Grocery Retailing Payments - Study 2013
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Grocery Retailing Payments
Study 2013
®
®REALIZE YOUR CASH OFFICE POTENTIAL
Automates cash office procedures to
reduce labor, shrink and bank fees
vbInSight
Optimizes self-checkout Enables bookkeepers to more Offers all-in processing for any Provides Web-based corporate
balancing and monitors efficiently manage cash and check type to improve returns reporting to make monitoring
terminals to reduce balancing non-cash items to reduce and reduce transportation cash office activities more
frequency and cash on hand cash on hand and shrink and bank costs efficient
®
www.balanceinnovations.com
11011 Eicher Drive | Lenexa, KS 66219 | 913.599.1177National Grocers Association
Balance Innovations, LLC
Grocery Retailing Payments Study 2013
Published by:
National Grocers Association
Balance Innovations, LLC
Prepared by:
210 Analytics, LLC
NGA and Balance Innovations © Page | 3Copyright© 2013
National Grocers Association (NGA) and Balance Innovations, LLC
All rights reserved. This publication may not be reproduced, stored in any information or retrieval system
or transmitted in whole or in part, in any form or by any means — electronic, mechanical, photocopying,
recording or otherwise — without the express written permission of NGA and Balance Innovations.
For questions or comments, please contact:
Aileen Munster
Vice President of Education and Research, National Grocers Association at amunster@nationalgrocers.org
Joy Nicholas
Vice President of Business Development, Balance Innovations at jnicholas@balanceinnovations.com
National Grocers Association is the national trade association representing the retail and wholesale grocers
that comprise the independent sector of the food distribution industry. An independent retailer is a privately-
owned or controlled food retail company operating a variety of formats. Most independent operators are
serviced by wholesale distributors, while others may be partially or fully self-distributing. Some are publicly-
traded but with the controlling shares held by the family and others are employee-owned. Independents are
the true entrepreneurs of the grocery industry and dedicated to their customers, associates and communities.
NGA members include retail and wholesale grocers, state grocer associations, manufacturers and service
suppliers.
Balance Innovations® is the leading developer of reconciliation and cash office management solutions for the
retail industry. Our leading-edge, customizable solutions integrate seamlessly with existing POS technologies
to simplify and improve retailers’ cash office management operations. Balance Innovations’ premier product,
VeriBalance®, is a patented, easy-to-use software solution that is helping retailers across the United States
and Canada increase profitability and improve operations by reducing labor, bank fees and shrink while
standardizing and enforcing best practices and corporate policies. Other products include: vbEPIXTM, an
electronic check processing solution; vbForecastTM, a cash forecasting product; vbScoutTM, a self-checkout
management tool; and vbInSightTM, a corporate reporting solution. Customers range from independent grocers
to Fortune 50 retailers. For more information, visit www.balanceinnovations.com.
NGA and Balance Innovations © Page | 4Introduction
The 2013 Grocery Retailing There is a lot of uncertainty about the technical future of payment
Payments Study is designed processing. While consumers have the most say in the success or
to understand the costs of and rejection of future payments innovations, retailers must also keep a
industry practices relative to watchful eye on their costs – which in some cases exceed the net profit
cash, check, debit and credit on a typical grocery purchase. While some cost components cannot be
management, payments controlled by the retailer, other high-activity costs can be an indication
automation and other
of the need to improve processes and remove inefficiencies, such as
payments related topics, such
the more streamlined handling of cash and checks.
as coupons and e-commerce.
In response to frequent requests from grocery retailers for benchmarks
and best practices relative to payments, the National Grocers
Association (NGA) teamed up with Balance Innovations to provide the
industry with this much needed information.
Understanding the latest trends helps retailers optimize their own
internal payment mechanisms to reduce shrink and inefficiencies,
meet the next generation payment processing needs, and establish
solid payment policies and strategies for the company and individual
stores. The payment process is very much part of the shopping
experience and trip satisfaction, and retailers need to be prepared
for wherever the market may move to meet shopper preferences and
future payment innovations.
Many of the findings are significantly impacted by company size,
measured by the number of stores operated. Therefore, the report
reflects the median for a more accurate picture of nationwide payment
practices as it is less skewed by large outliers in the data. However,
beyond the national averages, the report provides more detailed
insights by company size, sales volume, transaction volume and
average transaction size, as appropriate. This detailed information can
be used to benchmark against industry peers.
