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Grocery Delivery: Easy & Convenient…But Costly

March 6, 2017 Featured, Retail Comments Off on Grocery Delivery: Easy & Convenient…But Costly

The local grocery market is once again changing. Last week I decided to have groceries delivered to try out Instacart, now available in St. Louis.

From late January:

Maryland Heights-based Schnucks is among several retailers partnering with Instacart to offer online ordering and delivery beginning Feb. 16. Other retailers that will begin offering delivery through Instacart locally next month are Straub’s, Shop ’n Save, Whole Foods Market, Costco and Petco, Instacart spokeswoman Rebecca Silliman told the Post-Dispatch on Friday.

Based in San Francisco, rapidly growing Instacart provides delivery service for retailers across the country in 30 markets. It just expanded grocery delivery in Virginia Beach and plans to launch in Nashville soon. Instacart plans to hire at least 50 people in the St. Louis area, Silliman said.

Beginning next month, customers can access Schnucks Delivers’ new service online at Schnucksdelivers.com. Instacart will provide the software, shoppers and drivers. (Post-Dispatch)

I decided to go directly through Instacart, rather than Schnucks’ website — even though I was ordering from Schnucks. I also browsed the selection from Shop-n-Save, Straub’s, & Costco — we sometimes make a Shop-n-Save run and we always go to Costco once per month.  Those who aren’t Costco members can still have items delivered from them.

We needed bread and some produce but I decided I’d get the produce in person the next day. So my order was bread and three other items we’ll eventually eat — just enough to exceed $10.

These 4 items had a subtotal of $10.76. Sales tax was 69 cents for a store total of $11.45

I posted to my personal Facebook wall and a friend from grad school, now living in Chicago, said she loves Instacart, adding:

80%+ of what enters my house is delivered…..going to the store w/2 children in this town is literally insane. Happy to pay the delivery fee rather than spend 2 hours in traffic!!

I can see how a parent of two children might be willing to pay extra for delivery, but let’s look at the cost.

Instacart adds a 10% service fee onto the product subtotal, plus I tipped the delivery person $2. So my “free” delivery cost me $3.08 — 27% above what I would have paid id I’d gone to the store myself.

For my first free order the minimum was only $10, but the regular delivery rate is less for orders of at least $35.

Examples:

  • Orders less than $35, delivered within the hour: $11.99
  • Orders less than $35, delivered in 2 hours or more: $9.99
  • Orders $35 or more, delivered within the hour: $7.99
  • Orders $35 or more, delivered in 2 hours or more: $5.99

For $149 per year (or $14.99/month) you can get free delivery.

PROS

  • Fast & convenient
  • Easy to use website & smartphone app
  • Sale items appear on website/apps

CONS

  • Adds 25%+ to grocery cost
  • Four items arrived in 3 plastic bags
I use reusable bags, so having four items arrive in three bags was hard to accept. Not sure if this was the cashier or delivery person.

I do think grocery delivery will increase, but still be an expensive niche for a while. I invite you to try the service to see what you think. I got a link that will provide you with free delivery plus a $10 credit, click here.  Disclosure: I also get $10 for the first 5 who order using the link. Be sure to tip the delivery person online or in cash because Instacart keeps changing (lowering) their pay.

— Steve Patterson

 

Readers: Retain St. Louis Bread Company Name On Local Panera Bread Locations

March 1, 2017 Featured, Retail Comments Off on Readers: Retain St. Louis Bread Company Name On Local Panera Bread Locations

My husband and I use the Panera Bread name to describe both St. Louis Bread Co & Panera locations. The Panera Bread locations in the immediate St. Louis area are known as St. Louis Bread Company.

St. Louis Bread Co on Chippewa

Get an hour from downtown and they become Panera Bread.  As I mentioned in the Sunday Poll, when I worked in Kirkwood (2000-2004) we often got lunch from the original location, but by that point the original founder was ;png out of the picture.

St. Louis Bread was founded by Ken Rosenthal in 1987 when he opened the first location in Kirkwood, Missouri. In 1993, Au Bon Pain Co. purchased the St. Louis Bread Company. In 1997, Au Bon Pain changed the company name to Panera Bread, a made-up name combining the Italian words pane (bread) and era (time)—time of bread. At the same time, the St. Louis Bread Company was renovating its 20 bakery-cafés in the St. Louis area.

In May 1999, to expand Panera Bread into a national restaurant, Au Bon Pain Co. sold its other chains, including Au Bon Pain, which is now owned by Compass Group North America. Panera Bread moved into its new headquarters in Richmond Heights, Missouri in 2000. The company operates or franchises more than 1900 Panera Bread bakery-cafés in 46 states and 20 facilities that deliver fresh dough to the bakery-cafés every day. Panera Bread’s CEO is Ron Shaich.

