The World's Unsexiest Business
adding a little sizzle to the convenience store industry
It's a tricky and contentious issue. More 'in your face' and definitely less 'thought provoking'. And sometimes it seems like all we want to do is cautiously prod it with the jagged stick of statistics. But with 42.7 million Americans (nearly 1 in every 12) receiving food stamps, it's not an issue we can merely turn a blind eye to.
Alternatively for some unwarranted harsh opinions, you can always turn to Twitter:
Pointing the finger at any one particular political party doesn't solve the problem.
The genesis of the issue? Too many different origin points.
So instead of focusing on the crisscrossing dimensions of a pro-active solution perhaps it can be tackled re-actively. But it's reform driven by economic and political policy versus social and psychology based ones. The latter is open to so much more interpretation and therefore can be more easily downplayed and manipulated with data mined statistics.
A good starting place is to consider the kind of assertions that are being made of low income consumers and EBT (Electronic Benefit Transfer) users:
Let's face it, there are no shortage of headwinds that this growing segment of our population has to face: scarcity of time, money, mental health deterioration, resources, and perhaps even a lack of their wealthier counterpart's compassion. While it may seem that the rich might not pay their fair share of taxes, the poorer have found ways to relatively evade theirs -- sometimes with the cooperation of their 'richer' employers.
In a recent round-table discussion with some local business owners, it was rather unsurprisingly revealed that employees were 'wage' tender gaming -- seeking to cap their 'taxable' check wages while requesting that any additional wages due to be paid 'under the table'. It's a practice that benefits both parties highlighting the huge disconnect between real world economics and government labor law derived ones. To be honest, in assessing its value (or even detraction), I'm not sure where the economist begins and the legislator ends. Or vice versa?
Let's throw a real example out there.
Suppose you're a hardworking couple that works respective full-time minimum wage jobs and you've also got a toddler to raise. But that toddler needs special medical attention that has resulted in some significant out of pocket spending because your combined income is just too high. A further examination of this situation conducted by The Urban Institute can be found here. One very key takeaway can be found below:
Now to be able to qualify for CalFresh assistance each member of a three member household (two adults and one child), each adult would need to limit their work week to 24 hours (24.55 for MediCal) .
Now you're stuck with the reality of only being able to work 3 8-hour shifts. Your employer needs you for a full work week and can be accommodating with scheduling and time off. But he/she refuses to engage in an 'under the table' compensation scheme. What to do?
Perhaps use the extra time to search for better deals so that paying top dollar for essentials is entirely avoided? A back of the envelope calculation yields savings to be at least 15-25% of current expenditure levels. Call it emotions, poor math calculation, or just behavioral conditioning, overpaying isn't all that uncommon for many household staple goods.
Then there are assertions that women pay more than men for equivalent goods (a la the pink tax).
Hustle your way out of it?
99 Side Hustle Business Ideas You Can Start Today
Exploit online and retail price differences
Having been possessed by the entrepreneurial ghost, those who are so inclined would have the ability to now engage in Brick and Mortar to Online Retailer Arbitrage (BAMORArb). Even Gary Vaynerchuk (yes here I go again with Gary Vee) came up with the #2017FlipChallenge which popularizes this unique form of arbitrage. And his preferred mode of spreading the word -- leveraging social media to highly engage potential budding 'hustlers' in the process.
Now let's say that this particular group doesn't feign much interest in this because the payoff just seems too small or maybe it's too much work. And that's not to preclude a situation unfolding where the remaining 15-16 hours (to fill up a 40 hour 'full time' week) being worked under the table.
This will end my rather brief discourse on labor economics and 'side hustling'.
*Though I will comprehensively discuss in my book (to be released later this year) how BAMORA has been used to surprisingly augment our bottom line.
Let's now get to the spending behavior of this particularly interesting segment.
We might have to start with the following question -- what came first? The marketing of low nutritional value goods, the preference for them, or does price reign supreme? According, to the New York Times article Giving the Poor Easy Access to Healthy Food Doesn’t Mean They’ll Buy It, it's a mixed bag of findings.
"The cost of food — and people’s habits of shopping and eating — appear to be much more powerful than just convenience."
Acting in self-preservation, retailers stock products for which their consumers purchase. And then to remedy the nutrition gap, government funded organizations come in by providing monetary incentives to eligible retailers to significantly reduce their setup and construction costs. Seems pretty reasonable? But just because you built it doesn't entirely mean that they'll come.
Another serious consideration is that the purchasing power of the food stamp program just isn't in line with the relatively higher price of the higher nutrition food it's intended to be used for. Therefore the perceived value of goods being purchased is too low and sidestepping any sort of price computations, this consumer tends to prefer and purchase goods that are cheaper on an absolute basis.
“They never link the neighborhood characteristics to actual individuals. Without that, all you have is speculation.”
In case you got lost in the sea of #fakenews and #potusdrama, legislation limiting the type of items that can be purchased at a convenience store using food stamps is being strongly considered.
Lawmakers demand Food Stamps be restricted from candy, soda and sugary snacks
According to a USDA report in the aforementioned article, "SNAP recipients spent more money — more than $1.9 billion total — on sweetened beverages, frozen prepared foods, desserts, high-fat dairy, and salty snacks than they did on fruits, vegetables, milk, bread, and crackers, which totaled nearly $1.4 billion. "
Perhaps the writing is on the wall. If a particular segment of convenience stores is highly levered to SNAP spending then there are a couple of solutions to mitigate the revenue decline:
Even worse just engage in no scanning whatsoever and the 'discretionary' ringing up of all products in the taxable / non-taxable buckets.
Who's going to crackdown on this practice? Government program imposed mandatory scan data submissions?
By the way, ON THE RECORD, I'm by no means an advocate of this cheater scheme.
One last question -- are all food stamp users truly 'low income'?
Well that beckons the question of food stamp abuse with the answer across many different research reports and articles being reported as "rare", "near non-existent", and even "scant."
This exception is worth reading -- Raid targets millionaire on food stamps