NGA and Balance Innovations © Page | 5Table of Contents
Report Highlights....................................................................................................................................................7
Front-End Technology..............................................................................................................................................9
Checkouts.........................................................................................................................................................9
Self-Checkout....................................................................................................................................................9
Sales, Transactions and Transaction Size......................................................................................................11
Front-End Technology Choices.........................................................................................................................12
Store Accounting Data and the General Ledger.............................................................................................12
Coupon Handling..............................................................................................................................................13
Payment Types........................................................................................................................................................14
Payment Types as a Percentage of Transactions Versus Dollar Sales..........................................................14
Average Transaction Amount by Payment Type..............................................................................................16
E-Commerce......................................................................................................................................................17
Cash Operations......................................................................................................................................................18
Drawer/Till Practices........................................................................................................................................18
Cash Management at the Store Level.............................................................................................................20
Safe Management............................................................................................................................................20
Armored Car Service........................................................................................................................................21
Reconciliation ..................................................................................................................................................21
Cash Operations...............................................................................................................................................22
Over-Short Report.............................................................................................................................................23
Store Cash Audits.............................................................................................................................................23
Checks.....................................................................................................................................................................25
Check Volume...................................................................................................................................................25
Check Imaging and Encoding..........................................................................................................................25
Check Clearance...............................................................................................................................................26
Conclusions.............................................................................................................................................................27
Methodology ...........................................................................................................................................................28
NGA and Balance Innovations © Page | 6Report Highlights
Front-End Technology Payment Types
• Grocery retailers operate an average of 10 • While credit and debit make up more than 60
checkout lanes, with the majority being percent of dollar sales, cash continues to make
regular cashier-assisted lanes. The majority, up the highest percentage of total transactions,
66 percent, do have self-checkout lanes, with at 38.2 percent. Cash makes up a much smaller
a higher prevalence among higher-volume 23.1 percent of dollar sales as shoppers tend
stores. If offered, stores average four self- to pay cash for smaller transactions. Continued
checkout lanes. declining use of checks in the grocery channel
Self-checkout lanes are typically counted prompted checks to fall to the single digits as a
percentage of sales and transactions.
and replenished once daily and 82 percent
do cash pickups every day as well. Nine in 10 Checks do have the highest average
companies have no plans to add or remove transaction size, at $63.21, followed by
self-checkout lanes. credit and debit transactions.
• A point-of-sale at the service desk, check • Processor files are the most commonly used
cashing and Western Union are offered by at resources for EPS reconciliation, at 54 percent.
least half of grocery retailers. Less common • Monthly fees (combination of processing,
are in-lane mobile payments and check network and bank fees) for debit average 1.3
imaging as well as smart safes. One-third, percent and 1.9 percent of sales for credit.
however, are considering adding smart safes
to their stores. One-quarter are considering Cash
the implementation of in-lane electronic check • Opening drawer amounts average $274, with a
conversion. median of $200.
• One-third of companies offer some type of 54 percent of companies have cashiers count
online ordering and another 8 percent expect
their drawers before and after they sign on/
to enter the world of e-commerce in the next
two years. Most online ordering sites are hosted off. Furthermore, 94 percent have a second
by a third-party and offer a range of payments, person counting the till in addition to the
with Discover, VISA and MasterCard being the cashier. Twenty-nine percent do not have
most common ones, and PayPal and PIN debit their cashiers count the drawers at all.
being the least commonly offered options.
Sales and Transactions • While retailers spend a fair amount of hours
counting tills, only 52 percent of companies
• Weekly transactions per store average 11,000,
track the time taken to count the cash. The
with a transaction size of $27.65. On a per-
average per drawer is seven minutes, with a
checkout basis, weekly sales average $29,194
median of six.
and transactions stand at 1,241.
• Food retailers average 17 drawer pickups and
• 56 percent have an automated way of sending
loans per store, per day.
store accounting data to the general ledger.
• In a typical week, grocery companies process
Coupons
an average of four change orders per store.
• 63 percent reconcile coupons at the store,
• The average daily cash deposit amount is highly
with a manual count (60 percent) or adding
related to sales and transactions and averages
individual coupon amounts (20 percent) being
$8,946.
the two most common ways.
• The most common way for stores to order cash
• On a per-store basis, annual coupon losses
is through the in-store cash office (60 percent).
average $1,239.
NGA and Balance Innovations © Page | 7• 84 percent of stores offer cash back with Checks
purchase. The 16 percent that don’t are small • Checks are decreasing as a form of payment
independent operators. in the grocery channel. Companies handle the
Safe Management greatest number of personal checks, followed
• Company practices relative to counting the by WIC and payroll checks. The latter are
safe and maximum safe amounts allowed vary accepted by 78 percent of companies.
widely: 29 percent only count the safe in the • 67 percent of grocery retailers do not yet image
morning when the store opens, whereas others checks. Among those that do, check imaging in
count the safe multiple times, whether at the cash office is more common than in-lane.
opening and closing, three times a day or after 48 percent of grocers handle check collection
every shift. in-house. They average 1-2 returned checks
74 percent of companies have a set maximum per store, per week, but have a 70 percent
allowable safe amount. Among those that do, collection rate on bad checks. The average
the average amount is $27,021. returned check fee is $22.
• 46 percent of grocery retailers use armored car
service between five and six days a week.
Reconciliation
• It takes an average of four bookkeeper hours
to conduct a daily close, reconciliation and
deposit.
• Point-of-sale transactions that are not
integrated are most often manually entered
into the store’s POS system (52 percent) or
entered into a program that feeds the general
ledger (33 percent).
Preventing shrink
• Six in 10 companies have automated over-
short reports that they share with a number
of departments throughout the company to
limit and prevent shrink: 80 percent share the
over-short reports with store operations; 53
percent with loss prevention and 47 percent
with internal audit.
While 12 percent never do store cash audits,
most companies do them either weekly (20
percent) or quarterly (28 percent). The chosen
methods vary with 38 percent doing surprise
store cash audits and 33 percent doing both
surprise and planned ones. Companies spend
three hours to conduct an audit.
