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"is that extra 25 cents going to be more valuable than the goodwill and foot traffic generated by a combo that's stuck to its price point for nearly 35 years?"

"is that extra 25 cents going to be more valuable than the goodwill and foot traffic generated by a combo that's stuck to its price point for nearly 35 years?" Goodwill? Goodwill? Who thinks like that any more? If you know of any, tell me, I'm begging to shop there.

lotsofpulp 6y ago
Retailers earn 2% to 3% profit margins. How much goodwill can they afford?
- deleted 6y ago
  [deleted]
- tweetle_beetle 6y ago
  I've not had experience of anything like the scale of Costco before or in food, but what I know of retail is that margins are typically double the cost price. Where would such a low figure come from?
  - tweetle_beetle 6y ago
    Edit: phrased poorly. The profit margin is typically the same as the cost price at the till - this doesn't take into account deducting the cost of running the business, etc.
  - ksec 6y ago
    Not sure where the double the cost price coming from. Different Segment of Retail have different price structure. Double would be the norm for Electronics or anything that are not commodity. Margin tends to be around 30-40% depending on products. Once you deduct everything else they quickly come down to net >10% margin.
prepend 6y ago
Costco thinks that way. Used to be USAA. That’s about it as far as I can think.
staticautomatic 6y ago
Amica (mutual insurance company)
MarkMc 6y ago
Warren Buffett has become very rich in part because he appreciates the value of goodwill to a business while others ignore it. Here's a summary of what he's written on the topic: To a business, goodwill is an asset just as real as cash or vehicles. In fact it is often more valuable than fixed assets because it appreciates over time while the latter depreciates. Despite this, it doesn't appear on the traditional Profit and Loss statement so is overlooked by managers whose compensation is based on such an inadequate measure of profit.
junippor 6y ago
> I'm begging to shop there. Yes.... exactly....

lotsofpulp 6y ago

Retailers earn 2% to 3% profit margins. How much goodwill can they afford?

deleted 6y ago
[deleted]
tweetle_beetle 6y ago
I've not had experience of anything like the scale of Costco before or in food, but what I know of retail is that margins are typically double the cost price. Where would such a low figure come from?
- tweetle_beetle 6y ago
  Edit: phrased poorly. The profit margin is typically the same as the cost price at the till - this doesn't take into account deducting the cost of running the business, etc.
- ksec 6y ago
  Not sure where the double the cost price coming from. Different Segment of Retail have different price structure. Double would be the norm for Electronics or anything that are not commodity. Margin tends to be around 30-40% depending on products. Once you deduct everything else they quickly come down to net >10% margin.

prepend 6y ago

Costco thinks that way. Used to be USAA. That’s about it as far as I can think.

staticautomatic 6y ago

Amica (mutual insurance company)

MarkMc 6y ago

Warren Buffett has become very rich in part because he appreciates the value of goodwill to a business while others ignore it. Here's a summary of what he's written on the topic: To a business, goodwill is an asset just as real as cash or vehicles. In fact it is often more valuable than fixed assets because it appreciates over time while the latter depreciates. Despite this, it doesn't appear on the traditional Profit and Loss statement so is overlooked by managers whose compensation is based on such an inadequate measure of profit.

junippor 6y ago

> I'm begging to shop there. Yes.... exactly....