percent. Was that accurate? And how does a store make a profit if the profit margin is so low?

The last figure I read was just over 2% average net profit in supermarkets. That's down a full percentage point compared to a decade ago. This figure does not include supercenters, convenience stores, dollar stores, discount clubs or chain pharmacies. Keep in mind that this is an average. Some stores hemorrage money while others are gold mines. The key is volume. I might make 3 cents on an item, but if I sell thousands of that item & there are thousands of products in my store, those pennies add up (not mathmatically accurate-just for example). One might think that this dictates that smaller stores have higher prices to make up for lower volume, but this is not necessarily true. Some small stores price their products very competitively attempting to grow volume.

How does the store make money when it does sales and two-fers?

It doesn't. Commonly, sales items are sold near or below cost. They're not intended to make profit, but to increase foot traffic & volume & create a positive price perception. Often, the manufacturer will offer some form of discount to the store if the store puts its items on sale offsetting the store's loss. Sometimes, the manufacturer will help pay for the advertising as well. Keep in mind that there are thousands of items in a grocery store & maybe 300-500 of them are on sale at any given time. Two-fer is a term I've only seen used by chain pizza restaurants. Grocery stores usually use the term, Buy One Get One or BOGO. Again, sometimes we actually lose money on each BOGO sale. The grocery business is VERY competitive.

Some stores do quite well without advertising or putting items on sale. These stores typically price everything as low as they possibly can on a daily basis & hope that word of mouth will suffice.

How does your relationship with VISA affect your bottom line? Would store owners be better off if you could get people to use cash or interact instead?

We'd love to see everyone using cash all the time. Checks carry the risk of being forged, stolen or counterfeited. Credit/debit card companies charge the retailer all kinds of fees including, but not limited to:

1. A per transaction fee.
2. A fee for being hooked up to their network.
3. A fee corresponding to a certain percentage of the transaction amount.
4. A fee for demagnatized or damaged cards that must be entered manually instead of swiped. (Because of this one & the time it slows down the checkout line, my store does not accept cards that won't swipe.)

Fees charged to retailers are usually much higher for debit transactions than credit. In 2005, a huge class action lawsuit between retailers & a credit card company was won by the retailers. The basic contention was that the credit card company was requiring retailers to accept debit AND credit while many retailers did not want to accept debit.

The reality is that more & more shoppers are using plastic. In 2006, for the first time in history, shoppers spent more with plastic than with checks. To survive, most retailers have to accept plastic. The result is that the consumer pays higher prices while racking up record levels of debt.

Sorry, but my business' specific relationship with the credit card companies is proprietary information.

I don't know what the "interact" form of payment is. Never heard of it.

I'm not a grocer/retailer, but I did hear a story recently regarding credit cards and small business'...I had a tire blow out...eventually the sheriff called a tow. He discovered the blow out and took me back to his shop to get it fixed. After all was said and done, it was actually a pretty reasonable cost for his services - $30. Unfortunately, all I had was $20, and I wouldn't presume to talk him down. Especially after all he did. His parter was reluctant to take my credit card, and my checkbook was in my car (we just took the tire with us). On the way back to my car, he explained that he recently had a stranded motorist pay with a fleet card. I don't remember which one. But after all was said and done he saw about 12% of what he charged the guy for. He charged him $10, and got about $1.25 after all the fees were taken out.

He was probably exagerrating. It's bad, but not that bad. A credit card that charged fees that high wouldn't be accepted by any business. I'm not sure what a "fleet" card is, though.

How much food ends up in the dumpster?

Not much at my store. It varies a great deal from store to store, though. Throwing product in the trash is like flushing money down the toilet. It depends on what the product is & where it comes from, but here are some of the ways I deal with damaged or out date product:

1. Some manufacturers will pick it up & issue the store full credit.
2. Some items I can send back to my wholesaler for partial credit.
3. Some items we mark down to 1/2 price & toss in a markdown basket.
4. Some items we donate to local charities for their food bank or events.
5. Some items we give to local farmers who use them to feed their pigs.

There are some odds & ends that end up in the trash, but very little. Some badly managed stores just toss everything in the trash that isn't pristine & pass the cost along to their customers through higher prices.

When I was in training the video said that one dollar out of every 100 spent in the store is profit, so yes 1% is accurate for Kroger. The profit margin is higher on stuff like Frozen foods, individual packages of candy and whatnot, which is to offset the things that are lost, misplaced, or damaged.

That video was probably trying to get across the point that there's not much room for error. 1% is too low for Kroger as a whole; maybe a specific store, though.

Don't mistake profit margin for markup. The profit isn't necessarily higher on those items, but the markup is. Small packages of candy are often targets of shoplifting. Freezer cases are outrageously expensive to install & maintain.

The store does necessarily make money off of sales. They are put in place to draw more customers in to hopefully buy other things. For example the bread and milk are placed on opposite sides of the store, so when one is on sale the customer has to pass through every other part of the store.

Yup.

Do you operate a franchise or work for a company or is it your own buisness with it's own name?

I own it. It has it's own name. There's more to the answer, but I don't want to reveal my business because I don't want to break forum rules by seeming to promote it.