NGA and Balance Innovations © Page | 8Front-End Technology
The front-end is an enormously important part of the store. For one, it’s the only area that every customer
passes. Secondly, expedient and friendly service at the front-end goes a long way in ensuring a positive
trip experience. At the same time, optimizing the front-
end requires being cognizant of consumer privacy, data
Average of 10
security, theft-related shrink and more, while maximizing Checkout Lanes
operational efficiency. This chapter covers benchmarks
on current practices and future plans for various front-
1
end technologies. 1 Self-Checkout
8 Regular Express
Checkouts
U.S. grocery retailers offer an average of 10 checkout lanes, but predictably this figure varies highly by store
size and sales. For example, stores with weekly sales per store greater than $400,000 report an average of 13
checkouts, whereas smaller stores with weekly sales of less than $100,000 have an average of four. Grocery
retailers balance various technologies at the front end to find the best combination of cashier-assisted, self-
checkout and express/fast lanes — and some have started experimenting with mobile checkout using the
customers’ own smartphones or hand-held scanners.
Checkout Lanes Express Lanes Self-Checkout Lanes
The number of lanes in full- • 36% of stores do not have • 66% of stores have at least
express lanes at all one self-checkout lane
service supermarkets ranges
• Express lanes are more • Self-checkout lanes are
from three to 22
prevalent among higher- much more prevalent
Survey respondents use a wide volume stores among higher-volume stores
variety of POS types: • If offered, stores average 2 • If offered, stores average 4
• 24% IBM lanes lanes
• 24% Retalix • Often times, stores that
• 20% NCR offer self-checkout also
have express lanes
• Others include ACR, ECR,
RORC, ACE, RDS and TSS
Self-Checkout
Retailers often use self-checkout out as a way to adjust to the highs and lows in customer traffic throughout
the day. With only one employee for four to six self-checkout lanes, it can also generate significant cost savings.
But beyond the numbers and cost, the industry passionately debates the human factor in the self-checkout
versus staffed-lanes discussion. A personable and helpful cashier can add great value and highly appreciated
customer service, providing an important and lasting impression on the customer. As such, cashier-assisted
lanes can be a genuine asset, not just another cost. This point is driven home by The Retail Feedback Group’s
U.S. Supermarket Experience survey that found that the average trip satisfaction among shoppers who
used self-checkout lanes is much lower than that of shoppers who used cashier-assisted lanes. While some
NGA and Balance Innovations © Page | 9shoppers are appreciative of technological advances such as self and mobile checkout, it appears the human
factor does add an important touch.
Counting
Companies with at least one self-checkout Impact of checkout lane on trip satisfaction
typically count the self-checkout registers either Average satisfaction on a scale 1-5, where 5 is the highest...
daily (50 percent) or just once a week. Practices Average 4.42
differ by company, sales and transactions, with
Used self-checkout 4.29
larger companies slightly more likely to count
Used cashier-assisted lanes 4.44
only once a week.
Graph courtesy of:
The Retail Feeback Group from U.S. Supermarket Experience 2012
Replenishing
Sixty-four percent of companies with at least one
Frequency of counting the self-checkout lanes
self-checkout lane replenish these lanes daily,
others do so every two to three days.
Pickups
Once a Daily
While the self-checkout lanes may not be week 50%
replenished every day, the vast majority of 42%
companies with at least once self-checkout lanes
do cash pickups on a daily basis. The remaining 9%
18 percent do so every two to three days Multiple days per week
Future Changes to Self-Checkout Frequency of replenishing the self-checkout lanes
While some supermarket chains have removed Every 4+ days 0%
self-checkout lanes in recent years citing limited
customer use and the preference of cashier Every
contact with customers, the majority of survey Daily 2-3 Days
respondents (90 percent) do not plan to make 64% 36%
any changes to the existing self-checkout set-up
at their stores in the next two years. More than once
a day 0%
In fact, while 90 percent expect to hold the status
quo on self-checkout, the remaining 10 percent
Frequency of self-checkout lane pickups
actually anticipate increasing the number of
More than once a day 0%
lanes over the next two years.
Every
2-3 Days
18% Every 4+ days 0%
Daily
82%
NGA and Balance Innovations © Page | 10Sales, Transactions and Transaction Size
Survey respondents average slightly more than $300,000 in sales per store, per week. This reflects the full mix
of one-store operators and regional chains.
Weekly transactions per store are stable at slightly more than 11,000 and the average transaction size
is $27.65. This is the average amount spent per customer, regardless of payment type. Weekly sales and
transactions are important drivers behind front-end technology decisions, including the availability of express
and self-checkout lanes and payment processing related technology.
