ASD/AMD Marketplace - Summer 2008 - (Page 48) Feature: Merchandise Actually, a guarantee is common on many items provided by novelty distributors. “Anything you can get through a novelty supplier like that that’s guaranteed, you try to sell what you can, but it’s a no-lose situation,” Bates maintained. “You can take some chances with the category because you know you can return.” Circle K’s category manager agreed that “our biggest novelty provider guarantees everything. They rotate it, bring in the new stuff, and take out the old. It depends on the area, but they usually rotate it every 30, 60 to 90 days. I authorize the items, make sure everything selected is of a high quality and safe, but the guarantee makes it a no-brainer.” “will be 50 percent and above. It’s only below 50 when you do licensed merchandise like Budweiser or NASCAR — then the margins are in the 35 to 40 percent range, which is still pretty good.” O’Neill isn’t too phased by the shrink situation either — also because of the high margins. “Some of the LSU merchandise carries 100 percent profit margin,” he reported. The main novelty/general merchandise issue that convenience stores keep coming back to is not to let the items get stale. Even with novelty distributors, “you still have to stay on top of them to make sure they rotate it properly,” Bates said. Looking out for opportunistic buys is part of the equation, too. O’Neill has done a lot with dollar items, typically household goods. “Anything you can get a deal on should be considered,” he said. “I have contacts in the dollar store business, as well as grocery wholesalers, so I always keep my eye out for buys like that.” Reprinted with permission from Convenience Store News, March 2008. For a subscription to this publication, go to www.csnews.com The Shrink Factor Novelty items are notorious for high margins — typically in the 50 to 60 percent range and higher, but c-stores also have to factor in shrink, since small, high-ticket items are usually the easiest to pilfer. “We need to have a good gross profit on these items. The target is usually in the mid-40s, and what I ask from vendors is mid-50s because 10 percent of that is shrink,” the Circle K category manager explained. “So, 55 percent is the target, and if I hit 45, I call it a day. We try to keep some of the smaller items right in view at the register, but we know we’re always going to have 10 to 12 percent shrink.” He added that “you can’t put everything up at the counter. These are impulse buys, so there needs to be multiple points of interruption in the store.” Bates agreed that “you try to watch the high-dollar smaller items [but] the margins offset the shrink.” He said most novelty/general merchandise that he deals with 48 Summer ‘08 http://www.csnews.com
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