I've never heard of any grocery franchise. There is a West Coast company that is similar to a franchise, but is more of a consignment operation.

Is your store allowed to sell both Coke and Pepsi? (I recall that in some cases Coke will have a contract that states that they can't sell competing drinks if they sell coke)

Yes. It's mine & I'll sell whatever the law & my business model allows. I don't think that such a contract is legal, but I'm not an attorney. If a manufacturer told me to drop their competitors or lose them, I'd choose to lose them. I've never heard of anything like that contract you recall. Manufacturers do fight like hell over shelf & display space within a store.

What are the buisiest times of the day? What are your trading hours?

The busiest times vary greatly from store to store depending on it's customer demographic. For my store, the majority of our business is in the evening because of our customer demographic. Mine is open 7:00 AM to 10:00 PM every day. Again, store hours vary greatly across the industry.

And do you ever have problems with competitor espionage? Like when neighbouring stores send staff to write down prices and accordingly lower theirs?

Yes, but I usually know who the owners or managers of my competition are, so it's not too much of a problem. I watch my competitors closely, too.

Which do customers usually prefer, Paper or Plastic?

Which one do you think is better? Why? (I personally see plastic as completely superior, especially because is has handles so you dont have to literally carry it.)

Only a tiny fraction of bags used anymore are paper. Plastic is much cheaper, more durable & easier to dispense. I do have a handful of customers who prefer paper so I keep it for them. Paper bags also insulate items like ice cream better than plastic in the summertime. Paper bags with handles are available, but they are relatively expensive & I only see them at stores in affluent areas.

From an environmental point of view, they both have drawbacks. Plastic is a nonrenewable resource & doesn't biodegrade unless it's shredded into tiny pieces. Paper comes from trees.

A relatively new development is that some stores actually charge their customers for the bags they use to take their purchases home. Their regular customers become trained to bring their own bags from home. Personally, I don't get it. If someone walks into my store with his own bags, he's usually a shoplifter trying to fool my staff into believing he's paid for the items in his bags.

Do you buy stuff from your own store?

I buy stuff for my store. Further details are proprietary.

How do you compete against chains and the big box stores?

I would love to answer that, but, if they knew, it would help them put me out of business. I will say it's not easy.

Sorry for answering for him, two opinions can be helpful!

No Problem! I appreciate your input!

 

[JonnyB]

I don't know what the "interact" form of payment is. Never heard of it.

Interac is another name for debit in Canada. I'm not sure exactly how debit works in the U.S. but I think yours are handled by credit card companies while here the transactions are directly handled by the banks.

 

[Perfection]

So how does the whole ordering product work?

 

[Bad Player]

The result is that the consumer pays higher prices while racking up record levels of debt.

You seem rather anti-credit card but surely credit cards are good for your business because consumers spend more money - more than they can afford to spend! - at your store.

 

[Godwynn]

So how does the whole ordering product work?

We have computers that automatically count how many of a certain product we have on the shelves. Say we get in a package of 12 of one item. The computer automatically tallies 12 items, and each time one is scanned at the cash register, one is subtracted. So once that number goes below a set minimum it is automatically re-ordered. The department managers and co-managers can manually order things if the computer is off, or a big sale is about to happen. From there it is sent to our distribution center which collects products from every company we sell stuff from. Where they are placed on wooden pallets, wrapped in one thin layer of saran wrap so when it falls over on the truck and we have to pick it up off the floor at the store they can say they secured it.

 

[Sophie 378]

How do you decide how much to mark things down by, and what are the criteria for doing a mark-down? Special offers, sales, damaged goods, nearly-out-of-date goods?

Do you ever get people trying to haggle?

What's your returns policy like? Do you think that it is fair to the shop and the customers? Do you ever get people trying to abuse it?

Do you order stuff in specially if customers request it?

Do you get rid of the unsold newspapers before you shut to ship them back for a refund? If so, do you get many people coming in at teh last minute and being pissy because they can't get the newspapers because they're gone already?

Do you stock much ethical stuff - organic, local, Fairtrade etc? Do you sell a lot of it? Do you make a lot of profit off those items?

 

[ironduck]

A relatively new development is that some stores actually charge their customers for the bags they use to take their purchases home. Their regular customers become trained to bring their own bags from home. Personally, I don't get it. If someone walks into my store with his own bags, he's usually a shoplifter trying to fool my staff into believing he's paid for the items in his bags.

You don't get it? Why in the world would I want to use crappy bags that I have to throw away all the time when I can just bring my own good ones? Here all stores sell bags (plastic and paper and they both have handles), and the bags are plenty good to be used over and over which I do. Less waste and better bags.

 

[Godwynn]

How do you decide how much to mark things down by, and what are the criteria for doing a mark-down? Special offers, sales, damaged goods, nearly-out-of-date goods?

Slightly damaged items are scanned out and thrown away. We mark things down when they are nearly out of date.

Do you ever get people trying to haggle?

No.

What's your returns policy like? Do you think that it is fair to the shop and the customers? Do you ever get people trying to abuse it?