Sales and transactions by checkout:
• Weekly store sales by checkout: $29,194
• Weekly transactions by checkout: 1,241
Weekly Sales Per Store Weekly Transaction Per Store Average Transaction Size
Average: $305,105 Average: 11,211 Average: $27.65
Ranges from $30,600 to $1,641,000 Ranges from 2,147 to 29,477 Ranges from $14 to $58
High-volume Low-volume High-volume Low-volume
All Companies store; sales store; sales store; >10,000 store; $250,000Front-End Technology Choices
The use of front-end technologies varies widely among food retailing companies, with higher-volume stores
(in terms of sales and transactions) more likely to have a range of services. Some of the more common
technologies, implemented by at least half of retailers, are a point-of-sale at the service desk, check cashing
and Western Union. Less common are the use of smart safes and check imaging in lane/at the point-of-
purchase. One-third, however, are considering having smart safes in their stores. One-quarter are considering
the implementation of in-lane electronic check conversion.
Neither have, nor considering All
All All High-volume Low-volume
companies;
Currently have
companies; companies; store; store;
Neither
Currently Are Currently Currently
have, nor
have considering have have
considering
POS at service desk 76% 4% 20% 88% 71%
Check cashing 63% 4% 33% 69% 55%
Western Union 56% 4% 40% 46% 64%
Bill payments 48% 8% 44% 36% 43%
Self-checkout POS 44% 4% 52% 64% 29%
Coin dispensers 24% 4% 72% 46% 7%
Electronic check conversion in
24% 24% 52% 18% 29%
lane (return check to customer)
Check imaging in the back office 16% 16% 68% 18% 14%
Mobile payments in lane 8% 32% 60% 14% 0%
Smart safes 8% 34% 58% 18% 0%
Check imaging in lane 4% 16% 80% 9% 0%
Store Accounting Data and the General Ledger
Slightly more than half of companies (56 percent) have an automated way of sending store accounting data to
their general ledger. Additionally, 12 percent are considering such a system.
NGA and Balance Innovations © Page | 12Coupon Handling
Digital coupons According to Inmar, coupon redemption for consumer packaged goods
(CPGs) increased 6.1 percent in 2012, to about 3.5 billion coupons
NGA along with several redeemed, despite a decline in distribution. The increase in redemption
other trade groups released continues a trend that began during the recession, after grocery
free guidelines designed to
couponing had been declining for several years. Freestanding inserts
promote model practices in
(FSIs) continued to be the most popular way to distribute coupons,
digital couponing and reduce
accounting for 88 percent. The redemption rate for FSI was 0.5 percent
the incidence of coupon fraud.
and the rate for Internet print-at-home coupons increased to 7.7
Produced by the Joint Industry percent. Internet print-at-home coupons accounted for 4.6 percent of
Coupon Committee (JICC), total coupon redemption volume, having grown by 73.5 percent over
“Voluntary Guidelines for 2011 to 161 million coupons.
Digital Coupons” shares
Reconciling Coupons at the Store
model digital coupon
practices in order to promote Slightly less than two-thirds of responding companies (63 percent)
a positive experience for reconcile coupons at the store. The majority does so by doing a manual
consumers, proper settlement count, at 60 percent. The second most common way is to add individual
for retailers and effective and coupon amounts, cited by 20 percent of companies.
well-controlled promotions for
Annual Coupon Losses
manufacturers.
Annual coupon losses vary from none to substantial amounts, with
The guidelines highlight the an average of $1,239 on a per-store basis. Many of the smaller
key distinctions between independents do not track this cost, whereas the amount tends to be
digital and paper coupons, more substantial among larger chains, on a per store basis.
including the presence of
Monthly Coupon Processing Fees
barcode data, distribution
methods, consumer Monthly coupon processing fees average $46 with a median of $41.
acquisition and presentment,
purchase validation and offer
set-up at point of sale. 60%
Manually count
The guidelines are available
at: http://bit.ly/X4TUQb
7%
63%
Reconcile
Scanning
coupons at 20%
the store Adding ind.
coupon amounts
13%
Other
NGA and Balance Innovations © Page | 13Payment Types
Keeping up with changes in payment processing technology and the potential acceptance or rejection
of various payment innovations by consumers is a major source of concern among food retailers as they
wonder where to invest. This chapter provides a range of payment-related benchmarks to help retailers
understand the tremendous shifts in consumer behavior as it relates to preferred payment options.
Payment Types as a Percentage of Transactions Versus Dollar Sales
The major payment types have been relatively unchanged for many In 2009 (the most recent
years, with the last big addition being direct debit that was introduced in data available), noncash
the 1960s. However, the usage of each of the payment types has seen transactions totaled 109
tremendous change. Debit transactions saw a drastic increase, mostly million, with a value of $72.2
at the expense of checks, despite the fact that the U.S. continues to trillion. Noncash payments
lag the rest of the world in moving away from checks. Several European increased by 4.6 percent
between 2006 and 2009.
countries have announced the complete phasing out of checks within
Electronic payments (made
the next few years.
with cards and by ACH) now
The decline of check usage and the rise of debit can be seen in the collectively exceed three-
grocery retailing industry as well. Debit has nearly caught up with credit quarters of all noncash
in both sales and transactions and checks are down to single-digit payments while payments by
percentages. check have dropped to less
than one-quarter.
As a As a
percentage of percentage of
The Federal Reserve attributes
dollar sales transactions
the rise of electronic payments
Credit 31.5% 25.2%
to technological and financial
Debit 29.4% 23.2%
innovations that influence
Cash 23.1% 38.2%
Check 8.4% 5.5% the payment instrument
EBT 5.1% 5.6% choices of consumers and
Other 1.6% 0.9% business. Other reasons
WIC 0.4% 1.0% mentioned include the
eWIC 0.3% 0.2% level of economic activity,
Proprietary charge regulatory developments and
0.3% 0.2%
cards demographic changes in the
population.
