Hudson Group, a privately held retail corporation operates mainly Airport convenience stores under the brand Hudson News. You will find more than one in the same terminal, closer to most gates, and also one or more in the main terminal. Hudson News stores are very neatly arranged and well lit selling everything from books and magazines to snacks and bottled water. The stores have a open layout with things stacked along the walls. There is a center island with 2 clerks surrounded by every possible candy and gum.
When I stopped to purchase a pack of gum last week at a Hudson News store in an airport I noticed that the clerks were asking everyone, “Would you like some water with that?”. In the morning most travelers were stopping by for newspaper or a bag of snacks. All the same, even I was asked the same question for a pack of gum. It was the equivalent of “Do you want fries with that?”. Over the few minutes I was there not a single customer that that offer. The clerks had several pallets of Dasani water, stacked u to their hips. As I peeked inside I saw the label posted on the cash register monitor, “Did you suggest Dasani Water Today”. I walked into every store in that terminal and found the same sticker and heard the same questions.
Clearly there was some incentive for them and the store to make the marginal sale. They sold 20Oz bottles for the price of $1.59, which is same price in any non-airport convenience store. The wholesale price goes for $0.5 to $0.75 per bottle but big volume discounts point to a much lower price. Hudson News sold only Dasani brand (Coca-Cola’s brand) and hence must get a much better price. Conservatively every sale is bound to make a profit of at least $0.75, accounting for any other marginal cost for transporting and storing.
Even if each store sold just 10 additional bottles per day, it is $7.5 in pure profit per day per store. This may not sound much but with low margins and obsessive focus on same store performance generating an additional sale of $15.9 and a profit of $7.5 is not bad. Cumulatively, that is $3000 in profit from 400 stores per day.
Now, $3000 for just planting the idea in travellers mind unobtrusively and for a reasonable price that is not much different from a non-airport store, Hudson stands to generate $1 million a year in additional profit. A lucrative opportunity executed nicely. That said, this is not a cure-all or a scalable solution. A clerk can afford to ask just one question without turning off customers and slowing down the transactions. Once fully exploited, there is no room for growth unless Hudson can switch to a higher margin product.
Kudos to the Hudson group management.