THE president of Giant Foods has spoken out against bands of thieves stealing groceries and warned that stores could close from the increase in retail crime. Retail theft has become a nationwide is…
That last one is more of a problem. Grocery margins are usually very slim. In most cases, a grocery store can’t reduce their prices by any significant amount and still remain profitable.
All grocery store margins are tight. Historically, grocery stores are not enormously profitable. Most of the price gouging that you’ve seen in food lately has been at the manufacturer level, not the retailer level. That’s why you don’t see a lot of price difference between substantially identical items at different stores in the same region; the same size box of Cheerios is going to have roughly identical pricing at both Piggly Wiggly and Kroger. You start seeing price differences when you go to an upscale store like Amazon’s Whole Foods (prices go up sharply), or when you’re buying in bulk at Costco or restaurant supply stores (such as Gordon Food Service). That’s also why you see self-checkouts everywhere now; once one company cuts their labor costs by introducing them, everyone has to, because otherwise they can’t remain competitive. …And then prices stabilize across the industry at roughly the same very slim margins. The company that cuts costs first sees a slight initial uptick in profit, and then competition forces them to cut their margins back again.
At the store level, there’s not a helluva lot that can be done. The obscene profits are farther upstream.
See this as an example. Grocery stores are making profit in volume, but not a lot of profit per item. Typical margins are 1-3% per item. That means that, if you cut off every single bit of profit that a grocery store makes, your $200 worth of groceries would cost you… $198. Maybe as little as $194. Saving you a whopping $2-6. But when you have hundreds of transactions each day, that 1-3% per transaction adds up to profitability for the store.
I was thinking of the supermarket duopoly we have here in New Zealand were the two major players own 85% of the total market. So it might not be comparible to this type of store? Margins here are around 20% so that’s coloured my read of this story. The obcene profits here are at the retailer and they pressure the wholesellers to reduce prices to where they can even exceed a 20% margin. We’re definitly in a “It would be a shame if your product couldn’t be found on our shelves” situation. They own everything from small country town stores to large city supermarkets.
…Ah. That’s super shitty. I’m in a pretty small town–about 5000 people–but we still have three large grocery stores (if you count the WalMart as a grocery store), and a small, higher-end health food store. There’s heavy competition, which keeps prices down, but also leads to wage stagnation for workers, and means that poor people get fucked by rising food prices.
Yeah, because hiring staff back and getting rid of self help checkouts is impossible?? How would they even go about that?
Or, and here’s a radical idea, drop your prices so people can actually afford to pay for the food??
That last one is more of a problem. Grocery margins are usually very slim. In most cases, a grocery store can’t reduce their prices by any significant amount and still remain profitable.
How is their bad business my problem. Other stores seem to he doing fine.
All grocery store margins are tight. Historically, grocery stores are not enormously profitable. Most of the price gouging that you’ve seen in food lately has been at the manufacturer level, not the retailer level. That’s why you don’t see a lot of price difference between substantially identical items at different stores in the same region; the same size box of Cheerios is going to have roughly identical pricing at both Piggly Wiggly and Kroger. You start seeing price differences when you go to an upscale store like Amazon’s Whole Foods (prices go up sharply), or when you’re buying in bulk at Costco or restaurant supply stores (such as Gordon Food Service). That’s also why you see self-checkouts everywhere now; once one company cuts their labor costs by introducing them, everyone has to, because otherwise they can’t remain competitive. …And then prices stabilize across the industry at roughly the same very slim margins. The company that cuts costs first sees a slight initial uptick in profit, and then competition forces them to cut their margins back again.
At the store level, there’s not a helluva lot that can be done. The obscene profits are farther upstream.
See this as an example. Grocery stores are making profit in volume, but not a lot of profit per item. Typical margins are 1-3% per item. That means that, if you cut off every single bit of profit that a grocery store makes, your $200 worth of groceries would cost you… $198. Maybe as little as $194. Saving you a whopping $2-6. But when you have hundreds of transactions each day, that 1-3% per transaction adds up to profitability for the store.
I was thinking of the supermarket duopoly we have here in New Zealand were the two major players own 85% of the total market. So it might not be comparible to this type of store? Margins here are around 20% so that’s coloured my read of this story. The obcene profits here are at the retailer and they pressure the wholesellers to reduce prices to where they can even exceed a 20% margin. We’re definitly in a “It would be a shame if your product couldn’t be found on our shelves” situation. They own everything from small country town stores to large city supermarkets.
…Ah. That’s super shitty. I’m in a pretty small town–about 5000 people–but we still have three large grocery stores (if you count the WalMart as a grocery store), and a small, higher-end health food store. There’s heavy competition, which keeps prices down, but also leads to wage stagnation for workers, and means that poor people get fucked by rising food prices.