The mix of payments used differs widely by store sales, transactions,
and above all, the average transaction size. Cash and EBT rise in Source: Federal Reserve
importance for smaller transactions of $20 or less. Cash increases Payments Study 2010
as the chosen payment from 23.1 percent across all respondents to
34.6 percent among companies with smaller-than-average transaction
sizes. On the contrary, among stores with much higher-than-average
NGA and Balance Innovations © Page | 14transaction sizes of $35 or more, cash becomes less important as a percentage of the total and 42.1 percent
of total dollar sales are generated through credit payments.
High sales Low sales Average Average
All
As a percentage of dollar sales volume volume transaction transaction
companies
stores stores ≤$20 ≥$35
Credit 31.5% 37.1% 26.9% 22.2% 42.1%
Debit 29.4% 28.5% 30.1% 26.4% 29.1%
Cash 23.1% 20.7% 25.1% 34.6% 16.7%
Check 8.4% 5.6% 10.9% 6.7% 4.6%
EBT 5.1% 4.4% 5.8% 8.6% 2.1%
Other 1.6% 2.4% 1.1% 0.5% 3.9%
WIC 0.4% 0.6% 0.5% 1.0% 0.4%
eWIC 0.3% 0.2% 0.3% 0.0% 0.6%
Proprietary charge cards 0.3% 0.5% 0.0% 0.0% 0.5%
Branded decoupled debit 0.0% 0.0% 0.0% 0.0% 0.0%
Debit and Credit
Credit and debit card interchange fees are expensive to retailers, despite the financial reform legislation (the
Dodd-Frank Wall Street Reform and Consumer Protection Act P.L. 111-203) and the decision by the Federal
Reserve to cap transaction fees. In addition to transaction fees, retailers are charged other fees including
processing costs, dues and assessments in order to accept credit and debit cards. Our survey found the
following averages for monthly fees as a percentage of sales.
Debit Credit
Processing fees 0.5% 0.9%
Network fees 0.6% 0.8%
Bank fees 0.2% 0.2%
Total 1.3% 1.9%
NGA and Balance Innovations © Page | 15Chargebacks (the return of funds to a customer) appear to be a non-issue in the grocery retailing industry.
Most respondents said they have fewer than one chargeback per store, per week or simply wrote “negligible.”
Given the low number of chargebacks, the dollar amount was a non-issue as well.
EPS Reconciliation Resources
Resources used for EPS reconciliation
Processor files are the most commonly
Percentage of companies
used resources for EPS reconciliation,
followed by bank files and POS Processor files 54%
transaction files. Bank files 25%
POS transaction files 21%
Incentives to Use Cash
Despite the cost of debit and credit, no retailers in our study are offering either discounts or promotions for
free/discounted products if customers pay with cash.
Average Transaction Amount by Payment Type
With an average transaction size of $27.65, amounts vary widely by payment type as shown below:
CASH CHECK DEBIT CREDIT EBT WIC
$16.55 $63.21 $34.17 $37.15 $25.82 $22.31
Additionally, the number of weekly transactions and the amount of weekly sales also significantly impact the
transaction amount by payment type. In high-volume stores, transaction sizes are higher for all payment types
with the exception of cash.
High-volume store; Sales Low sales volume stores
Average transaction size All companies
>$250,000 salesE-Commerce
One-third of grocery companies currently offer some type of online
E-commerce presence among grocery retailers
ordering and over the next two years, another 8 percent expect to
enter the world of e-commerce. The remaining 59 percent do not
33%
currently have plans to take their grocery business online. Online
ordering
E-commerce can take a number of different forms. First, there
59% established
No planned
are some online-only grocers, such as MyWebGrocer and online 8%
ordering Planning online
Netgrocer, with a growing presence of online-only retailers in ordering in next
two years
niche food segments, such as gluten-free or organic. Next, there
are regional and national brick-and-mortar grocery chains, such
Forrester Research predicts that
as Giant, Publix, Hy-Vee and D’Agostino, offering online ordering
U.S. consumers will spend $327
in addition to their physical store presence. Lastly, we have
billion online in 2016 — accounting
nationwide mass merchants (online and brick-and-mortar), such
for 9 percent of total retail sales.
as Amazon and Walmart. Additionally, chains can opt for online
Computers, apparel, housewares and
ordering with or without home-delivery options.
books/music/videos are the largest
Survey respondents with online ordering in place report that only categories. Groceries comprise the
a fraction of their total company sales is generated through their fifth largest category.
website, at an average of 0.8 percent of total sales.
Online sales of groceries account for
The vast majority (88 percent) use third-party services to host less than 3 percent of total grocery
their online ordering site. industry revenue, which is estimated
at $680 billion. However, online
Accepted Online Payment Methods food sales are poised for growth
While all responding companies with online ordering accept VISA, with consumer adoption of online
MasterCard and Discover, the acceptance of other methods of purchasing growing annually and it
payment varies widely: is likely that these purchases will
soon start to affect trip frequency
Accepted for online and format shifting in the brick-
Payment method
grocery orders
and-mortar landscape. Forrester is
Discover 100%
predicting double-digit growth at
VISA 100%
12.8 percent, taking online sales of
MasterCard 100%
grocery-type items from $11.7 billion
Credit 89%
in 2011 to $13.2 billion in 2012.