Panera’s headquarters are in the St. Louis suburb of Sunset Hills. You might think CEO Shaich lives in a tony St. Louis suburb like Ladue…but you’d only be partially correct. He does live in a wealthy suburb — outside of Boston. To his credit, he’s kept the headquarters here for more than two decades. Executives that run the day-to-day business do live here. Panera stock is publicly traded.

More than half of you think the local name should remain St. Louis Bread Company:

Q: Agree or disagree: St. Louis Bread Co locations should go by the name Panera (the name used in the rest of the country?

  • Strongly agree 2 [3.77%]
  • Agree 4 [7.55%]
  • Somewhat agree 3 [5.66%]
  • Neither agree or disagree 7 [13.21%]
  • Somewhat disagree 3 [5.66%]
  • Disagree 10 [18.87%]
  • Strongly disagree 24 [45.28%]
  • Unsure/No Answer 0 [0%]

I somewhat think they should just all become Panera Bread. Most of the packaging, cups, etc are already the same. The main different is the name on the outside of the building.  I’m not advocating for a change, I just won’t be surprised or upset if they decide to do so in the future.

— Steve Patterson

 

Opinion: Sales Taxes Outdated In 21st Century

February 15, 2017 Featured, Retail, Taxes Comments Off on Opinion: Sales Taxes Outdated In 21st Century

We order stuff online frequently because it’s convenient to do so, not because we want to save on taxes. Often we’ll order from target.com so we pay the same tax rate we do when we shop at Hampton Village location once per month.  Amazon is the bulk of our online shopping so now we’ll pay 4.225% for Missouri sales tax. Fine.

There are lots of online retailers out there, from 2013:

Using figures from a variety of sources, including Internet Retailer’s Top 500 Guide for 2013 and data from the U.S. Census Bureau, ReferralCandy determined that there are 102,728 e-commerce retailers in the United States that are generating at least $12,000 per year in revenue. That’s a 13.5 percent increase over last year’s findings, which revealed 90,501 online retailers generating the same amount.

Other findings from the study include:

  • 61,728 online retailers generate at least $25k in revenue (up 12.8 percent from the year before)
  • 38,157 e-commerce merchants generate at least $50k in revenue (up 12.3 percent from the year before)
  • 23,587 online merchants generate at least $100k in revenue (up 13.6% from the previous year) (Forbes)

So over 100k retailers should register with every state to be able to collect and report sales taxes?  I looked at three retailers located on Cherokee Street to see how they handle sales taxes on their online shops — they ship to every state:

Firecracker Press

  • Collects 8.7% Missouri & St. Louis sales tax on orders shipped to Missouri customers.
  • Doesn’t collect sales taxes shipped outside Missouri.

Spoked Bikes & Stuff

  • Doesn’t appear to collect sales taxes on any online order, though a tax line appears in the cart.

STL-Style

  • Doesn’t appear to collect sales taxes on any online order, no sales tax line appeared .

More than half of those who voted in the recent non-scientific Sunday Poll support online retailers collecting state sales taxes:

Q:  Agree or disagree: Online retailers, without brick & mortar stores in a state, shouldn’t collect sales taxes in that state.

  • Strongly agree 6 [14.63%]
  • Agree 5 [12.2%]
  • Somewhat agree 1 [2.44%]
  • Neither agree or disagree 1 [2.44%]
  • Somewhat disagree 3 [7.32%]
  • Disagree 9 [21.95%]
  • Strongly disagree 15 [36.59%]
  • Unsure/No Answer 1 [2.44%]

Oh, I bet many thought I was talking only about Amazon. Where is the line drawn in the sand? Is it based on sales shipped to each state? If so, the three small retailers on Cherokee would need to keep track of sales to each state and then begin collecting state sales taxes only when their sales to that state have crossed the threshold?

We pay taxes to receive services from the government(s). How governments collect revenue varies widely, not all collect sales tax:

In 2013, sales and gross receipt taxes nationwide totaled $254.7 billion — a 3.9% increase from the year before — which means Americans spent an average of $806 on sales taxes last year. That’s less than the $309.6 billion, or $979 per American, spent on state income taxes. However, including selective sales taxes, which are levied on goods like gas and cigarettes, Americans actually pay more in sales taxes than they do in state income taxes.

Sales taxes vary widely from state to state. Some states charge no sales tax, while some localities charges as much as 10% when state and local sales taxes are combined. Tennessee, on average, has the highest sales tax at 9.44%.

There are four states with no sales tax: Delaware, Montana, Oregon, and New Hampshire. A fifth, Alaska, has no state-level sales tax but allows municipalities to impose the retail-level tax. As a result, the average sales tax rate in Alaska is 1.69%. 

