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See also, grocery corporation CEOs bragging about price gouging under the cover of "inflation" during investor calls, https://pluralistic.net/2022/10/17/united-

See also, grocery corporation CEOs bragging about price gouging under the cover of "inflation" during investor calls, https://pluralistic.net/2022/10/17/united-states-vs-vons/#pricing-power https://pluralistic.net/2022/10/17/united-states-vs-vons/#pr... >As Kroger CEO told his shareholders: "a little bit of inflation is always good in our business" because it lets him raise prices and "customers don’t overly react." etc, etc.

sokoloff 4y ago
A little bit of stable inflation is good for almost every business. Massive inflation shocks are bad for lots of people and businesses.
- bombcar 4y ago
  And the CEO isn't wrong - customers are used to gas prices flailing all over the place, but they notice food price changes, and so things "build up" over time and when the dam finally breaks, it breaks hard. Arizona Iced Tea started at 99 cents in 1997 - today that should be $1.83 but it's still 99 cents. Same with Costco's hot dog and chicken (though they've done some noticeable changes on the hot dog). When the dam breaks, it's not going to go up 10%, it's going to skyrocket to try to make up for lost time.
  - lotsofpulp 4y ago
    Those are not good examples. One is sugar water with extremely high profit margins, and the other is likely sold as a loss leader or at most, at cost. Food prices have been changing for a long time, but only if you pay attention to quantity and ingredients. With gas prices, the unit quantity or ingredient cannot change, so the change is obvious. Same with things like milk and eggs and vegetables though, which do change often. With processed food, the seller has much more ability to maneuver around having to increase price.
    - bombcar 4y ago
      Yeah - my point was that once prices start going up noticeably, all the other processed food manufacturers will increase their prices, also (often with a "return to what the original size was" along with it).
    - ch4s3 4y ago
      [*edit] I probably shouldn't have weighed in on this.
      - lotsofpulp 4y ago
        Is this at the retail level? At the producer level, profit margins seem quite decent: https://www.investopedia.com/ask/answers/071015/what-profit-margin-usual-company-food-and-beverage-sector.asp https://www.investopedia.com/ask/answers/071015/what-profit-... Logically, if the same quantity of Arizona Ice Tea retails for the same price as it did 25 years ago, then someone in the supply chain is or was making huge profit margins, considering the increase in materials and transport costs.
        deleted 4y ago
        [deleted]
  - Firmwarrior 4y ago
    Adding onto this a little: I was shocked at how volatile some food prices are, and how much some have gone up recently https://www.fao.org/worldfoodsituation/foodpricesindex/en/ https://www.fao.org/worldfoodsituation/foodpricesindex/en/ Depending on how you set your endpoints, you can basically come up with any number for inflation you want, from 1.7% to 20+% I guess this is all well-understood and taken care of under the hood by processed food companies, though, since the Big Mac Index has pretty steadily held to an inflation level near the CPI
    - jacobr1 4y ago
      The big mac index tracks labor costs as much if not more-so than wholesale food prices.
      - lupire 4y ago
        Price of anything can be reduced to labor, energy, and scarcity as, you move up the supply chain.
  - datavirtue 4y ago
    It's because the consumer literally has to buy hundreds of things. Tinkering with a penny turns into a dollar real quick.
    - lupire 4y ago
      That's not how it works. It's percentage changes that are significant.
      - datavirtue 4y ago
        Every thing in my cart increases by a penny. It (the cart, my food) now costs $2 more. Easy math. Change that to percentages and amount increases, of course. They do play with pennies. I worked in a huge national restaurant chain as a teenager and went through numerous menu updates. They were always flipping nickels and pennies all over the place on the menu. As a kid I thought changing the menu prices by five cents was ridiculous. Apparently, that's how it works in this business with razor thin margins.
- adamsmith143 4y ago
  There's a reason why corporate profits are at all time highs. they're just pushing any inflation related costs and more directly to consumers and scraping even more profit off the top. This is actually just not even controversial, completely supported by data. https://fred.stlouisfed.org/series/CP https://fred.stlouisfed.org/series/CP