American Express 89%
Gift cards 67%
Signature debit 33%
Prepaid credit 33%
PayPal 22%
PIN debit 11%
NGA and Balance Innovations © Page | 17Cash Operations
As the number three form of payment following credit and debit, cash continues to be important in the
grocery retailing industry. This is particularly true among stores catering to quick trips, smaller baskets
and convenience-type purchases. Running efficient cash operations can save significantly in reducing
shrink, improving accuracy, reducing labor costs and improving productivity. This chapter focuses on a
variety of benchmarks relative to cash operations to help retailers compare their practices against that of
industry peers.
Drawer/Till Practices
With an average of 10 checkout lanes per store, streamlined drawer or till practices go a long way in front-end
efficiency.
Opening Amount
Ranging from $75 to $900, the average opening drawer amount is $274 with a median of $200. This average
amount varies by store sales and transactions. As seen earlier, smaller stores in terms of sales and transactions
tend to handle more cash transactions. As a result, they typically start off with slightly greater amounts.
Average Average
Opening High sales Low sales
All companies transaction transaction
drawer $ volume stores volume stores
≤$20 ≥$35
Average $274 $244 $305 $244 $275
Median $200 $200 $225 $200 $275
The Role of the Cashier
Practices surrounding the role of the cashier in counting the drawers before they open or after they sign off
for their shifts vary widely. While a narrow majority of retailers (54 percent) have cashiers count drawers both
before they start and after they sign off, other systems range from no cashier involvement at all (29 percent)
to checking just before or after.
Do Cashiers....
Among the 71 percent of stores
where cashiers have some level
Count their drawers both 8%
before they open and after
of involvement in counting tills, they sign off. 9%
the vast majority has another Cashiers never count
layer of checks and balances their drawers.
built into the process. In 94
29% 54%
Count their drawers before
percent of the cases, someone
they open.
else in addition to the cashiers
counts the drawers as well. Count their drawers after
they sign off for their shift.
NGA and Balance Innovations © Page | 18This is often done by:
7 min
• Bookkeeper (18 percent) Average
• Front-end manager/supervisor (18 percent) 48%
• Office administrator/clerk (12 percent) YES
Track/benchmark
• Accounts receivable (6 percent) the number of 6 min
• Cash office manager (6 percent) minutes it takes Median
to count the drawer
52%
NO
Time Spent Counting Drawers
Retailers spend a fair amount of hours counting tills — especially with the vast majority of stores having both
the cashier and another person involved in the process. Yet, only 52 percent of companies say they track
the average number of minutes to count the cash. This share does not differ significantly across store sizes.
Among those that do track or benchmark the time, the average number of minutes allocated to counting the
cash is seven, with a median of six.
Pickups and Loans
On average, food retailing companies do 17 drawer pickups and loans per store, per day. As sales and
transactions tend to have a direct correlation to the number of checkouts in the store, the average number of
pickups and loans is highly related to store volume.
High sales Low sales
Pickups and All
volume volume
Loans companies
stores stores
Average 17 22 8
Median 18 23 7
NGA and Balance Innovations © Page | 19Cash Management at the Store Level
In a typical week, grocery chains process an average of four change orders per store, with a median of three.
This number was the same across high-volume and low-volume stores in terms of weekly sales.
The average daily cash deposit amount, however, is highly related to sales and transactions. While on average
grocery stores deposit just under $9,000 every day, high-volume stores (with weekly sales above $400,000)
average $12,360 per day.
Change Daily
Orders Cash
Deposit
Average: 4 per store, per week Average: $8,946.00
Median: 3 Median: $7,850.00
High-volume stores: 4 High-volume stores: $12,360.00
Low-volume stores: 4 Low-volume stores: $5,934.00
Safe Management
Company practices relative to counting the safe and
Frequency of counting the safe
maximum safe amounts allowed vary widely. While
the highest share (29 percent of stores) only counts
the safe in the morning when the store opens, others 29%
count the safe multiple times, whether at opening 21% Morning
and closing, three times a day or after every shift. After every
shift 4%
Often established by headquarters, these policies Night
appear to differ more across company size and store 21% 25%
Three times Morning and
hours, than store volume. Specifically, companies a day night
with 50 or more stores are more likely to do multiple
counts than one- or two-store operators.
Maximum Safe Amount Allowed
$27,021
Respondents are also quite divided in their practices Average
on the maximum allowable safe amount. Twelve
percent of respondents do not have set maximums $15,000
Median
at all and 14 percent of companies say the maximum 74%
Have set
amounts differ by store based on their individual maximums $38,395
Avg high volume
sales volume. Among respondents that do have a Maximum safe
amount allowed
12%
maximum safe amount policy in place, the average Don’t have a $21,335
per store
amount is $27,021, with a much lower median of policy at all Avg low volume
$15,000. This difference between the average and
14%
median reflects the enormous disparity in practices Differs by
store
and maximum amounts allowed among retailers.