While 10% of U.S. states impose no sales tax, a much smaller percentage of the population lives in one of these states — only about 2.5%. (Motley Fool)

Let’s not forget the complex sales tax pool in St. Louis County.

I think it may be time to admit sales taxes as a revenue source is outdated by current technology & shopping trends. I’m not suggesting we need lower taxes — but that we need to find a better way to fund local & state government services.

— Steve Patterson

 

Sunday Poll: Should Online Retailers Collect State Sales Taxes?

February 12, 2017 Featured, Retail, Sunday Poll Comments Off on Sunday Poll: Should Online Retailers Collect State Sales Taxes?
Please vote below

As I’ve previously noted, the retail landscape is always changing — big downtown department stores rarely exist anymore — more & more suburban malls struggle. Last month another change was announced:

The collection of state sales tax in Missouri will begin Feb. 1, Amazon spokeswoman Jill Kerr said in an email to the Post-Dispatch. The state sales tax rate in Missouri is 4.225 percent.

Items sold by Seattle-based Amazon.com and its subsidiaries already are subject to sales tax for merchandise shipped to more than 30 states. Amazon will also begin collecting sales tax on Feb. 1 in Mississippi, Rhode Island, South Dakota and Vermont, and in Wyoming in March.

Amazon does not yet have facilities in the state of Missouri, and online retailers aren’t required to collect sales tax where they don’t have a physical presence. Amazon charges sales tax in Illinois, where it has multiple distribution facilities, including in Edwardsville. (Post-Dispatch)

Posts on social media showed disagreement on this issue so I thought it would make a great poll question:

The poll will close at 8pm, results & my thoughts on Wednesday.

— Steve Patterson

 

Readers Like Amazon Prime

December 14, 2016 Featured, Retail Comments Off on Readers Like Amazon Prime
Papa Fabarre's restaurant was in the downtown Famous-Barr for decades, it closed in 2011 when Macy's downsized in a failed effort to remain viable. Macy's closed in 2013
Papa Fabarre’s restaurant was in the downtown Famous-Barr for decades, it closed in 2011 when Macy’s downsized in a failed effort to remain viable. Macy’s closed in 2013

We can’t draw any definitive conclusions from the recent non-scientific Sunday Poll, but it’s clear from other data that Amazon Prime is a hit. From July:

Amazon Prime members now make up more than half the online retailer’s customer base, according to a new study.

Consumer Intelligence Research Partners estimates that Amazon  counts 63 million Prime members among its shoppers—an increase of 19 million from last June. (Fortune)

As I posted Monday, retailing continues to change. A century ago the Sears catalog was a big deal, offering everything you could imagine — including house kits. The Sears mail order catalog began in 1888, Montgomery Ward was earlier: 1872. National & regional retail stores survived the mail order catalog revolution and all the many changes since.  Retailers that survive must adapt & change with the times. Can you imagine a retailer not accepting credit cards? Even ALDI had to change and accept more than just debit cards.

The recent poll results:

Q: Are you currently a paid member of any of the following (check all that apply):

  1. Amazon Prime 24 [36.92%]
  2. Sam’s Club 18 [27.69%]
  3. Costco 12 [18.46%]
  4. Not a member of any 11 [16.92%]
  5. Google Express 0 [0%]
  6. Walmart Shipping Pass 0 [0%]

I’ve been an Amazon Prime member for at least 5 years now. While it costs $99, it allows me to order things without concern for the shipping cost. We order often enough that it is a good value, we occasionally watch videos too. In July 2015 we joined Costco, shopping there once per month since. Last month we got a 16.6 cu ft upright freezer (yes, Energy Star rated) so we’ll be buying even more there.

While Costco is debating the best approach to e-commerce, its competitors are acting fast. Amazon continues to open dozens of warehouses a year to accelerate shipping times. Its Prime membership program may now be Costco’s closest competitor, as Prime offers a number of perks including free two-day shipping for a $99 annual fee. There is significant overlap between Prime and Costco members, but that could change if consumers find themselves shopping on Amazon more than Costco.

Wal-Mart (NYSE: WMT) has also been rapidly expanding its grocery pick-up program, with plans to have about 1,000 kiosks in store parking lots by the end of next year. Management has said the program has been very popular. The company also acquired Jet.com for $3.3 billion to advance its own e-commerce operations.

In addition, Kroger has implemented a similar click-and-collect grocery program that allows customers to order on their phones and pick up in groceries in a store parking lot. (USA Today)

Locally owned retailers will continue to need to stay relevant to survive & thrive.

— Steve Patterson

 

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