Convenience at a cost
By Rajesh Setty on Sun 24 Dec 2006, 8:51 PM – 5 Comments
I have always been amazed looking at the “10 items or less” checkout counters in the supermarkets. At the outset, it looks like a great idea as people with less than ten items should not wait longer because they have only a few items. But it does not make sense just for the same reason. Why treat them as special when they are not your best customers? If people with less than 10 items should not wait longer, how about people with 25 items or more? Since there are only a finite number of checkout counters in a supermarket, for every “10 items or less” counter opened, people with more than 10 items will have to wait longer.
It’s odd that providing this convenience to some customers comes at the cost of increasing inconvenience for the best customers.
My $.02 – this arrangement is great as long as they also take care of doing something to people buying a lot of items. May be provide them with exclusive discount coupons or carry their bags to the cars or something that will show appreciation for their best customers.
So, here is the real question: How about in your business? Are you providing some conveniences for some of your customers at the expense of your best customers?
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Posted in the Business Models, Main Page category.
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5 Comments so far, Add Yours
Anonymous on December 25th, 2006
I agree with you there. I don’t have anything against “10 items or less” lanes. My point is that if you are taking care of people buying “10 items or less” why are you not taking care of people who are buying “20 items or more”?
Best,
Raj
Anonymous on December 25th, 2006
Raj, I see your point, but I am not fully convinced that the ‘20 items or more’ shopper is your best customer, I feel its the other way around. People purchase things that were never on their shopping list when they actually visit a store (unlike an online store, where we go in with the intent of purchasing a specific item and exit once we are done buying it). Chances of an impulsive purchase (often a high cost item) are much higher for a customer who visits the store frequently; i.e the ‘less than 10 item’ shopper. The guy who comes in for a can of milk but picks up a bottle of wine anyway because it is on sale. And this guy will be back in a day or two when he runs out of milk and buy something else. The ‘greater than 20 item’ shopper is the more organized customer who will be well stocked for the next two weeks and will not come back for a while. As a retailer, I am more interested in the ‘quick’ shopper and will allocate my resources accordingly. Perhaps, I am getting into the consumer behavior realm here, but just wanted to share my thoughts.
Btw, I am a frequent visitor to your blog here and have found it to be very insightful to say the least. keep up the good work – SS
Anonymous on December 25th, 2006
Hi SS,
First of all, thank you for your kind words there.
I thought about your perspective. Here was my reasoning for why I thought “20 items or more person” was a better customer.
1. The fact that they are buying 20 items or more shows that they trust this supermarket for their shopping needs. A person who buys only a few items may have just stopped by because he wanted something in a hurry and MAY go to another place to buy more items.
2. One way to look at the value of a customer is the total sales made through that customer and the cost of getting those sales. In the “20 items or more case” it is 20 items worth of sales for the cost of one transaction. In the case of customer who buys one or two items at a time, the cost of sales are high as there are multiple transactions.
My $.02 of course.
Best,
Raj
Anonymous on December 27th, 2006
Interesting discussion. The service time of more than 10 items shopper will improve – if folks with less than 10 items move to a different checkout. What are your thoughts?
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Anonymous on December 25th, 2006
You bring up an interesting observation. But if one were to observe carefully, there are more < 10 item shoppers than > 10 item shoppers. Therefore the two segments are quite comparable in terms of sales volume. Secondly, a shopper who had to wait twenty minutes to purchase two items is unlikely to come back to that store – you are losing a potential 50 item shopper. I think, a two item frequent shopper is as valuable (if not more) as a 50 item one-time shopper. – Just a thought