NGA and Balance Innovations © Page | 20Armored Car Service
More than half of companies do not use armored car service pickup at all. Those that do, typically have pickups
scheduled between five and six days a week at an average cost of $23 per pickup.
5 days/wk
Average
Fee per pickup:
46%
• Average: $23 YES
• Median: $20 Armored car 6 days/wk
service? Median
54%
Reconciliation NO
Across food retailing companies, it takes an average of four bookkeeper hours to do a daily close, reconciliation
and deposit. The cited number of hours is slightly higher at companies operating fewer than 10 stores and lower
among regional chains. A possible explanation is the greater level of automation and technology integration
among these larger companies. All responding companies do daily reconciliations.
Reconciliation of Non-Integrated POS
Reconciliation of non-integrated POS transactions
Transactions
Manual entry into Point-of-sale transactions that are not integrated,
the store POS
14% such as Western Union, tent sales or bill pay, are
Entered into program
that feeds general most often manually entered into the store’s point-
ledger
52% of-sale system (52 percent). The second most
Spreadsheets
33% common way to reconcile non-integrated POS
transactions is by entering them into a program
that feeds the general ledger.
NGA and Balance Innovations © Page | 21Cash Operations
The most common way for stores to order cash is through personnel assigned to the in-store cash office. This
is the practice among 60 percent of companies. Another 20 percent have standing cash and change orders.
Practices surrounding ordering cash do differ significantly across respondents. Independent operators with
fewer than 10 stores are more likely to have standing cash orders (30 percent), whereas 87 percent of the
larger regional chains order cash through in-store cash office personnel.
Companies with Companies with
Ordering cash All companies
< 10 stores > 50 stores
Store cash office personnel 60% 50% 87%
Standing cash/change order 20% 30% 13%
Treasury or accounting personnel at HQ 12% 10% 0%
Other 8% 10% 0%
Offering Cash Back
Offering customers the ability to get cash back with purchases has grown to become a very common practice
among food retailers. Fully 84 percent of grocers offer cash back with purchases. Those that don’t, tend to be
independent grocers operating fewer than 10 stores. All regional chains, operating more than 50 stores, offer
cash back with purchase.
Reporting Stores’ Cash on Hand
Practices surrounding the reporting of cash on hand vary much more widely. While 44 percent of companies
use manual reports received from the store, 40 percent use the reports generated by the POS system.
Examples of ways companies report cash on hand mentioned under “other” include:
• Proprietary system for back office
• By using VeriBalance
• Combination of bank deposits and manual reports received from the store
Companies with Companies with
Ordering cash All companies
< 10 stores > 50 stores
Manual reports received from the store 44% 60% 12%
Reporting from the POS 40% 40% 75%
Bank deposits 4% 0% 13%
Other method 12% 0% 0%
NGA and Balance Innovations © Page | 22Do you have Over-Short Report
automated
over-short
60% Across company sizes, 60 percent of responding food retailing
reports? YES companies have automated over-short reports. This goes up to fully
If yes, 53% 100 percent among companies with more than 50 stores. An over/
to whom Loss Prevention short reading indicates the difference between the amount of cash
are they that was reported to the software during the end-of-day or drawer-
distributed? 13%
Safe audit
closing process and the amount the software thinks you should have
based on sales. A positive amount points at having more cash than you
33% should and a negative amount means having less.
Sr. Management
Most companies distribute these over-short reports to at least one
47% department, but often two or three. These most commonly are store
Internal audit
operations, loss prevention and internal audit.
80% Annual cashier over/shorts losses:
Store operations
• Average annual loss per store: $632
• The average loss among high-volume stores (weekly sales of
$400,000 or more): $900
Store Cash Audits
Practices regarding store cash audits vary widely. While 12 percent of companies (mostly small independent
operators) never conduct store cash audits, 20 percent do them weekly, 28 percent quarterly and 16 percent
as needed. Larger companies reported a higher frequency of audits.
Frequency of store cash audits All companies Nature of store cash audits
Daily 8%
Weekly 20%
Quarterly 28%
Twice a year 4% 33% 38%
Annually 12% Both Surprise
As needed 16%
Never 12%
29%
Scheduled
NGA and Balance Innovations © Page | 23Scheduled Versus Surprise
Among companies that do store cash audits with at least some regularity, 38 percent do surprise audits,
whereas 33 percent opt for a combination of surprise and scheduled.
Hours per Audit
Companies spend an average of 2.9 hours per audit, with a median of three.
High sales Low sales
All
Store cash audits volume volume
companies
stores stores
Scheduled 29% 33% 25%
Surprise 38% 35% 42%
Both 33% 32% 33%
Average hours per audit 2.8 2.7 3.0
Median hours per audit 3 2.0 3.5
NGA and Balance Innovations © Page | 24Checks
Checks are decreasing as a form of payment across all channels, including grocery. However, they remain
an important payment source, accounting for just below 10 percent of dollar sales. Additionally, checks
are an opportunity for food retailers to create traffic by offering services such as cashing payroll checks
and travelers’ checks. Check processing practices in the U.S. are changing rapidly, with the percentage
of checks cleared electronically having more than doubled in the past three years — reducing risk and
improving response time and accuracy.
