Stockpiling Starts with the Stores Themselves

Stockpiling Through the Stores

Have you been stockpiling for awhile or are you new to the couponing game? If you’re new, you may very well be enamored with the plethora of new terms that have invaded your brain! Whether it’s BOGO, “stacking,” blinkie, peelie or any of the other usual suspects, you have had to change the way you think as well as the way you talk. One of the toughest adjustments that people have when they start to coupon is learning the proper way to stockpile. If you are just starting out, you want to know things like: How long will it take to get my stockpile built? Will I ever be able to stockpile food? Why do I need so much toothpaste? The list could go forever.

One thing that we strive to teach our readers is that you need to make sure you are a not an “extreme couponer,” but an “EXTREMEly effective couponer.” Anyone can go on shopping binges with reckless abandon and no regard for others. To be extremely effective means that you understand stockpiling at a much deeper level. You understand what the true value of cash flow is to your home. You understand that even free inventory is still inventory and is taking up space that could be better devoted to your household’s needs. You track your stockpile quantities and stockpile prices so that you know exactly how many you need and how much you should be paying for them. Honestly, you have learned to run your home like a business.

Grocery Stores Stockpile Too

Nowhere is stockpiling more prevalent than in the grocery industry itself. The industry is made up of veteran buyers and sellers. The only difference is they are playing with tractor trailer loads and not shopping carts. Let’s face it, groceries are a disposable commodity. We all need them, but we don’t want to have to pay for them. Stores are stuck with narrow profit margins so they need to do everything in their power to maximize the profitability of every single sale that they make. One way that they do this is by “stockpiling.”

Stockpiling Supply & Demand

To truly understand the art of the stockpile, you need to go back to the basic laws of economics. The law of supply and demand teaches us that as the supply of something goes up, the pricing goes down. When things are in ample supply, people can readily shop your competition and find better prices because “everybody has it.” When the supply goes down, the prices go up. If you are the only game in town that has a good supply of ice on the 4th of July, you could charge $4.00 per bag (even if regular price is only $2.00). We all experience this in every facet of our lives. Have you been to the gasoline pump lately?

Stores order their groceries by the truckload every week. Depending on the sales volume of your location, you may get 2-5 deliveries each week. As a store manager, it’s your responsibility to be sure that you are bringing in product that you can turn immediately. With dates stamped on perishable products, you can’t afford to throw your already narrow profit margin down the drain of the mop sink. You have to turn your product or you lose your shirt. You have to turn your product or you lose your bonus. You have to turn your product or you lose your job. Inventory control is paramount. Aside from payroll productivity and sales volume, it’s the lifeblood of the grocery industry. But, is there a different way?

Stockpile Pricing Example

When I was a store manager, when there was a sale, the price that we paid for the sale merchandise was adjusted to the sale price. In other words, when Cheerios was on sale 2/$4.00, I would pay that sale price as opposed to the regular $3.49 per box that was considered retail. Cheerios has an exceptionally long shelf life. It is also the single fastest moving cereal in terms of sales volume (at least it was back then). Are you stockpiling? I’ll bet you “carry” Cheerios too! Anyway, as a store manager, I would gamble in these situations. If I could get Cheerios for $2.00 per box as opposed to $3.49, I was buying my Cheerios at a 43% discount from my regular billing rate. As I ordered, I would add an entire pallet of Cheerios to each truck I received during the sale week.

This did several things: it allowed me to keep my shelves full and it allowed me to buy future inventory dollars at a discount today. It also allowed me to deplete the supply of the distribution center so that other stores would end up running out and I would gain increased sales as their customers began to shop with me. After the sale was over, the Cheerios would return to the regular price and I would essentially make and additional $1.49 on each box that I sold. It may take me a month to sell through the remaining quantities, but I was happy enough to do that because my margin shot through the roof on a product that was already hot. Combine that with the .08 handling fee I got for coupon redemption on the product and I made a killing.

Tying the Grocery Example Into Stockpiling

While this is a more monetary approach to stockpiling, it is a good illustration of the effect of leveraging bulk purchases at the right price. After all, that’s what you are doing each time you buy your stockpile quantity. Remember, the money you save by not having to pay retail over a 12 week period is no different than the increased profit my store made. The difference is, you keep the money in your pocket where it belongs and I had to sell to realize my profit potential.

What valuable lessons have you learned since you started stockpiling? ~David