How Accumulating and Redeeming Points Affects Your Store

[thien_nga]

BrutallyHonest used to work for SDM and he well said on this!!! I just quoted it again!!!

I know there have been some discussions on the board about optimum points. As a (former) Shoppers insider, maybe I can shed some light on what has been happening.

Shoppers Drug Mart franchises their locations, so each actual store is owned by one person (a pharmacist). The pharmacist (Associate) pays an upfront free to have their own Shopppers store and continues to pay the company a percent of their sales. They must participate in all promos- flyers, sale prices, and Optimum points – no choice.

Meetings between Head Office and Shoppers store owners happen about 1-2 times per year, in huge conferences. Since Optimum began, store owners have made huge stinks about the Optimum program and the costs to the store. The reason is that the store, not the corporation, pays out the value in points. So if you spent $50 on a 20X point day, Shoppers Head Office makes a commission on that $50 sale, but the store owner must pay out 10,000 points (50 X 10=500 points, X20 = 10,000; about $21) into your Optimum account. (The store that makes the sale pays out the points value, not the store you redeem at. ) So the owners’ $50 sale just became $29, and he/she still needs to pay Shopppers’ commission on the full $50. Additionally, they have to pay regardless of what you purchased – most items on page 1 of the flyers are below their cost, so they are already losing money on the sale, even before paying out Head Office and your points.

According to what I have been told, the average store owner pays out about $300,000/year in points. Bigger stores claim to pay out more than $1,000,000 per year in points, and, as crazy as that sounds, it only takes $10 million in sales at regular earnings (10 points for every dollar), which is average for a larger Shoppers store in Toronto, and that doesn’t even take into account 20X point days, all their operating expenses (inlcuding staff), their Shoppers HO fees, or how much of that $10,000,000 sold was at a profit or loss. (This is why so many stores mysteriously are out-of-stock on Nintendos and other high ticket items on bonus days – the markup on the device is so low (on electronics at Shoppers, it is usually very low), and paying out 20X the points on that makes a steep loss to the owner. So some Associates intentionally leave it off the floor (against Head Office rules- of course, Head Office wants you to buy it so they can earn the commission on the sale, and HO isn’t paying out points to anyone.) If they simply don’t reorder the item – well, that’s also against the rules, and Shoppers can see if they have none in stock (but don’t bother calling and asking them to check for you).

And they don't say “Oh, well, we make lots of money otherwise, so it is OK”. They are really upset about it and keep pushing Head Office to roll back the program. So, lately, HO is trying to support the store owners by picking on a few people who earned lots of points to make it look like they care about the owners’ losses. Shoppers HO is usually very helpful customer service-wise, but since the store owners have been pushing for more control on the points program, HO has taken a less customer friendly approach.

And just to be clear – there is nothing inflammatory or rude about my post. I am not taking anyone’s side in any issue, nor am I suggesting one person is wrong and another is right.I am just sharing information based on my (former) position in an effort to help posters who don’t understand what is happening how the decisions are being made. In fact, taking away one woman's points is so unbelievably petty and small I am grateful I left that job with no new job in sight, just to have gotten away from that environment. Shoppers spends more on coffee stir-sticks than the value of the points they took away, and who benefits? Nobody, because HO did absolutely did not reimburse the store owners for all those points they paid out, though they did keep the commission the store paid on the sales. .I don’t work there anymore so I can’t comment on what has changed (if anything). But, I suspect, this is a sign of things to come for Shoppers.

[queenkathy]

Supercouponers do cost stores money cause even WM told us that in training. They either clear the shelves, or get the product for free or overage etc and with SDM its a little bit different except for shelf clearing. But since the shelves are clear, or just your average person who purchases the item with out any coupons they pay full price and if there isn't any of the shelf they can't purchase it. With couponers they have to wait to send it in and my WM said once every few months and then it takes a month or so to get the money then they get the money back. When a person pays full price they get the money immediately and can turn it around for day to day operations.

Of course WM doesn't like coupons. They also don't like cheques, debit or credit (unless it's their own WM credit card.) They wish every transaction was done with plain old cash.

With that being said, coupons are a form of tender and WM/SDM will get reimbursed. WM especially makes millions of dollars every day - they are not crying over a supercouponer using twenty $2 Resolve coupons.

[queenkathy]

BrutallyHonest used to work for SDM and he well said on this!!! I just quoted it again!!!

Good read - thanks for posting thien_nga.

One wonders how a SDM franchise stays in business with such a high cost structure. But I've personally never seen a SDM location go out of business - the franchises must be making money!?

[Silk]

Good thread

Silk

[bigsexyphil]

Supercouponers do cost stores money cause even WM told us that in training. They either clear the shelves, or get the product for free or overage etc and with SDM its a little bit different except for shelf clearing. But since the shelves are clear, or just your average person who purchases the item with out any coupons they pay full price and if there isn't any of the shelf they can't purchase it. With couponers they have to wait to send it in and my WM said once every few months and then it takes a month or so to get the money then they get the money back. When a person pays full price they get the money immediately and can turn it around for day to day operations.

Not sure what or how Walmart handles the redemtion part of their coupons, but Shopper sends them to NCH promotions(a company to sort and redeem the coupons) 1-2 times per months depending on the volume of coupons redeemed. They get a cheque back(in 2-3 weeks) for the full value of the coupons and NCH takes the handling fee which varies by company. The only thing they could lose money on is if they accept expired, non canadian coupons or other company coupons(coupon zone).

[anisa]

SDM owners are not losing money, WM is not losing money.

they are making healthy profits, otherwise they wouldn't be open right?

To double over backwards trying to 'make a difference' doesn't really make a difference when it comes to the individual stores. they are too busy making millions in revenue to notice the difference a mega redemption (or two) might make in their bottom line for the year.

[CurEuS]

Interesting to learn more about the mysterious inner workings of Large Retail Franchisees position.
I hope to see a scenario where SDM Head Office, my local store and I can all benefit from our relationship

[CurEuS]

Actually...there is a Shoppers Location that makes my blood boil for being hostile and rude to customers...I'm Shopping there for 20x now and redeeming at my favourite little store

[PammieD]

"loss leaders" are a big thing in most retailers. My good friend owns a no frills and says they take a loss On things like milk, eggs etc in order to get people in to the store, where they'll pick up something with higher profit margins.

[anastasia1009]

"loss leaders" are a big thing in most retailers. My good friend owns a no frills and says they take a loss On things like milk, eggs etc in order to get people in to the store, where they'll pick up something with higher profit margins.

my boss at WM told us that to that most retailers loss money on most food items such as milk, bread, pop etc and I used the teldon gun scanning items and there was a screen that said the percentage of profit on certain items. All health and beauty, most food items but gain a huge profit on clothes and other items. So you come in the store for eggs but leave with other items. That is why I shop at No Frills now