Over the last few years I’ve been fortunate enough to meet dozens of people who have started their own discounted food or salvage grocery store. Steve and Melissa of S & M Grocery are just as vibrant and passionate as every other young entrepreneurial couple I’ve meet. They opened a salvage food store fifteen months ago in a town of approximately 33,000 people. The following is an excerpt from a telephone conversation last week between the three of us.
How has the lack luster economy affected your store?
Well honestly, this is why Mel and I started this business. We knew we could capitalize within a struggling economy providing a solution for struggling families trying to make ends meet. I would be lying if I didn’t tell you that at times we feel a little guilty about this, but honestly, at the same time we know we are meeting the needs of many families providing an alternative solution when it comes to the high cost of grocery shopping. Sales are strong and we both feel our little business just might be recession proof.
Steve, I wanted to ask about the aggressive advertising campaign you launched a few weeks ago. Have you noticed an increase in foot traffic to the store?
Melissa has commented a few times about the number of daily transactions increasing. No, we haven’t analyzed the full ROI from our advertising dollars, but I believe it has made a difference. Especially the half page flier we had inserted within our local newspaper. We made sure to include a 10% off coupon for total store purchases, and I have a stack of redeemed coupons in the back office. I think the most important aspect of advertising is the fact that we get people through the doors who normally may not shop with us. Hopefully, those new people turn into regular shoppers.
Have you guys experienced any issues with customers returning merchandise? Can you go into detail about your store’s return policy?
Inevitably, product returns are a part of any kind of retailing, but I think the salvage grocery business offers an increased opportunity for people to be dissatisfied with products due to the nature of expiring products. Even though we try to explain about product dating, some people return merchandise stating the product is unpalatable. Our store policy concerning returns has evolved into a 100% satisfaction guarantee through either store credit or full cash refund. We have found that since most of the items we sell are priced no higher than $5-$8, it makes good sense to insure complete customer happiness. The last thing we want is to have someone spread negative, word of mouth advertising about our store. Even though our town is not very small, word can spread, and we do not want to make a bad name for our business.
About how many returns does your store experience within a month?
Well, at times, it appears the number of people returning food products is high, but when balanced over a month we are averaging about twenty transactions due to freshness and overall dissatisfaction. We really try to maintain a 100% “no questions asked” policy to insure a no hassle shopping experience within our store. I can tell you with certainty, that each returned transaction walks away with our stores’ flier that explains product dating.
What is the hardest part about operating a salvage food store?
That would have to be the consistency of the food loads, or I should say lack thereof. We purchase from the same sources each week, but every now and then we still get a load that seems to be heavily damaged, of if not damaged, less of an assortment/variety. It’s not too troubling now that we are ordering a load every week, but when we started, we were only re-ordering every two weeks and that made a bad load difficult to deal with.