Our FEC economy, while some sectors have seen softening, has weathered the storm fairly well. With some 1,000 active FEC accounts you would think our Redemption Plus business is a fair barometer of how the FEC Industry is doing, and we continue to grow our business (one smile at a time). We are seeing many new customers as our unique, comprehensive approach (“beyond the merchandise”) to managing redemption is really being embraced in the marketplace. Apparently the economy has motivated FEC owners to look for a better way to manage costs, plus the right-pricing of pc and debit card technology fit right into our program.
For those of you who may be new to this space
Redemption Plus offers a series of tools which come with your merchandise purchase: the easiest, most comprehensive website ordering in the industry, the only true DPL, digital packing list, in the industry (we invented it), merchandise items bar coded by us with your custom ticket value. Through our Pinnacle division, we offer in house consulting on game room and attraction selection and operations. These tools are designed to save labor and make it easier to effectively manage sales, cost of sales, and inventory. So many redemption managers spend all of their time doing it the old way- looking at catalogues, trying to shave 1/10 of a cent of a two cent item, that they completely miss the big picture. Our system allows management to get right to the bottom line- by managing cost of sales.
In a downturn it is good management to review all expenses. However, it has to be done carefully as cost cutting by blunt instrument, without doing our homework, risks doing more harm then good. “Efficiency Analysis” leading to expense savings is a virtue; “Budget Cuts” too often starts a downward spiral. The Cost of Sales line is a good example. Some operators simply reduce inventory-order less-have less on display in the redemption center. But, remember, FEC’s are top line businesses. That is, the revenue line has the most to do with reaching an acceptable bottom line. Diminishing stock or displays will negatively effect sales. Many people believe a 20% cost on redemption sales is good value (I have success in the 15-18% range). If that’s so then every sales dollar lost by inadequate stock or displays takes with it 80 cents in gross profit.
No, we need to be more surgical in our quest for savings and look directly at the cost of sales line. After careful analysis of all of the factors: game mix, game payouts, ticket values, markup, and merchandise assortment, operators can then adjust effectively, reset the cost of sales target lower and deliver fast effect cost savings to the bottom line.
We can help you analyze this part of your business and “right size” your redemption costs. Give me a call at 913-563-4370 or email at
gmcauliffe@redemption-plus.com . We’ll be glad to help.
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