  - themitigating 4y ago
    I can't believe you're being downvoted
  - hellojesus 4y ago
    That may be the case, but that should allow a new competitor to come in and offer lower priced goods.
    - metadat 4y ago
      Yeah, starting a new local grocer or even national grocery chain is pretty easy, right? Why don't you lead the charge.
      - hellojesus 4y ago
        Because I have no incentive to do so? I could, certainly, but until this deal proves rotten there is no impetus for action.
  - coldcode 4y ago
    If they were at all time highs the stock market would not be done so much.
    - fzeroracer 4y ago
      The stock market hasn't been connected to reality for years. Companies which produce nothing and are deep in debt have high stock value purely on basis of speculation. Most companies that report layoffs, tough times etc also report record levels of profit because it's not enough to be profitable, you have to go well above and beyond profit. You have to squeeze out everything even at the cost of short term stability.
collegeburner 4y ago
absolutely how "price gouging" has gone from meaning "charging $100 for a case of water during a hurricane" to "adding a 15% markup to some groceries".
- geraldyo 4y ago
  Both are examples of price gouging... ?
  - happyopossum 4y ago
    No, price gouging is actually a thing which means a thing - it's not a term you can just apply to whatever you want. Most states define it as charging inflated prices during a crisis or emergency, not simply raising prices beyond what geraldyo thinks is reasonable.
    - replygirl 4y ago
      If some term has different meanings in different legal contexts, and you believe that having a meaning in a legal context precludes having a distinct colloquial meaning, how can you tell GP they're using the wrong meaning before you've asked where they're posting from? Wikipedia: "Price gouging occurs when a seller increases the prices of goods, services, or commodities to a level much higher than is considered reasonable or fair."
      - collegeburner 4y ago
        it never had that meaning. it's a concerted effort by democrat politicians and media: they say "price gouging" because that's something most people agree is wrong when it's actually normal economic behavior in response to both parties' really stupid economic policies. they're doing this because they want more control of pricing and that's how they're going to lie their way into it and spread disinformation about what's happening. edit: updating with proof, Texas state definition is "selling or leasing fuel, food, medicine, or another necessity at an exorbitant or excess price, or demanding an exorbitant or excessive price in connection with the sale or lease of fuel, food, medicine or another necessity."
PragmaticPulp 4y ago
To put this in context: Grocery starts famously have razor-thin margins because the business is so competitive. Kroger's most recent reported net profit margin was 1.7% with gross margins (e.g. before company expenses) in the 22% range. Compare that to the SaaS companies, where many of us collect our paychecks, that can have gross margins in the 60-90% range. If you want to call companies out for price gouging and excessive profit margins, taking Kroger to task for a 1.7% net margin seems kind of silly. Especially when most of us engineers are collecting paychecks from companies with far, far higher margins than that.
- dan_quixote 4y ago
  There's nothing wrong with a healthy profit margin, per se. The potential problem here is that we have a de facto monopoly in many regions which controls access to FOOD.
  - noasaservice 4y ago
    If it gets too bad, that's how you end up with riots, local politicians dead, buildings torched, etc. Food riots are not something you fuck with.... If history has anything to say about that. I don't think we've seen that scope here in the US... Yet. But given the number of guns, "it's a when, not an if" if the politicians allow extreme food scarcity to happen in a wide area.
    - themitigating 4y ago
      Politicians allow? Not the business? The calls for government regulation by the same gun toteing people who constantly complain about big government is so confusing.
    - datavirtue 4y ago
      My senical take on food stamps has been one of politicians feeding the poor to prevent reality. In the US you are talking about 40+MM people who cannot afford to feed themselves. If half of them missed a few meals all of our other problems would disappear under the ensuing sea of shit.

