What Stores Will Close?

California. No non-grocery posts.
HCal
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Re: What Stores Will Close?

Post by HCal »

ClownLoach wrote: April 10th, 2022, 12:54 pm What do all of these have in common though? For the most part the shareholders are the ones footing the bill. Stock is issued to pay the executives the majority of their compensation package which means that the other shareholders are all diluted.
That's really not much of a distinction, because all pay comes from shareholders, whether it is in the form of cash or stock. Every dollar that the company pays to a cashier is money that could have otherwise been paid out as a dividend, so therefore it "dilutes" shareholders by reducing the company's cash on hand and therefore its value.
ClownLoach wrote: April 10th, 2022, 12:54 pm The other comment I will make is that the average corporate office has been slashed to ribbons over the past two decades. Retailers who had nearly a million square feet of office space had cut so much headcount from the offices that they could fit in a 100K Sq foot building and that was before the pandemic. I understand the ratio saying the CEO now makes 350X average employee when it was around 20X decades ago. But I would imagine that if you measure straight dollars - office to stores/DCs/etc. these days the exact reverse has occurred and far less is spent on corporate payroll vs store payroll than ever before. That CEO in the 70s sitting in a plush office smoking a cigar with 50 Executive VPs directly reporting to him, and 1000 VPs under that, is long gone. Now he or she may only have 7 or 8 Executives and maybe 20 VPs.
The same has happened at the store level (and actually in almost any place of business). Cashier jobs have been eliminated by automation, and those that are left are facing strong pressure to check out more customers per hour. Stocker jobs have been eliminated in favor of placing boxes directly on the floor at many retailers. Cashiers of the 70s may have had the time to chit-chat with customers, walk them to their cars, give advice on products to buy, etc. Proportionally, I don't know which has been cut more, but it would be interesting to compare store vs. corporate payrolls if the data is available.

But thanks for this post, I enjoyed reading your insights.
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Re: What Stores Will Close?

Post by Bluelightspecial »

In no way do I want to discredit your opinion, but from my experience this is not accurate. I worked in supermarkets in the mid to late 90's. You had to memorize produce codes. Your performance was based on how many items you could scan a minute. I remember we were required to scan 120 items a minute. If you've been in any union market like Ralphs, Vons, or Gelson's the checkers are so much slower than before. They don't need to know produce codes because they can just scan the produce now. I still remember that bananas were 011 and organic were 4011....now clerks just need to show up. On the doors to every market there are signs practically begging anybody with a pulse to apply. Self Checkout is so much quicker in California now. Whole Foods has electronic shelf tags in all the stores in my area so no labor is required to change shelf tags. I imagine Kroger and Albertsons will follow. So what is the bases of going on strike when within a few years most of those jobs will be automated.
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Re: What Stores Will Close?

Post by ClownLoach »

The other piece of the puzzle is that there seems to be little to no understanding of the actual payroll model of the stores.

Payroll is measured, for accounting purposes, as a percentage of sales dollars. Some retailers may speak to the store in terms of "hours" but they still are all using percent of sales at the P&L statement level.

Regardless of the Union or Non Union status, new contract, etc. the budgets are not going to change.

If anything the Unions just shoot themselves in the foot because if the stores don't pass along the entire contract increase directly to the customer with price increases then the only alternative is to cut the labor hours necessary to balance the budget now that the cost of an hour has increased.

This leads to the piece which makes me scratch my head every time I hear about it - automation and self service. Every single new "free" service added to the store - curbside pickup, delivery, in store pickup, has to be done within the same budget. Thus the only way to add these services is to remove or automate elsewhere. This is why I just don't understand when I keep hearing that "the self checkouts are killing jobs" in a store where they have had to shift 6 cashiers to order picking where they shop for the customer. Or "the shelf tags are now automated so they can kill jobs". The typical labor cost of a online curbside pickup order is 15X higher than full service checkout with a cashier unload and a bagger load. If they don't automate or self service the heck out of the store and just add additional payroll dollars to fund all of these "free" services the whole thing turns upside down and becomes a money pit spiraling into bankruptcy. The stores that seem to be maintaining the most professional service, most staffed checkouts, most full service perimeters are the ones that simply say 'the hell with all these free services' like Stater Bros. I do think Stater Bros. should add self checkout purely because now many customers want the choice. But it baffles me that nobody understands the balance sheet aspect that if you are adding a service you remove another. I actually had a relative recently tell me that they stopped shopping at an Albertsons that just added self checkout because they don't believe in "job killing machines" and now they're driving further to shop at a small Vons without them (they probably don't fit its a tiny old store). These are otherwise pretty intelligent folks yet they have really think the self checkouts go in to fire people and they have no idea they're the same company.
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Re: What Stores Will Close?

Post by CalItalian »

ClownLoach wrote: April 14th, 2022, 10:56 am The other piece of the puzzle is that there seems to be little to no understanding of the actual payroll model of the stores.

Payroll is measured, for accounting purposes, as a percentage of sales dollars. Some retailers may speak to the store in terms of "hours" but they still are all using percent of sales at the P&L statement level.

Regardless of the Union or Non Union status, new contract, etc. the budgets are not going to change.

If anything the Unions just shoot themselves in the foot because if the stores don't pass along the entire contract increase directly to the customer with price increases then the only alternative is to cut the labor hours necessary to balance the budget now that the cost of an hour has increased.

