mad anthony

Rants, politics, and thoughts on politics, technology, life,
and stuff from a generally politically conservative Baltimoron.

Friday, January 02, 2009

Buying food, underwear, and TV's in the same store...

I've always been interested in retailing - how stores get people to buy stuff there, how they compete, why people buy what they buy. I remember years ago, probably when I was in high school, reading an article on K-Mart and how they were expanding the food section in their stores. It didn't make sense to me - why would you buy food at K-Mart instead of a grocery store, and why would K-Mart want to go into such a low-margin business?

When I took accounting in college, I got one explanation - volume. Sure, grocery stores don't make much on each product they sell, but they sell a lot of product. They turn over inventory quickly, which means that they don't have as many holding costs as companies that have to keep stuff around longer.

But now that I'm on my own, and do my own shopping, it makes sense for another reason - convenience. Stores know that many times, you need some stuff and you don't have time to go to multiple stores - if they can sell everything you need, then you will stop there. Target and K-Mart and the rest may not make much profit on the loaf of bread or box of cereal they sell you, but they know that by selling it, you might also buy clothing or electronics or some other high-margin item.

And as a time-strapped professional, I like being able to pick up a few food items that I need - it seems like I'm always low on something - and also pick up other stuff, like clothing or household items or cat food or a get a prescription refilled. One of the Target stores near me has renovated recently, and added a ton more food, including several rows of refrigerator and freezer cases. Besides the novelty of buying Target brand cheese, it's cool to be able to do a ton of shopping in one place.

Sadly, where I live there aren't any SuperTarget stores yet - combinations of actual full-service grocery stores and regular Targets. I visited one in Indiana when I was there for work earlier this year, and it was awesome - especially since Indiana is one of the states that sells alcohol in grocery stores, meaning you could buy a flat-panel TV, beer, underwear, and bread all at the same time.


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