sokoloff 4y ago

A little bit of stable inflation is good for almost every business. Massive inflation shocks are bad for lots of people and businesses.

bombcar 4y ago
And the CEO isn't wrong - customers are used to gas prices flailing all over the place, but they notice food price changes, and so things "build up" over time and when the dam finally breaks, it breaks hard. Arizona Iced Tea started at 99 cents in 1997 - today that should be $1.83 but it's still 99 cents. Same with Costco's hot dog and chicken (though they've done some noticeable changes on the hot dog). When the dam breaks, it's not going to go up 10%, it's going to skyrocket to try to make up for lost time.
- lotsofpulp 4y ago
  Those are not good examples. One is sugar water with extremely high profit margins, and the other is likely sold as a loss leader or at most, at cost. Food prices have been changing for a long time, but only if you pay attention to quantity and ingredients. With gas prices, the unit quantity or ingredient cannot change, so the change is obvious. Same with things like milk and eggs and vegetables though, which do change often. With processed food, the seller has much more ability to maneuver around having to increase price.
  - bombcar 4y ago
    Yeah - my point was that once prices start going up noticeably, all the other processed food manufacturers will increase their prices, also (often with a "return to what the original size was" along with it).
  - ch4s3 4y ago
    [*edit] I probably shouldn't have weighed in on this.
    - lotsofpulp 4y ago
      Is this at the retail level? At the producer level, profit margins seem quite decent: https://www.investopedia.com/ask/answers/071015/what-profit-margin-usual-company-food-and-beverage-sector.asp https://www.investopedia.com/ask/answers/071015/what-profit-... Logically, if the same quantity of Arizona Ice Tea retails for the same price as it did 25 years ago, then someone in the supply chain is or was making huge profit margins, considering the increase in materials and transport costs.
      - deleted 4y ago
        [deleted]
- Firmwarrior 4y ago
  Adding onto this a little: I was shocked at how volatile some food prices are, and how much some have gone up recently https://www.fao.org/worldfoodsituation/foodpricesindex/en/ https://www.fao.org/worldfoodsituation/foodpricesindex/en/ Depending on how you set your endpoints, you can basically come up with any number for inflation you want, from 1.7% to 20+% I guess this is all well-understood and taken care of under the hood by processed food companies, though, since the Big Mac Index has pretty steadily held to an inflation level near the CPI
  - jacobr1 4y ago
    The big mac index tracks labor costs as much if not more-so than wholesale food prices.
    - lupire 4y ago
      Price of anything can be reduced to labor, energy, and scarcity as, you move up the supply chain.
- datavirtue 4y ago
  It's because the consumer literally has to buy hundreds of things. Tinkering with a penny turns into a dollar real quick.
  - lupire 4y ago
    That's not how it works. It's percentage changes that are significant.
    - datavirtue 4y ago
      Every thing in my cart increases by a penny. It (the cart, my food) now costs $2 more. Easy math. Change that to percentages and amount increases, of course. They do play with pennies. I worked in a huge national restaurant chain as a teenager and went through numerous menu updates. They were always flipping nickels and pennies all over the place on the menu. As a kid I thought changing the menu prices by five cents was ridiculous. Apparently, that's how it works in this business with razor thin margins.
adamsmith143 4y ago
There's a reason why corporate profits are at all time highs. they're just pushing any inflation related costs and more directly to consumers and scraping even more profit off the top. This is actually just not even controversial, completely supported by data. https://fred.stlouisfed.org/series/CP https://fred.stlouisfed.org/series/CP
- themitigating 4y ago
  I can't believe you're being downvoted
- hellojesus 4y ago
  That may be the case, but that should allow a new competitor to come in and offer lower priced goods.
  - metadat 4y ago
    Yeah, starting a new local grocer or even national grocery chain is pretty easy, right? Why don't you lead the charge.
    - hellojesus 4y ago
      Because I have no incentive to do so? I could, certainly, but until this deal proves rotten there is no impetus for action.
- coldcode 4y ago
  If they were at all time highs the stock market would not be done so much.
  - fzeroracer 4y ago
    The stock market hasn't been connected to reality for years. Companies which produce nothing and are deep in debt have high stock value purely on basis of speculation. Most companies that report layoffs, tough times etc also report record levels of profit because it's not enough to be profitable, you have to go well above and beyond profit. You have to squeeze out everything even at the cost of short term stability.

collegeburner 4y ago

absolutely how "price gouging" has gone from meaning "charging $100 for a case of water during a hurricane" to "adding a 15% markup to some groceries".

geraldyo 4y ago
Both are examples of price gouging... ?
- happyopossum 4y ago
  No, price gouging is actually a thing which means a thing - it's not a term you can just apply to whatever you want. Most states define it as charging inflated prices during a crisis or emergency, not simply raising prices beyond what geraldyo thinks is reasonable.
  - replygirl 4y ago
    If some term has different meanings in different legal contexts, and you believe that having a meaning in a legal context precludes having a distinct colloquial meaning, how can you tell GP they're using the wrong meaning before you've asked where they're posting from? Wikipedia: "Price gouging occurs when a seller increases the prices of goods, services, or commodities to a level much higher than is considered reasonable or fair."
    - collegeburner 4y ago
      it never had that meaning. it's a concerted effort by democrat politicians and media: they say "price gouging" because that's something most people agree is wrong when it's actually normal economic behavior in response to both parties' really stupid economic policies. they're doing this because they want more control of pricing and that's how they're going to lie their way into it and spread disinformation about what's happening. edit: updating with proof, Texas state definition is "selling or leasing fuel, food, medicine, or another necessity at an exorbitant or excess price, or demanding an exorbitant or excessive price in connection with the sale or lease of fuel, food, medicine or another necessity."

PragmaticPulp 4y ago

To put this in context: Grocery starts famously have razor-thin margins because the business is so competitive. Kroger's most recent reported net profit margin was 1.7% with gross margins (e.g. before company expenses) in the 22% range. Compare that to the SaaS companies, where many of us collect our paychecks, that can have gross margins in the 60-90% range. If you want to call companies out for price gouging and excessive profit margins, taking Kroger to task for a 1.7% net margin seems kind of silly. Especially when most of us engineers are collecting paychecks from companies with far, far higher margins than that.

dan_quixote 4y ago
There's nothing wrong with a healthy profit margin, per se. The potential problem here is that we have a de facto monopoly in many regions which controls access to FOOD.
- noasaservice 4y ago
  If it gets too bad, that's how you end up with riots, local politicians dead, buildings torched, etc. Food riots are not something you fuck with.... If history has anything to say about that. I don't think we've seen that scope here in the US... Yet. But given the number of guns, "it's a when, not an if" if the politicians allow extreme food scarcity to happen in a wide area.
  - themitigating 4y ago
    Politicians allow? Not the business? The calls for government regulation by the same gun toteing people who constantly complain about big government is so confusing.
  - datavirtue 4y ago
    My senical take on food stamps has been one of politicians feeding the poor to prevent reality. In the US you are talking about 40+MM people who cannot afford to feed themselves. If half of them missed a few meals all of our other problems would disappear under the ensuing sea of shit.