Blog - CSA Best Practices


 

The Importance of a Walk-through

Posted Tue, September 24, 2013

What is the first thing you do when you pull up to your store in the morning? Unlock it - flip over the “Open” sign, maybe grab a cup of coffee and start counting cash?

Here’s a little tip for your morning routine that might take you five minutes, but will make you new and returning customers. And what do returning customers mean for you? MONEY. Lots of money. Cleanliness is the easiest, most inexpensive way to gain and retain customers.

So here’s the tip: take a daily morning walk-through as if you were the customer.

The walk-through allows you to see your store through the eyes of your current and prospective customers. And their decision to shop at your store begins before they even pull into your lot.

Here are some key areas to quickly survey first-thing each morning (Remember, this is from a customer’s perspective!):

OUTSIDE PRESENTATION
Is the grass mowed? Is trash blowing around the parking lot? Are there oil stains and old gum on the parking lot and sidewalks? Are parking spaces identified with yellow lines? Are the doors and windows cluttered with advertisements so I can’t see inside?

FUEL PUMPS
Is there graffiti, grease, or grime on the pumps/nozzles? Are the pumps bagged off? Are the trash receptacles overflowing?

RESTROOMS
Are they clean? Are there adequate paper towels and toilet paper? Is the mirror clean and free of cracks? Are light bulbs burnt out or flickering? Is the odor foul or pleasing?
For the love of all living things…We want clean restrooms!

INSIDE PRESENTATION
Are the floors mopped and swept? Is the store layout fluid and easy to navigate (i.e. are cardboard promotional shippers crowding my way)? Are the shelves dusted? Have the walk-in shelves been stocked? Are the fountain/coffee areas clean, inviting, and organized?

CHECK-OUT AREA
Are the cashiers friendly? Do they look approachable? Are they wearing uniforms? Are the uniforms clean? Are they counting change back to customers? Do they greet customers and thank them for their business?

If, after reading this, you are slightly overwhelmed with the amount of progress to be made, let me offer you some solace: the purpose of the morning walk-through is not to fix everything right then and there. It is to acknowledge that there is room for improvement. Carry a small notepad in your pocket and make note of the issues. Then try to mark a few things off every day.

And here’s another idea. Bring your employees in on the fun as well. Once you have set the bar higher on your expectations of cleanliness and organization for your store, have them survey the store too. Give them the opportunity to find areas of improvement and work to resolve those issues. You will find that your employees will take pride in your store’s presentation, which will also lead to greater job satisfaction.

Do any of you practice the morning walk-through? Comment on this post and share your success stories with us!

Posted By:
Ben Bowman
CSA Regional C-store Consultant
South Central Region

Posted in : CSA Best Practices |  No Comments >>
Tags : walk-through , tips , best practice , c-store , convenience store , appearance , cleanliness , employees


Markup V. Margin

Posted Wed, July 17, 2013

A common mistake by retailers is to confuse markup and margin. This confusion can result in lower-than-expected profits. Here are some tips on how to keep them straight, and a little advice on which to use.

To start, it's important to know that "margin" is frequently referred to as "GP%" or "Gross Profit Percentage." Your vendors probably use GP% on your invoices instead of margin. I use the term "margin" here, but know that GP% and margin mean the same thing.

The mistake I see most often is a retailer calculating a markup, but thinking he or she is calculating margin. The mistake might look something like this:

An item has a $1.00 cost and the retailer wants a 30% margin. He or she quickly calculates:
$1.00 X 30% = $.30, and assigns a retail of $1.30 ($1.00 + $.30).

But that's a 30% markup. It's NOT a 30% margin. The margin in this case is actually 23%...A BIG difference. Below are a few formulas to help you calculate retails so you get what you expect.

If you know your cost and desired margin, here's how to calculate your retail:
Cost ÷ (1 - Desired margin %) = Retail

Example with $2.00 cost and a 30% desired margin: $2.00 ÷ (1 - .30) = $2.86 retail
You might round $2.86 to $2.89 for a more natural price point (and a few extra pennies of profit).

If you know your cost and your retail, here's how to calculate your margin:
(Retail - Cost) ÷ Retail = Margin

Example with $2.79 retail and a $1.50 cost: ($2.79 - $1.50)  ÷ $2.79 = 46% Margin

If you know your cost and desired markup, here's how to calculate your retail:
(Cost X Desired markup %) + Cost = Retail

Example with $1.00 cost and 30% desired markup: ($1.00 X .30) + $1.00 = $1.30

Margin vs. Markup for calculating retails
In my opinion, it is better to use margin than markup. When reviewing financials at the end of a period, most retailers look at their margin as they evaluate performance. You're more likely to hit the right margin at the end of the period if you use margin to calculate your retails day to day.

A final word
Setting retails based solely on a desired margin is usually a mistake. Take some time to understand your competition's retails and the customers who shop (and might shop) your store before you make pricing decisions. More on this and techniques for raising your store's overall margin and profits in an upcoming blog.

Posted By:
Eric Johnson
CSA Regional C-store Consultant
Pacific Northwest Region

Posted in : CSA Best Practices |  No Comments >>
Tags : margin , markup , markup v margin , convenience store alliance , industry best practices , CSA best practices




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