Who Shredded My Cheese?

I’m not sure but they need to be paid for doing it.

I was talking with my buddy who spent decades in the supermarket business about how new consumer payment technologies cost money and affect transaction costs and margins. I know several car wash owners who are hesitant to use an app to promote their business because of the percentage transaction fees.

I got no sympathy. He gave me several examples of how value-added products can sell for lower margin compared to the products they begin to replace – but they create additional sales and add a lot more profit dollars to the bottom line.

He said, “Back in the seventies and eighties, people bought cheese in blocks and shredded it themselves. Manufacturers started selling cheese in 8- and 12-oz packages with the cheese already shredded. Shredded cheese costs the retailer – and the consumer – more, and the profit percentage was lower than bulk cheese. Initially, retailers didn’t care for this model.”

“Value added products were being introduced in all fresh food categories. Head lettuce was being replaced by bagged, prepared salads; value added, sliced lunch meats were introduced; fresh salads in the deli were being introduced that replaced ‘homemade’. All these products cost more by weight, had a lower gross profit, BUT they contributed to consumer sales growth, overall margin and consumer loyalty because of the convenience they offered.”

The car wash business is no different.

As our business has moved from cash, to credit cards, debit cards, loyalty cards, and now cell phone apps to accommodate consumers and how THEY want to pay for the services we sell, the costs associated with providing the equipment, software and programming, and seamless service delivery increase. 

Every new technology brings with it a new layer of costs and challenges.

Every new technology brings with it a new layer of costs and challenges. But if it is truly adding value, it has to be considered, implemented and paid for. The technologist is always finding ways to make the consumers’ life easier, and car wash customers, like any other, always respond to convenience. 

Car wash apps are becoming extremely popular with consumers, particularly in light of the COVID crisis; more and more people don’t want to touch a payment keypad, or even touch their debit card to a payment device. They don’t feel safe. So that extra layer of cost – processing a consumer payment through a cell-phone app – isn’t really an “optional” service offering, it’s a requirement of doing business in today’s environment if you want your car wash to be fully accessible to all audiences.

And the reality is, consumers are willing to pay for convenience, and, they are willing to drive farther to get it. That’s Retail 101.

Finally, I actually think there are probably more germs on a cell phone that on the keypad in a self-service car wash. But that doesn’t matter if the consumer would prefer to pay through a cell phone app. 

I can’t believe how far our industry has come since I opened my own wash so many years ago. We’ve gone from rolls and rolls of quarters, to people paying for services with their cell phones. 

I’m proud that we can offer car wash owners the latest technologies that are available – especially to our independent operators and chain customers. Helping them compete with the latest consumer payment conveniences is important to success in the marketplace. 

It’s easy for me to get focused on “another layer of costs”, but, in the end, whatever it takes to deliver consumer convenience is what matters. Consumers always respond to better service with more visits, bigger transactions and more profit dollars.