Vending Machines Ammo
Selling ammo in grocery stores??? What’s more crucial in retail — profits, or revenue? This is the chicken/egg struggle that retailers have precariously balanced for decades. Obviously, you can’t have one without the other. Until recently, grocery retail has erred on the side of the customer when exploring ideas. But this past year has seen the winds shift. Kroger is testing video gaming machines in select stores. Now Fresh Value grocery stores across Oklahoma, Texas, Alabama and Colorado are testing vending machines for gun ammunition.
Although these machines use ID scanners and facial recognition before authorizing a transaction, this radically changes the store environment that customers must navigate, often with children in tow. One can argue that shoppers can opt for home delivery if they don’t like the store environment. But this only worsens profit margins for retailers. A recent report from McKinsey quantifies the average operating cost to sell $100 of groceries to an in-store shopper at $7, whereas fulfilling an online order costs the retailer $13 — nearly double the in-store cost. As tech evolves over time this cost gap will come down, but it will take several years. To offset today’s higher cost of delivery grocers are desperately seeking new revenue streams that will kick in quickly, rather than waiting on the longer term results of refining in-store experiences.
Grocers have tried in-store partnerships to build revenue, but found they don’t grow high/fast enough, even if shoppers loved them, such as Hy-Vee’s partnership with DSW. So the chicken/egg conundrum intensifies. To a grocery retailer, nothing is more profitable than a loyal in-store shopper. But to compete in today’s market, home delivery is a necessary revenue driver. Succeeding at both online and offline retail is getting a lot harder, especially for large public companies under shareholder pressure, but for long term survival you need both, especially in grocery. hashtagtopretailexpert; AAG Consulting Group
Talk to DeAnn Campbell at AAG — Retail strategy expert with 20 years of experience helping companies improve bottom line profitability through better online and offline inter-operability, customer and employee experiences, and integrating the right in-store technology
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