This leads to the piece which makes me scratch my head every time I hear about it - automation and self service. Every single new "free" service added to the store - curbside pickup, delivery, in store pickup, has to be done within the same budget. Thus the only way to add these services is to remove or automate elsewhere. This is why I just don't understand when I keep hearing that "the self checkouts are killing jobs" in a store where they have had to shift 6 cashiers to order picking where they shop for the customer. Or "the shelf tags are now automated so they can kill jobs". The typical labor cost of a online curbside pickup order is 15X higher than full service checkout with a cashier unload and a bagger load. If they don't automate or self service the heck out of the store and just add additional payroll dollars to fund all of these "free" services the whole thing turns upside down and becomes a money pit spiraling into bankruptcy. The stores that seem to be maintaining the most professional service, most staffed checkouts, most full service perimeters are the ones that simply say 'the hell with all these free services' like Stater Bros. I do think Stater Bros. should add self checkout purely because now many customers want the choice. But it baffles me that nobody understands the balance sheet aspect that if you are adding a service you remove another. I actually had a relative recently tell me that they stopped shopping at an Albertsons that just added self checkout because they don't believe in "job killing machines" and now they're driving further to shop at a small Vons without them (they probably don't fit its a tiny old store). These are otherwise pretty intelligent folks yet they have really think the self checkouts go in to fire people and they have no idea they're the same company.
I'm the opposite. Vons Sun City did not add self checkout during their remodel which I was expecting. Although it is closer to me, I don't shop there very often purely because they do not have it. Since the remodel, Covid & new homes being built nearby, the lines have gotten long at times. I go to other nearby Vons & Albertsons that do have self checkout. I added the Murrieta border Menifee store recently to my stores because they did add self checkout. I only shop in stores with self checkout (Aldi being an exception but I shop there only for specific items & infrequently). I want the choice to get out fast if the regular checkout lines are long. I rarely ever shop at Stater Bros. just because their cashiers tend to be chatty with customers and checkout is slow.
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Re: What Stores Will Close?

Post by storewanderer »

Albertsons is still working on getting self checkout rolled out. It is still being added to stores.
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Re: What Stores Will Close?

Post by Alpha8472 »

I have noticed that small Safeway stores in the San Francisco Bay Area still do not have self checkout. That number is decreasing as more self checkout machines are being added.
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Re: What Stores Will Close?

Post by BillyGr »

ClownLoach wrote: April 14th, 2022, 10:56 am This leads to the piece which makes me scratch my head every time I hear about it - automation and self service. Every single new "free" service added to the store - curbside pickup, delivery, in store pickup, has to be done within the same budget. Thus the only way to add these services is to remove or automate elsewhere.
Unless, of course the budget increases as it should - the stores usually charge an extra amount per order for those pickup/delivery services, so that amount covers at least a portion of the costs to provide them (likely not all, but some).
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Re: What Stores Will Close?

Post by Alpha8472 »

These personal shoppers are costing these stores a ton of money. There were Phone App services where the App employees would shop for you and you pay a fee. This way the store does not need to waste money on employee labor.
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Re: What Stores Will Close?

Post by storewanderer »

Alpha8472 wrote: April 17th, 2022, 12:19 pm These personal shoppers are costing these stores a ton of money. There were Phone App services where the App employees would shop for you and you pay a fee. This way the store does not need to waste money on employee labor.
These programs are not sustainable without a significant service fee. Typically service providers even the unskilled parts of those services (medical, financial/legal, construction, auto repair) mark up their service rate charged to the customer significantly vs. labor rate paid to employee yet this retail "pick up" thing is the opposite the pick up employee is paid $15/hr yet the consumer is not charged a thing (often times the consumer gets a better deal via pick up than if they would buy in the store). At minimum the consumer should probably be paying $40/hr for the "personal shopper service." The consumer wouldn't pay it. That is not even remotely close to happening and the race to the bottom will continue.

How many employees not only handle but also end up walking dozens of steps with each item in an order? Way too many. The chains will throw a ton of money and resources at automating the process to see if they can make that work. That remains to be seen but shows some promise. They can cut the selection of items available via online to make it more efficient also. But there is still the issue of how much time it takes to deliver the order, transport to/from storage, deal with not picked up orders (should be a huge cancellation fee attached to those but a consumer gets charged a fee one time and they'll never purchase from your store again so you can't do that), etc.
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Re: What Stores Will Close?

Post by BillyGr »

storewanderer wrote: April 17th, 2022, 12:27 pm These programs are not sustainable without a significant service fee. Typically service providers even the unskilled parts of those services (medical, financial/legal, construction, auto repair) mark up their service rate charged to the customer significantly vs. labor rate paid to employee yet this retail "pick up" thing is the opposite the pick up employee is paid $15/hr yet the consumer is not charged a thing (often times the consumer gets a better deal via pick up than if they would buy in the store). At minimum the consumer should probably be paying $40/hr for the "personal shopper service." The consumer wouldn't pay it. That is not even remotely close to happening and the race to the bottom will continue.

How many employees not only handle but also end up walking dozens of steps with each item in an order? Way too many. The chains will throw a ton of money and resources at automating the process to see if they can make that work. That remains to be seen but shows some promise. They can cut the selection of items available via online to make it more efficient also. But there is still the issue of how much time it takes to deliver the order, transport to/from storage, deal with not picked up orders (should be a huge cancellation fee attached to those but a consumer gets charged a fee one time and they'll never purchase from your store again so you can't do that), etc.
One store locally advertises a $5 fee for shopping plus $6.95 for delivery (not if you pick it up). That should be feasible, given the employee packing the order only has to do 3 or 4 orders/hour to make $15 and they often have carts with many bags (so not just picking one order at a time).
The delivery is probably a bit low, but it would depend on where the store is (the ones closer to a major city might be able to deliver several orders in a short time with more dense population).
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