When “Loss Leader” Means “Lost Customers”

FreshCo: And not a car in sight. Makes you wonder.

Last Sunday we went to Fresh Co, the new incarnation of what was once Price Chopper, now featuring classy display fixtures and higher prices.  Sobey’s thought this change was a good idea, but they’ve never convinced us to buy our “staple” items through them instead of No Frills (Loblaw Group) or Food Basics (Metro Group).

The item in question this week was a special on drumsticks.  I’m not sure if you have those in the U.S., but they are an ice-cream treat in a package of six that is extremely high in fat, and therefore very popular here in Canada.  They regularly run in the $5 – $6 range, and they were featuring them at $2.77 each.

Of course they were sold out by the time we got there on Sunday, which is pathetic when you consider it was only the third day of the sale.

Checking out both the “sale bunker” and the regular freezer section where these are normally kept, I encountered, in one minute, four “sets” of shoppers who were extremely ticked off.  I’m still not convinced these drumstick things are healthy, so I could go either way on this issue, but these people were genuinely angry.

It made me wonder what Sobey’s gains by being sold out so soon.  Maybe setting the price at $3.77 instead of $2.77 would have tempered the demand enough for them to keep stock.   Maybe they planned to supplement the stock with a second delivery; though we come into the city from the country, so that wouldn’t help us.

But I thought about it:

• Nothing left for the Sunday customers
• Nothing left for the Monday customers
• Nothing left for the Tuesday customers
• Nothing left for the Wednesday customers
• Nothing left for the Thursday customers

…and then it all starts over Friday with a new flyer, more “tease,” more “bait and switch,” more anger.

Now let’s give Fresh Co the benefit of the doubt and say that my “four irate customers in sixty seconds” thing was an aberration.  Let’s pretend there are generally only four irate customers every five minutes.

That’s

• sixty upset customers an hour
• if the store is open 8:00 – 8:00 that’s 720 upset customers per day
• if they were out of stock for five of the seven days that the item was advertised — and they don’t do rain checks, remember — that’s 3,600 upset customers for the balance of the week.

Because of one item.

And completely under-estimated demand.

This is where I have to give No Frills credit.  They really load in the merchandise, obviously because they’ve run statistical simulations like the one I just described.

Let’s say that half of the very angry types I ran into cool off and decide to give the store another try the next week.  That means they still run the risk of having lost 1,800 customers.

In one store alone.

Multiply that by 50 stores, and you’ve got 90,000 ice-cream-treat-eating customers angry with you.

And the next week it’s an orange juice special you can’t keep in stock.  (Happened.)

And the week after that it’s a special on cheese.  (Happened.)

And the week after that you’re wondering why sales are declining.

They should have asked me.

Or issued rain checks.

(We did not return the next week.)

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