The logistics of his idea may have some sound basis for offsetting the cost for rising cost of freight delivery charges, but there is also certain implications to doing this that will forever change his stores market share of the $1.00 store industry. Below are several points of interest I like to make stating this is not a good idea for $1.00 store owners that have a business that has a steady clientele that frequent their store.
The same customer that is used to paying $1.00 or less for a product you sell, will instantly be turned off, even possibly disgusted you are now charging more.
The present customer base will greatly change. No longer will some customers frequent your store, or share their shopping experience with others that would normally increase your customer base.
Signage – Imagine all the signs that were once displayed proudly that you sell all items for a $1.00 or less. The money spent on that signage is now overhead loss, and new signage would have to be purchased. Very possible you would have to pay for materials & labor cost to change what you display for signage out side your store.
Possible profit loss because you buy less in bulk items for a higher price, when your trying to reduce your freight cost.
So what do you do?
There are some ways to combat freight cost! It takes a little foot work, and valuable time, but can be well worth the effort in the long run.
As best I have known since the late 1980’s when dollar stores started popping up all over, some independently owned $1.00 stores had the right kind of idea in my personal opinion.
What they did that made so much sense that, customers would flock to the front door of a store on certain days just waiting for the doors to open that business day. At times I could see customers lined up early just so they can get in first, before certain products were gone from the shelves within hours.
Here’s what made the customers flock to the store: Simply supplying top brand name items everyone needs for $1.00. These products sold are a gallon of milk, cheese, ice cream, various frozen foods, even Petridge Farms line of cookies & snack, Lays or Frito’s brands potato chips in the large to medium sized bags. At times sirloin, or T-bone steaks sold for just $1.00 each!
Freezer & Refrigerated items never stayed stocked for longer than three hours max, which it rarely lasted that long, for customers would be grabbing the merchandise before the stock person could even put it on the shelf.
Where do you get these brand names items that you can sell for $1.00 and make a profit?
It is simple in some ways but as I mentioned before it will take a little leg work at first. So I’m going to explain the way you do it step by step, and while you read this try not to beat yourself up to much for never thinking of it before.
Every day manufacturer’s of various products distribute these products to local vendors, even if the manufacturer is local or not. Freight charges are charged to either vendor or waved, which is not your concern as a store owner. By Federal Regulations & Laws the FDC mandates that many products must display a “Expiration Date” on the product. Where this comes into play, is when the vendor is involved, the vendor must pay the seller for products sold, but credit the seller for items not sold from supplied inventory to seller.
Yes that makes sense to so far I am sure of. But think of the loss both vendor, and manufacturer, lose on their profit margin? Loss of profit, because a product that which was not sold is always bad for everyone.
Here is how you can change the thoughts of loss profit margin from what the manufacturer & vendor lose.
Remember it is going to take some initial effort at first, but will have a big pay off to your store, and make everyone truly happy in the long run from Manufacturer to customer.
Because vendors must remove the almost outdated products from shelves of major retailers to make room for new product received, the vendor, as well as the manufacturer shall take a loss. And product is deemed non-sellable, and eventually they will mark the product for destruction or disposal.
EXAMPLE: Manufacturer makes 1,000 gallons of milk to be sent for distribution to a local vendor that will stock the shelves of various retail sellers in the vendor’s area for retail. Manufacturer sells the product for $0.65 per gallon to vendor. Vendor sells the gallon of milk to seller for $1.25 per gallon. Seller sells gallon of milk for $2.50 per gallon for each gallon of milk sold. Retail seller only pays vendor for product sold and vendor is held responsible for maintaining updated expiration dated product.
Now let’s say Retail seller only sells 900 gallons of milk before vendor is required to pull soon outdated merchandise. This leaves the vendor to remove 100 gallons of milk from the shelves and loose profit. In turn the manufacturer is asked to credit the vendor for product not sold, and loss of profit remains to them as well.
How fast does a gallon of milk go in your house even if the “Expiration Date” is one day away?
Because its one day expired from the date listed, it’s still not considered un-drinkable right?
What about chips, bread, cookies or crackers? Just because the expiration date expired yesterday will you throw it away if it’s sitting on your shelf?
Now legally you as a retailer can not sell outdated products, but if the expiration date is one or two days away from expire date, you can sell for a price you name.
With a little of real early morning leg work most of the time it will require it at first, you can catch the local vendors when they are restocking retailer shelves as well as removing older stock. From 7-11 stores to your local supermarket the vendors are out there! Now imagine if you will, talking to the vendor and letting them know that the product they are removing that is still sellable from a particular retailer or retailers those items can still be sold at your store.
A vendor will be more than happy to sell you these items for a fraction of their original cost just to make a profit on what they might never have gotten for items not sold at all.
1)Vendor removes close to outdated merchandise from large retailer shelves.
2)Vendor re-stocks your $1.00 store shelves with same merchandise. (You never pay for
freight of merchandise, or labor to re-stock shelves)
3)Customers find merchandise for $1.00 while telling friends and family where to get the
merchandise for cheap.
A vendor would rather make a little money from merchandise than not at all! Go out and in the wee early hours of the morning talk to the vendors. You can find them easy because their trucks are parked just outside the door of major retailers!
What you get from this, is well, a reduction in what you have to purchase from your usual wholesalers, reducing your freight cost, reducing labor cost of stocking shelves, and offer a more immediate important product line to your customers needs.
Vendors keep your shelved stock fresh, and you get more customers in these trying times!
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