Can't help you there, I've never worked at customer service.

Do you order stuff in specially if customers request it?

I believe that we do, never had it happen to me though.

Do you get rid of the unsold newspapers before you shut to ship them back for a refund? If so, do you get many people coming in at teh last minute and being pissy because they can't get the newspapers because they're gone already?

No clue, although I have never seen a stack of outdated newspapers anywhere in the store.

Do you stock much ethical stuff - organic, local, Fairtrade etc? Do you sell a lot of it? Do you make a lot of profit off those items?

For a small town we do stock a lot of ethnic foods for Hispanics and Jews. Although we don't sell much of it. I know for sure that some of our Mexican foods that we sell for $5 can be bought at the International Foods Market in the next town over for $2.

 

[Catharsis]

Have you ever watched Open All Hours? It's feh-feh-feh-funny cornershop comedy.

 

[Eran of Arcadia]

I always found "buy one get one" a funny phrase. In most transactions, when you buy one, you get one. With BOGO, when you buy one, you actually get 2.

Wait, what?

 

[Wolfe Tone]

I always found "buy one get one" a funny phrase. In most transactions, when you buy one, you get one. With BOGO, when you buy one, you actually get 2.

Wait, what?

Well here the phrase is "Buy One Get One Free". Which makes perfect sense.

 

[Maimonides]

What products do you have to sell as perminant loss-leaders/ cost to draw in the punters?

I don't do that. Some stores do. My feeling is that, if I can't make money selling it, I'd rather put something else on my shelf.

There is a list of about 250 basic, everyday items that the industry watches very closely. Supercenters commonly sell them at cost. Exactly what's on that list is proprietary.

What do you think of Walmart?

That's a big question. Wal-mart is one of my competitors so I'm not an objective voice on the subject. I do not own Wal-mart stock. They have two supercenters within 8 miles of my store & are building a third.

One has to be impressed by a corporation that's managed to become the largest in the world, larger than the economies of many nations.

Sometimes, they actually help me. Recently, their store ran out of potatoes. I had droves of people coming into my store looking for potatoes. If my store ever ran out of a basic staple like potatoes, I would die of embarrasement, but I don't think Wal-mart's stockholders have any idea what's on their stores' shelves. Situations like this create a better public perception of my store at Wal-mart's expense.

They have more buying power than any other company in history by far. This means that they can actually dictate to manufacturers the prices they will pay. The result is lower retail prices, but also the loss of manufacturing jobs & increasing amounts of imported goods.

The corporation was very different when it's founder was alive. His "Made In the U.S.A." promotion was positive. Since his death, they have been importing much of what's on their shelves including the products of sweatshops & child labor. Remember the Kathy Lee Gifford debacle?

Two years ago a memo leaked to the press revealed that they don't prosecute theft of less than $75. This creates a culture tolerant of theft & dishonesty that I abhor.

Despite it's shortcomings, their ordering & distribution network is amazing due to it's sheer size.

Their store level employees are poorly trained, unmotivated & unknowledgable. Putting Wal-mart on a resume doesn't help much. Ever asked their cashier to count back your change? Ever asked their employee a question about an item & seen that blank look on his face? They have a huge problem with employee theft. Too many of their employees rely on public assistance. Wal-mart is currently the brunt of a class action lawsuit that claims they pay females less & promote them less frequently. Total mess in this department.

It is nice that they hire elderly people to greet customers at the door. What you may not realize is that this also discourages shoplifting.

They've just started to build a few Green stores. Green is an industry term for stores that are designed & built to be environmentally friendly. This increases construction costs, but delivers lower energy usage & lower harmful emissions such as greenhouse gasses. This is a good thing.

I was glad to see Wal-mart pull out of the German & South Korean markets last year. It's format just didn't jive with those cultures. It was FINALLY a sign that there is a limit to it's expansion.

I could write on this subject for a week so I'll leave it at that for now.

Did any grocer here survive the Cola Wars of '85? I did, but the introduction of paper vs. plastic in '86 drove me out of the game.

This post intrigues me.

Yes I survived the Cola Wars, but I don't remember them being a problem for me as a retailer. Can you elaborate?

Why would "paper vs. plastic" drive you "out of the game?" I remember the transition from paper to plastic in the 80s, but don't remember it threatening the viability of my business.

I thought the point of an "Ask a" thread is that eventually the thread starter is supposed to answer.

I'm looking in at least once a day & will try to answer questions every 48 hours or so. If I'm going to be AFK longer than that, I'll post it in the OP.

 

[MjM]

I'm curious as to the name of your store, no adress or anything.

I'm sure it won't be considered advertising, it is the topic of this thread.

 

[Narz]

Do you carry any organics (produce and/or processed foods)?

 

[AL_DA_GREAT]

Is your buisness profitable. Is it a good branch for making money.

 

[Shylock]

Which do customers usually prefer, Paper or Plastic?

Which one do you think is better? Why? (I personally see plastic as completely superior, especially because is has handles so you dont have to literally carry it.)

Do you buy stuff from your own store?

Plastic usually. I'm a grocery bagger.

I have an 8 hour shift today too.