Some tips from a friend of mine who owns convenience stores

[TexasHusker]

Good friend of mine owns a chain of convenience/gas stores (not franchise). He is a multimillionaire obviously but he gave me a few inside tips about groceries as well as convenience stores:

1. The most profitable thing in the stores is soft drinks, iced tea, and coffee. The cost of the cup and the drink to them is pennies, yet they get a dollar or two for each drink.

2. Gas markup is very small - they might make a nickel or so per gallon - but most customers come in to buy other things (like drinks).

3. The automatic car wash costs them about $.30 per car, but they charge from $5-8 depending on the type of wash you select.

4. Grocery stores and convenience stores are very strategic about product placement - it is not by chance. It is actually a pretty exact science. The cheap, lower-margin items that consumers still want are typically on the lower shelves (bread, the off-brand candies and snacks, etc.). The higher-margin (and often more expensive) items are much more prominently displayed. Items toward the register are called "impulse buy" items - toys, souvenirs, spikey balls, toy cars - and are extremely profitable.

5. Many of the items in the convenience store are priced pretty closely to a grocery store - bread, milk, etc. But they are banking on you buying a bag of ice, a soft drink, and a package of chewing gum "while you are there." Perhaps even a spikey ball just to play with.

The whole "order your groceries online and then come pick them up" concept isn't going over that great. Yes, there are some that do it, but for what could be a variety of reasons, it isn't a big hit with consumers, and might not ever be.

However, the drive through convenience stores are going gangbusters - people driving up for a bag of ice, gallon of milk, or a drink.

So that' my $.02 for the day.

[rennigade]

However, the drive through convenience stores are going gangbusters - people driving up for a bag of ice, gallon of milk, or a drink.

Dont ya know...time is money! If it saves a minute or two of someones life that they can then put towards something else more appealing...its well worth it! Cant put a price on that kind of stuff

[disneysteve]

The whole "order your groceries online and then come pick them up" concept isn't going over that great.

I'm really surprised to hear that. I just heard today that WalMart has started doing this. At least in our area, these services are very popular. A lot of people are very happy to pay the modest fee to save the 45-60 minutes it would take to go grocery shopping on their own. It's especially true of parents with young children who no longer have to deal with corralling the kids while they shop.

Someone I used to work with loved using it simply because she hates grocery shopping. She jumped on that service as soon as it started and raved about it. I think it was $5 at the time and she thought it was the best thing ever.

There used to only be one local chain that did it. Counting WalMart, there are now at least 4 that I know of, basically every major supermarket option in the area. A couple of them also offer home delivery.

[disneysteve]

Dont ya know...time is money! If it saves a minute or two of someones life that they can then put towards something else more appealing...its well worth it! Cant put a price on that kind of stuff

Exactly. When both spouses work all day, being able to place an online order and pick it up on the way home from work is a huge convenience to some people.

[~bs]

the grocery store order online delivery service thing appears to be gaining steam in my area as well. I'm guessing it's helpful for older people who may not be very mobile or like to drive/use the bus.

And yeah, my understanding is the stations selling gas is mainly to draw customers into the shop, where they make money on grocery and convenience type items that are marked up higher than normal grocery/drug stores.

[TexasHusker]

There is a segment that wants to online ordering deal, but my friend told me it is catching on quite slowly.

The challenge is that there are literally thousands of items in a grocery store, and if you make the online portal too encompassing, it is cumbersome. You spend more time on your laptop punching around than you would just going in and getting what you want.

And then there is all the stuff you forgot to put on the list that you end up having to go back for.

He says long term it's not going to work in his opinion.

[disneysteve]

the drive through convenience stores are going gangbusters

This must be a regional thing. I don't think there is a single one of those types of stores anywhere in our area.

[TexasHusker]

This must be a regional thing. I don't think there is a single one of those types of stores anywhere in our area.

They converted an old Starbucks into one and it is crazy busy 24/7.

[disneysteve]

The challenge is that there are literally thousands of items in a grocery store

True, but we pretty much buy the same 30-40 items over and over again. We aren't buying hundreds of different items. I've never used these services but I'm guessing they have some sort of "shopping list" feature so that you can easily reorder items that you buy regularly. It might take time the first time you use the service but would probably be much quicker for repeat orders.

[~bs]

There is a segment that wants to online ordering deal, but my friend told me it is catching on quite slowly.

The challenge is that there are literally thousands of items in a grocery store, and if you make the online portal too encompassing, it is cumbersome. You spend more time on your laptop punching around than you would just going in and getting what you want.

And then there is all the stuff you forgot to put on the list that you end up having to go back for.

He says long term it's not going to work in his opinion.

yeah, from what my friend says, they way it works is they dumb down the listing of stuff available, otherwise it's too ridiculous. Like for chicken stock, they'll offer 1 can type/brand, or for onions, 1 type of onion, etc. By doing this, they can probably pare down the supermarket's offerings to maybe 1/10 of what they carry.

[disneysteve]

yeah, from what my friend says, they way it works is they dumb down the listing of stuff available

That's another reason these services don't interest me. Even if there are only 1 or 2 items that we use that aren't available, it would defeat the purpose of doing it as we'd still need to go to the store to get those items.

[~bs]

That's another reason these services don't interest me. Even if there are only 1 or 2 items that we use that aren't available, it would defeat the purpose of doing it as we'd still need to go to the store to get those items.

The TYPE of item themselves should be avaialble, it just might not be in the size or brand you prefer. Like the example I brought up with the chicken broth.
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and when you select vegetables, somebody else is doing the picking. They aren't going to spend the extra time to make sure you get the best veggies, even though you're paying the premium for delivery.

Good for some people, others it doesn't make sense. I think if you cook, these services may be less appealing to you if you're particular about what you're cooking. If you're just getting frozen foods or canned foods, might not be a huge deal.

[disneysteve]

The TYPE of item themselves should be avaialble, it just might not be in the size or brand you prefer.

Yep. That would be a deal breaker for me. If I can't get the products I want (and I know the store carries), then there would be no point in me using the service.

[~bs]

^

the fact that the service costs extra money is already the dealbreaker for me. haha

[disneysteve]

the fact that the service costs extra money is already the dealbreaker for me. haha

There's that too.

I happen to like grocery shopping generally. I have no desire to have it done for me, even if the service was free.