Check Volume
According to the Check Imaging and the Check Conversion Process Study, consumers write 37 billion checks
each year, of which 13 billion are written by consumers at the point-of-sale to pay for purchases at retail
locations. While the number of checks per store can vary highly on factors such as weekly transactions, region,
local economy, local industry and neighborhood household income, the majority of grocery stores processes
upwards of 750 personal checks per store, per month. The number of WIC checks per store, per month
averages 258. According to the USDA, WIC participation has risen across states in recent years as a result of
the economic conditions. Participation rates by state can be found at http://www.fns.usda.gov/pd/26wifypart.
htm. As to payroll checks, 22 percent of companies do not accept those at all. Those that do, handle an
average of 94 payroll checks per store, per month. This translates into an average of 72 percent of checks
being ACH and 28 percent being WIC, payroll and other checks.
Personal checks WIC checks Payroll checks
Average number per store, per month 950 258 94
Median number per store, per month 780 213 97
Average check amount $75.00 $23.00 $257
Median check amount $69.00 $21.00 $215.00
Check Imaging and Encoding
Check Imaging Encode and
Among grocery retailers, 67 percent Manually Deposit
do not yet image checks. Twenty
percent image the checks in the cash 20% 39%
We image the checks We encode and
office and 13 percent do so in lane. in the cash office. manually deposit
checks.
13%
We image the checks 61%
in lane. We don’t encode and
manually deposit
checks.
67%
We don’t image
checks.
NGA and Balance Innovations © Page | 25Check Collection Services
Across company sizes, 48 percent of companies handle check collection in-house versus outsourcing this
task. Larger companies, in terms of the number of stores operated, are more likely to handle check collection
in house, at 57 percent.
Companies with Companies with
Check collection… All respondents
50 stores
…is done in house 48% 44% 57%
… is outsourced 52% 56% 43%
Check Clearance
Ranging from one to five days, checks take an average of three days to clear across companies and systems.
When regarding the average wait among companies that have either in-lane or back-office imaging, the average
for personal checks drops to two days. Among companies with back-office imaging, the average for WIC and
Travelers checks drops to two days (those cannot be processed in-lane).
Average wait for checks to be Companies with Returned check stats among
All respondents
settled with the bank check imaging all respondents
Personal checks 3 days 2 days
• Number of check returns
WIC checks 3 days 2 days processed per store, per
Payroll checks 3 days 3 days week: 1-2
Travelers checks 3 days 2 days • Annual bad check write-
off per company: $2,683
Returned Checks (average) and $951 (median)
• Collection percentage on bad
On a per store, per week basis, most companies say the number checks: 70%
of returned checks is minimal at an average of one to two a week. • Average retuned check fee
Stores with higher check volumes (greater than 780 a week) typically (per check): $22
reported processing an average of three returned checks. The average
per check fee on returned checks is $22, with a median of $25. This
amount is consistent across company sizes and regions.
Most companies are fairly successful in collecting on bad checks, with
an average and median success rate of 70 percent. Regardless, most
companies still have to write off an average of $2,683 per store in
bad (uncollectable) checks, with a median of $951. The amount varies
widely by company and number of checks received.
NGA and Balance Innovations © Page | 26Conclusions
• Customer preference has driven the increased usage of credit and debit. Electronic payments now make
up more than sixty percent of total sales, with a declining use of cash and checks. Food retailers and
their trade associations have spent much time and effort on reducing the cost of processing electronic
payments, and rightfully so. However, it is important to consider potential savings across payment options
for optimized payment processing.
• Grocery retailers are faced with quite a few cost components when handling payments, whether cash,
checks or plastic. The benchmarks in this report will help identify and quantify areas for more streamlined
operations and cost cutting when processing payments.
• Participating retailers often found it difficult to find all the data covered in this study. Either they did not
track the data or could not disaggregate it to the level of detail required. Gathering accurate data is the first
step in identifying and improving inefficient processes.
• In general, larger stores (and often larger companies) have higher transaction volumes for all payment
types and therefore are more cost efficient than smaller retailers. As a consequence, regional chains
spend a lower percentage of total revenue on payment processing than independent operators.
NGA and Balance Innovations © Page | 27Methodology
The data included in this report was compiled from a three-page questionnaire that was sent to the NGA
membership and additional grocery retailing and wholesaling companies between January and March, 2013.
Data entry, data cleaning, statistical validity testing, analysis and reporting were done by
Anne-Marie Roerink of 210 Analytics, LLC. Data outliers were checked and, if needed, removed from the
sample. Likewise, data for company sizes, sales, transactions, etc. were checked for accurate representation.
Due to rounding, percentages may not add to 100.00%. For any data analysis or methodology questions,
please contact Anne-Marie at aroerink@210analytics.com.
The study is based on 26 grocery retailing companies, representing more than 2,600 stores.
These include:
• One-store operators: 20 percent
• 2-10 store operators: 20 percent
• 11-30 store operators: 24 percent
• 30-125 store operators: 20 percent
• More than 126 stores: 16 percent
NGA and Balance Innovations © Page | 28You can also read
