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You realize that grocery stores have some of the smallest margins, on average, of any business at around 2.2%? [1] What do you expect them to reduce that to?
by claytongulick 4y ago
You realize that grocery stores have some of the smallest margins, on average, of any business at around 2.2%? [1]
What do you expect them to reduce that to?
With margins that low, don't you think they are already very focused on operating with the absolute minimum number of employees they need?
A friend of mine managed a very busy grocery store for years. It's an extraordinarily difficult business.
Many grocery store chains treat their employees very well, they provide good salaries and training programs. It's one of the few businesses left where you can start out as a bagger and work your way up to senior manager, with all costs paid by the store.
Other than inventory cost, this is their highest cost.
Would you have them change it?
[1] https://thegrocerystoreguy.com/what-is-the-profit-margin-for-grocery-stores/ https://thegrocerystoreguy.com/what-is-the-profit-margin-for...
- adrianN 4y agoWithout knowing what fraction of their costs are wages you can't give a meaningful answer. If 100% if their costs are wages they obviously can't raise wages more than 2.2% without going bankrupt. If 1% of their costs are wages they can double them without meaningfully affecting their profit margins.
- claytongulick 4y agoLMGTFY: it's between 9-14% [1] https://www.ncr.com/blogs/retail/supermarkets-turn-to-technology-to-manage-grocery-costs https://www.ncr.com/blogs/retail/supermarkets-turn-to-techno...
- AstralStorm 4y agoWhich means they're exposed to any material costs a lot. So, when a company like BP or Shell raises fuel price by 33%, they're forced to match it or maybe try to get more things sourced locally, cut out middlemen - rather hard. Usually they'll raise the price a bit more further.