Additional services

Why is it a good idea for convenience stores to offer additional services?

Sylvia: Anything extra you can offer is another way to get customers through the door, and hopefully once they’re there they’ll pick up some products.

Jimmy: It’s an integral part of the business - you have to look at different areas to bring people into the store.

Atul: Services are great and create footfall, although I’m not prepared to offer them at any cost.

Harry: In my opinion, supermarkets have brainwashed shoppers into thinking they sell products at the lowest price, which isn’t the case. The only way to get customers into your store when battling the competition is by offering additional services. Don’t just do it for the sake of it, though. Test the idea with customers ask them if they think it’s a good idea and if they feel it would be of use to them.

What in your view is the most important additional service a convenience retailer can offer?

Sylvia: The post office is by far the most important service we offer. Not everyone wants to go to a shopping centre to draw money out. In here, they feel safe and they know that we’re there to help them.

Jimmy: Taking the store to the people is a very strong service that most retailers can benefit from. We get a lot of carers in here doing shopping for elderly folk, so I decided to carry out a leaflet drop to the local elderly people offering a delivery service. We’ve had a good response and I’m now delivering to six care homes. It’s fantastic - they’re ordering a range of wine, multipacks of beer, and spirits. I’m selling 250 bottles of whisky a month.

Atul: An ATM can be immensely valuable as it saves banking charges and increases footfall.

Harry: It’s difficult to come up with one solution, because it really depends on demographics. For example, a dry-cleaning service could go down really well in some areas, but not if there’s a dry-cleaners right around the corner from you. PayPoint is a valued service for customers, but it doesn’t make the average retailer any money - it’s a loss leader. It really depends on your circumstances as to what services are best. For us, our post office has proved to be one of the most important services we offer.

What additional services do you currently offer and how successful are they?

Sylvia: We have a post office, photocopier and photo developing facilities, and also offer flower delivery and laundry services.

Jimmy: As well as the delivery service, we offer customers gift-wrapping, express wine chilling, plus a catering service for people having parties. We have a deal with a local caterer where I’ll recommend them and a marquee provider, if they recommend us as the alcohol supplier. We provide alcohol crates on a sale or return basis. There’s plenty of opportunities for businesses to link up with other independents in the area.

Atul: We offer National Lottery, free ATM, Payzone, mobile top-ups and food-to-go services.

Harry: We do hot food to go, the post office, National Lottery, plus homemade bread pudding.

Are there any additional services you want to offer but are having difficulty doing so?

Sylvia: I’d like to offer a parcel drop service, but can’t because of my contract with the post office.

Jimmy: If c-stores could get better commission for services such as Payzone I’d be happy, but at the moment we just aren’t making enough to cover costs.

Atul: We offer the Health Lottery, but they don’t make it easy for us. The tickets are too big - they take up 16 inches of till roll that I have to pay for, and take an age to print out, which means customers are waiting too long. Services are all well and good, but it’s almost slave labour! We aren’t paid enough commission and the equipment often isn’t up to the job.

Harry: We do coffee to go, which is popular, but we’d prefer to have a branded machine. The Starbucks reps are more than happy to come and sell us the brand’s chilled products, but they won’t help when we ask about providing us with a machine.

Besides revenue, how do you measure the success of additional services?

Sylvia: We don’t measure their success as such, we mainly offer additional services to help customers, rather than to bring in big profits.

Jimmy: It’s different for different services. With our express chilling service, we don’t actually charge for it, but there’s a registry office nearby so people often pop in to buy sparkling wine and if the brand they want isn’t available chilled, then they might just go elsewhere, so we’d lose the sale. With our delivery service, it’s not just a case of bringing in sales, it also acts as a good PR exercise. We leave our number on our leaflets and tell elderly folk that if they run into any trouble, then we’ll be there to help out. A lot of these people need someone to talk to and only see a carer once a day, so they really appreciate the social aspect of having someone come to their door.

Atul: The only way I’ve analysed additional services aside from sales is when we got rid of PayPoint, and it didn’t make any difference to my footfall.

Harry: Everything is on epos so we can measure direct sales by the minute, hour and day. But you can’t measure incremental sales accurately. If I were to analyse how many cross-over sales were generated by people who use the post office, and then do shopping in the store, it could make up about 30-40% of sales.

Are there any additional services that you used to offer, but have now dropped?

Sylvia: We haven’t dropped any, but some have become less popular over time. Demand for photo developing has dropped as most people use digital cameras these days, but you still get kids coming in with disposable cameras, and people sometimes use them at weddings.

Jimmy: We used to offer Payzone, but I knocked it on the head. I was making sales of £6-7,000 a week, but I’d only earn £128 commission, and then I had to pay VAT on that, plus banking charges.

Atul: We used to have Collect+ parcel collection, but it just didn’t take off. I wonder if it was because the service hasn’t been marketed well enough to potential users. For example, if it was published on ebay and Amazon then those people who regularly pick up parcels would be more likely to use it. We have also stopped using PayPoint. We were taking £6,000 a week through it and I was only earning £45, so it wasn’t worth my while. There is an argument for it bringing incremental sales, but when people come in to pay a bill through Pay Point, they don’t have any extra money to spend on goods. If they had money to spend like that then they’d probably pay their bills via direct debit.

Harry: We used to offer a laminating service, but there just isn’t the demand for it now. The machine wasn’t an expensive piece of kit, though, and we still use it to make our own POS, so it hasn’t gone to waste.

Is the importance of additional services increasing or decreasing?

Sylvia: It’s certainly not decreasing. The way that the market is at the moment, trading is difficult and any ideas that may bring in extra revenue are worth a try, so it is important that retailers continue to offer additional services.

Jimmy: It’s growing in importance and there’s room for it to grow even further. We need to offer additional services to get more people into the store. We’re in business to make money, so whatever extra service we offer it has to make money, or increase sales.

Atul: It has grown in importance in that many of these things aren’t seen as additional services - they are simply expected by customers. For that reason, it is important to offer a good range of services. As convenience retailers, we’re in a perfect place for people to come in, pick up a paper, pay a bill, and collect a parcel and so on. But I’m not doing it for nothing, though. I’m going to pick and choose the services I offer.

Harry: Their importance is only going to increase because the supermarkets are relentless. In this town alone, Tesco has opened five Express outlets. They aren’t needed, but they can afford to operate with losses until they force their rivals to close down. Additional services ensure that people have another reason to come to your store.■