Grocery Store Guru

All about the grocery industry, from a store level perspective.

Why is There Always a Line at the Cash Registers?

This question is usually what I hear right after “I couldn’t find anyone to help me in the aisle I was in”.

Hate to tell you this, Mr. or Mrs. Consumer, but you take part of the blame for this one. Okay, a very small part.

There are 2 key facts at play here.

First, it’s a basic truth in almost any business that the largest controllable expense (I.e. not a fixed expense, like rent) is labour. It costs an awful lot to have an employee, and it’s not just the cost of whatever their hourly rate happens to be. Each employee costs the employer in CPP contributions,  EI premiums, WSIB premiums, and so on (PS I’m in Ontario, Canada… these are the payroll taxes we pay, but no matter where you are the employers are paying some sort of taxes and premiums…). Walmart had a chart in their lunch rooms that laid it out bit by bit – you may think you’re making $10 an hour Mr. or Mrs. Employee, but we actually pay out over $14 an hour to have you here! Aren’t  you lucky?.

Second, is that grocery retail (and retailers in general) have trained their customers to make buying decisions based almost solely on price. They use loss leaders on the front page of the flyer, use numbers the size of my hand to show you the amazing price… and we fall all over ourselves to buy whatever happens to be on that front page. I bet every one of us could walk into our kitchen or pantry and pick up something that’s been there for months, that we bought only because it was on sale for a great price…. how do you use Navel Beef, anyhow?

Your friendly local grocer knows that he’s going to lose a ton of money on those loss leaders. To make up for the loss, he’s going to have to spend less money this week… and the only really large chunk of change he can control is wages. The end result is that there are less employees in the store, trying to service an increased number of customers falling over themselves to buy what’s on sale.

How do they get away with it? Well, Mr. and Mrs. Consumer, you’re a predictable lot. You get very annoyed when you’re standing in a long line at the registers, with a buggy full of the $1.99 cases of bottled water and nothing else. In fact, some of you may even get angry and ask to see the manager (please don’t take it out on the frazzled cashier – they’re making minimum wage for the most part, and dealing with angry people for an entire shift does not make for a good day to begin with). I’d come over, listen to the angry rant, apologize…. but I can’t change anything about the situation. I’m sorry Ma’am, all of our cashiers are already working a cash. Some people would even tell me they’re never coming back! They can’t believe the terrible service!

Here’s the important part:

I would always see those same people back next week, cart full of whatever’s on special. Never fails. Doesn’t matter how many people get angry, shake their fists, yell and scream…. the next flyer, the store is full again. Today’s customers are so price focussed they’ll put up with almost anything to save the extra buck. The stores know this, and the cycle continues. Cheap prices, no staff.

Now, don’t get me wrong… this is no lament for the poor grocery corporations. They’ve done it to themselves, deciding that they’re going to compete on price alone (with a couple of very notable exceptions). Think about it… these are multi million dollar corporations, and they don’t do something that almost every other corporation does – advertise. All they do is send you a flyer every week telling you about their great prices.

One major exception is Loblaws…. but what do they advertise? Almost exclusively PC products. And if you have read my (very first) post about store brands, you’ll understand why. The other big exception to the price focussed major grocers is Longo’s. They’re only around the GTA/Golden Horseshoe here in Ontario, and they avoid most of the price mud-slinging… for those of you who don’t know, I consider Longo’s to be the best run grocery company in Ontario, by the way.

I’ll close this out with a quick story. A while ago, I was the assistant store manager of a grocery store in Toronto’s west end. It was a store of the discount variety and awfully green looking. Anyways, we had Nestle bottled water on sale for $1.99 2 weeks in a row. It was a loss leader – each one cost us $2.83 to bring in. We sold 12 TRUCKLOADS of water each week… each truck was 24 pallets of 84 cases of water (you can do the math, it still hurts my head). The store was insanely busy – constant lines at the registers, what staff we did have were re-filling the water display almost constantly. You couldn’t move in the aisles for all of the people shopping. Volume and sales were through the roof. These 2 weeks ended up being the highest sales weeks for the store in calendar year 2010.

Both weeks, the store lost money.



January 19, 2012 - Posted by | At the Store

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