Small business tips will show you how to generate more sales. Here’s a story as illustration:
A good friend just found out she has severe allergies to gluten. Apparently, one third of the U.S. population has this, but most don’t know it.
Here are three grocery stores, Wegmans, Fairway, and Costco. Each company serves this segment of grocery buyers in different ways.
Wegman’s is one of our favorites. Go into any of their mega stores and you’ll see at least one whole aisle dedicated to gluten-free products. These include ready-made snacks, cakes, breads, and pretzels (yup, they really do exist).
Next to the ready-made items, you’ll find all kinds of packaged raw ingredients and mixes to satisfy the carbo-craving gluten-free palate. Bob’s Red Mill products have an extensive line of items and it looks like Wegman’s carries most of them.
Everything is clearly marked. It’s easy to find what you want. You’ll probably spend a lot more money than you expected because everything looks so enticing. A loaf of regular raisin bread might cost $2.50. The gluten-free variety is over $6.00.
The average sale for a gluten-free grocery basket is probably twice what it would be for the equivalent items made of wheat.
My guess is, any store that sells gluten-free products is making a killing on revenues and gross margin.
Fairway also has gluten-free products. In their 86st store in New York City, these products are segregated on the lower level near the kosher foods.
Once you persevere through the labyrinthine lower level, you’ll eventually arrive there. The good news is, once you do, there’s a lot to choose from whether it’s gluten-free pasta, crackers, or gluten-free smores mixes (who knew?)
Costco, on the other hand, pursued a very different strategy than either Wegman’s or Fairway. Costco apparently carries gluten-free products, but it’s anybody’s guess within the store as to where these items might be. They’re sprinkled in between all the other products.
Have you ever gone to a Costco? Have you ever asked the manager where you can find gluten-free pasta only for them to say “It could be anywhere in the store. You’ll have to look.”
WHAT? And this guy thinks this is a real answer? The store is 50,000 square feet. I’ll be lost among the breads until I go on medicare.
This is insanity to expect anyone would troll the entire store to find key specialty items. Bottom line is no one in his or her right mind will try to find these items. Can you say “lost revenues?”
So here’s my take on gluten-free merchandising as illustrated by these three very successful grocery stores.
Wegman’s gets it. They know more and more people are buying gluten-free products so they make it obvious and easy to choose and to purchase these items.
Have you ever seen the price of gluten-free products? They’ll make Donald Trump blush. Wegman’s is making a lot of money on these products which also have very high turnover.
In the grocery store world, this is a great thing. That means their items are fresh.
Fairway gets it too, but it’s clear, gluten-free is not a major category for them. You have to work hard to find the location of the goods. At least they’re all in one place.
Costco on the other hand is missing an ginormous opportunity. Costco, are you listening?
If you can make more gross margin on gluten-free products AND YOU’RE HIDING THEM FROM CUSTOMERS, guess what? Your overall gross margin will take a swan dive.
Take this small business tip from Wegman’s. If you want to serve a gluten-free customer base, make it easy for them to make a choice and make a purchase.
This small business tip is really here to inspire you. If you’re going to serve a gluten-free segment of the population, do it right, or let the competition do it right.
And if anything we’ve said about revenues, gross margin or product line merchandising needs more explanation, watch our Instant CFO Course. A $249 value for only $49.
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In your corner, as always.
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