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Squeeze more profit out of your self-service coin redemption program
A growing number of grocery stores are recognizing that a viable strategy for improving customer service and increasing profits is at the front of their stores with a new approach to self-service coin redemption.
February 20, 2019
3 Min Read
A growing number of grocery stores are recognizing that a viable strategy for improving customer service and increasing profits is at the front of their stores with a new approach to self-service coin redemption.Photograph: Shutterstock
Sponsored by Cummins Allison
The grocery business is tough and getting tougher. Competition, especially online, is growing at a rapid pace, increasing the need to improve customer value and service, and placing even more strain on already less-than-ideal margins.
A growing number of grocery stores are recognizing that a viable strategy for improving customer service and increasing profits is at the front of their stores with a new approach to self-service coin redemption.
Today’s coin redemption standard is a model whereby a self-service coin machine is placed in the store by a vendor who keeps the lion’s share of the profits. The consumer is charged almost 12% of the transaction while grocers typically get 1% to 2% of the fee.
Grocers are closely examining this model and looking at other options and a provider who can boost their share of the fee up to 8%.
Evaluate your options
The placement program commonly offered in the market today is considered a one-size-fits-all. This limited option fails to consider unique business requirements, leaving grocers with no flexibility when it comes to choices in machine configuration, procurement options, coin management, as well as fee structures.
To make the most of your coin redemption services, you should investigate how other available product options and business models can significantly increase your profits, as well as improve customer service.
Take a look at Cummins Allison’s program options below.
Placement | Purchase | Lease |
|---|---|---|
No capital investment | Grocer purchases machine | 1 to 5 years with $1 buyout at end of lease |
Cummins Allison owns and manages machine | Bin machines: Cummins Allison can monitor service and manage bin pickup and processing | Bin machines: Cummins Allison can monitor service and manage bin pickup and processing |
Cummins Allison manages coin pickup and processing | Bag machines: Grocer manages bags and arranges for pickup with armored carrier | Bag machines: Grocer manages bags and arranges for pickup with armored carrier |
Reimburses grocer for coin less user fee | Grocer determines user fee charge | Grocer determines user fee charge |
Minimum of 10.9% required | Grocers net profit depending on coin volume: 6% to 8% | Grocers net profit depending on coin volume: 4% to 6% |
Placement versus purchase or lease
Average store coin volume collected ranges from $2,000 to $10,000 a week. A grocer with a single placement machine typically clears about 1% to 3% of that money. By owning or leasing a self-service coin machine, grocers keep all the fees generated from coin redemption. Owning a coin machine can deliver returns of more than seven times the original investment when calculated over the lifetime of the machine.
For example, when you own the machine, you decide what usage fee to charge and you keep the profit, not a third party. This makes it possible for you to recover the cost of the equipment and fees in as little as 12 months.
Recycle coins for addition ROI
Self-service coin counters are not only a revenue generator but an effective way to recycle coin for your operations, saving thousands annually. By restocking cash drawers with the coin taken in, you can reduce coin pick-up fees and eliminate the need to buy coin from a financial institution, further increasing your ROI.
To learn more about how you can squeeze more profit out of your coin redemption program, visit us here.
