Local shop charging for cashback

timtagel

I do support my shop keeper - but charging extra for a service (cashback) that I know costs him little, if anything at all just creates bad feeling and encourages me to spend my money elsewhere. He already has huge mark-ups on products anyway and the comfort of running a post office.

Savvy_Sue

timtagel wrote:

and the comfort of running a post office.

I'm not sure it's much of a 'comfort' running a PO these days - the one nearest work and the two nearest home have all closed in the last couple of years. And I don't think the closures are over yet!

Pennywise

timtagel wrote:

He already has huge mark-ups on products anyway and the comfort of running a post office.

What?

What makes you think he has huge mark-ups. Yes, for things like groceries, he probably charges more than supermarkets, but he is likely to pay more too - in fact the price he pays his suppliers and wholesalers is likely to be more than the supermarket selling price.

As for "comfort" of running a post office, hundreds if not thousands have been closed down already, and there is likely to be another few hundred closing down in a few years time. You also forget that he has paid for the business and will have loans to repay, not just for the property, but also the "privilege" as you would have it for the post office.

You would be surprised at just how little money these small village shops actually make after their huge costs - and considering the number of hours they have to work (not just opening hours but a lot of behind the scenes time as well), you will probably find that alot of proprietors don't even manage to take the equivalent minimum wage out for themselves.

If you value the shop and want to keep it open, then you have to pay for the services provided.

Anwen_2

Good lord, immoral??? They are providing a service, which you can choose to use (pay a fairly small charge for) or not take advantage of (not pay for). If, during the PO(part of the shop)'s opening hours you can withdraw cash from the PO(part of the shop) during those hours, so it's not as though you are forced to use the cashback.

That said, I would probably be annoyed at having to pay, but it's hardly immoral (assuming he is up front about the charge).

Rob236

timtagel wrote:

He already has huge mark-ups on products anyway

Tell me what kind of profit margins you think he's making for each item in this example basket:

Lambert & Butler cigarettes:
Mars bar:
Daily Mail
Smirnoff Vodka 70cl:
Bread 800g:
Maltesers 175g:
Heinz beans:

-=Mr-J=-

Anwen wrote:

Good lord, immoral??? They are providing a service, which you can choose to use (pay a fairly small charge for) or not take advantage of (not pay for). ... <SNIP> ...
That said, I would probably be annoyed at having to pay, but it's hardly immoral (assuming he is up front about the charge).

As it was I who said it was 'immoral', I'll take the reigns on this one.

The reason is that, as previously described, the transaction fee for a Debit Card is flat rate. My 6p seems to be slightly low, with a little research showing a 25p - 35p charge being common. However, the transaction charge is irrelevant (providing you have already made a purchase) as it has to be paid anyway.
Offering cashback should be presented as a value added service by any retailer (over and above an existing purchase).

As also mentioned, by releasing the hard cash, fees for transporting (if a security company is used) and depositing the hard cash (banks charge business for recieving their money :rolleyes: ) are reduced by the reduction of the deposit.

The OP stated the increasing charge per £10 cashback (2% of the cashback), so if they bought their shopping and took £30 cashback, thats an extra 5p profit for the shop (if they bank with HSBC) on top of their reduced operating costs. Okay it may be small change, but those pennies soon add up.

So as I said, immoral, because the retailer is taking something for nothing.

The situation is different if you have not made a purchase, because then their are no product profit mechanisms in place to cover the transaction fee - I would agree with a charge in such a case - though I could never agree to 15%+ that private ATMs extort.

-=Mr-J=-

CIS wrote:

For smaller buisnesses the company typically pays a fixed fee + 2.5% , HSBC charge 2.5% + 25p per transaction, LLoyds charge 3-5% + , Natwest 3% + 40p per transaction. On top of this they all charge around £20-25 rental fee.

CIS, I thanked you for your advice on charges, however, they are slightly misleading.
For example, HSBC charge 2.5% on CC transactions but only 25p on DC transactions, not both.

IvanOpinion

Rob236 wrote:

Tell me what kind of profit margins you think he's making for each item in this example basket:

Lambert & Butler cigarettes:
Mars bar:
Daily Mail
Smirnoff Vodka 70cl:
Bread 800g:
Maltesers 175g:
Heinz beans:

I can field part of this but not for all the items in the list. When I worked in a small shop (several decades ago) the pricing was dead simple. If a dozen cans cost £2.40 then the price per can was 24p ... this meant that for every 12 cans only 2 were considered to be profit (about 20%). Now considering that the same small shop lost approximately 5% due to shrinkage/wasteage/shop-lifiting that means we are now down to about 1.5 cans of profit to pay someone to stack the shelves, serve on the counter, possibly a storeman, heat, lighting, loan repayment, insurance, refurbishment and possibly those little extras such as dropping off someones shopping for them (FOC).

I believe bread and cigarettes had a smaller profit margin.

I saw the owner of the small shop I worked for often going to the supermarket to buy a dozen cases of something because it was cheaper than they could buy it at the local wholesalers.

Ivan

CIS

I didn't get my info of the actual banks site's, they came from a 3rd party, but 25p on a debit card is still a large fee to pay , most people use debits cards for cashback so the fee would soon mount up.

When people comlpain about the pricing, it may be expensive in local shops , but the've got to make some profit, if everyone who couldn't compete with the supermarkets gave in to tomorrow, you had tesco,asda, sainsbury's, morrisions and no one else.

For the profit they make, supermarkets are way outperforming local stores. A supermarket might by a tin of beans for 3p each and sell them for 25p,a local store buys them for 24p and sells them for 30p.

Who's making the profit ?

Rob236

Ivan is pretty much right but here's the answers: (Profit on return in percentage and cash profit after you take away VAT, where applicable)

Lambert & Butler cigarettes: 6% / 22p
Mars bar: 20% / 5.5p
Daily Mail 25% / 8p
Smirnoff Vodka 70cl: 10% / 95p
Bread 800g: 15% / 15p
Maltesers 175g: 18% / 22p
Heinz beans: 20% / 8p

So say you put down your mars bar and asked for 20 L&B, then presented your debit card and asked for £20 cashback.

Retailer profit from 2 items - 27.5p
Transaction cost - 30p (based on my charges)
Loss of 2.5p

Now I hope some of you can see than charging for cashback/transactions is not immoral but a matter of survival.

Rob