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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

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.
  - polynomial 4y ago
    Correct. It matters less how healthy/nutritious the food actually is, full bellies tend to keep revolutions at bay.
    - noasaservice 4y ago
      Yep. The Romans figured it out over 2000 years ago. panem et circusensus (bread and circuses)
- hellojesus 4y ago
  Is there a way in which the monopoly is causing food to be denied to individuals? The way I see it is that any food desert either exists because it is not profitable or because nobody has taken the initiative to offer a profitable service. Obviously I could be wrong, but I have a hard time seeing how a megacorp is denying access to food.
88913527 4y ago
The socioeconomic impact of a grocery store is far more important than anything happening in the SaaS world. Towns live and die by grocery stores-- food deserts as they're known in areas that go without. It's fair to be critical of a sector with tighter margins because food is rather low on Maslow's hierarchy of needs. SaaS is expendable, food isn't.
- dnissley 4y ago
  > Towns live and die by grocery stores Do they? Or are things like food deserts transitive symptoms of deeper problems? E.g. that the surrounding area is poor and getting poorer. If so, no amount of legislation will change that
  - daotoad 4y ago
    > no amount of legislation will change that Programs like SNAP, the earned income tax credit, subsidized child-care, and refundable tax credits for children have an immediate impact. Legislation could also provide a universal basic income. If that's too pink a set of approaches to reduce the impact of poverty for you, governments can also subsidize development of new housing and invest in infrastructure upgrades that draw folks with higher incomes into a community. This works best if you are in a metropolitan area. In rural communities, it's not uncommon to pour great sums of money into courting large employers, giving them land or tax free status for extended periods. Hell, if your goal is just to get a grocery store, pour on enough subsidies and someone will show up to collect that money.
    - dnissley 4y ago
      To clarify: "no amount of legislation of grocery stores / the grocery industry"
      - jessaustin 4y ago
        The point of TFA is that this is one of the many mergers that should be rejected by regulators.
themitigating 4y ago
Low margins on food is a positive thing though.
- jessaustin 4y ago
  The margins on food aren't actually low; they've just been captured by Smithfield, Chiquita, Tyson, JBS, Cargill, Archer Daniels Midland, etc. Farmers certainly aren't seeing any margins!
spaetzleesser 4y ago
You can rescue your profit margin by paying high salaries to executives and have a ton of administrative overhead. That’s how health insurance works. The profit margin says nothing about how efficient the company is.
elil17 4y ago
Why should a company that provides no differentiated value have much of net margin (after paying for the cost of capital, in the form of debt payments which are included in company expenses)? Kroger et. al provide no unique value - they don't have any intellectual property, they have almost zero human capital because they treat their workers terribly and have low retention. They do some stuff with their private labels but that's really it. What grocery stores doing that commands more than a 1 or 2% margin on a huge segment of the economy? If they're earning more than that it is probably and indication that they are ripping off the consumer, ripping off the worker, or both.
- PragmaticPulp 4y ago
  > What grocery stores doing that commands more than a 1 or 2% margin on a huge segment of the economy? If they're earning more than that it is probably and indication that they are ripping off the consumer, ripping off the worker, or both. They are not earning more than that. Kroger's net margins were 1.7%. That was the entire point of my post.
d23 4y ago
> Especially when most of us engineers are collecting paychecks from companies with far, far higher margins than that. Ah yes, it's important to remember we should only care about ourselves.

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.
- polynomial 4y ago
  Correct. It matters less how healthy/nutritious the food actually is, full bellies tend to keep revolutions at bay.
  - noasaservice 4y ago
    Yep. The Romans figured it out over 2000 years ago. panem et circusensus (bread and circuses)
hellojesus 4y ago
Is there a way in which the monopoly is causing food to be denied to individuals? The way I see it is that any food desert either exists because it is not profitable or because nobody has taken the initiative to offer a profitable service. Obviously I could be wrong, but I have a hard time seeing how a megacorp is denying access to food.

88913527 4y ago

The socioeconomic impact of a grocery store is far more important than anything happening in the SaaS world. Towns live and die by grocery stores-- food deserts as they're known in areas that go without. It's fair to be critical of a sector with tighter margins because food is rather low on Maslow's hierarchy of needs. SaaS is expendable, food isn't.

dnissley 4y ago
> Towns live and die by grocery stores Do they? Or are things like food deserts transitive symptoms of deeper problems? E.g. that the surrounding area is poor and getting poorer. If so, no amount of legislation will change that
- daotoad 4y ago
  > no amount of legislation will change that Programs like SNAP, the earned income tax credit, subsidized child-care, and refundable tax credits for children have an immediate impact. Legislation could also provide a universal basic income. If that's too pink a set of approaches to reduce the impact of poverty for you, governments can also subsidize development of new housing and invest in infrastructure upgrades that draw folks with higher incomes into a community. This works best if you are in a metropolitan area. In rural communities, it's not uncommon to pour great sums of money into courting large employers, giving them land or tax free status for extended periods. Hell, if your goal is just to get a grocery store, pour on enough subsidies and someone will show up to collect that money.
  - dnissley 4y ago
    To clarify: "no amount of legislation of grocery stores / the grocery industry"
    - jessaustin 4y ago
      The point of TFA is that this is one of the many mergers that should be rejected by regulators.

themitigating 4y ago

Low margins on food is a positive thing though.

jessaustin 4y ago
The margins on food aren't actually low; they've just been captured by Smithfield, Chiquita, Tyson, JBS, Cargill, Archer Daniels Midland, etc. Farmers certainly aren't seeing any margins!

spaetzleesser 4y ago

You can rescue your profit margin by paying high salaries to executives and have a ton of administrative overhead. That’s how health insurance works. The profit margin says nothing about how efficient the company is.

elil17 4y ago

Why should a company that provides no differentiated value have much of net margin (after paying for the cost of capital, in the form of debt payments which are included in company expenses)? Kroger et. al provide no unique value - they don't have any intellectual property, they have almost zero human capital because they treat their workers terribly and have low retention. They do some stuff with their private labels but that's really it. What grocery stores doing that commands more than a 1 or 2% margin on a huge segment of the economy? If they're earning more than that it is probably and indication that they are ripping off the consumer, ripping off the worker, or both.

PragmaticPulp 4y ago
> What grocery stores doing that commands more than a 1 or 2% margin on a huge segment of the economy? If they're earning more than that it is probably and indication that they are ripping off the consumer, ripping off the worker, or both. They are not earning more than that. Kroger's net margins were 1.7%. That was the entire point of my post.

d23 4y ago

> Especially when most of us engineers are collecting paychecks from companies with far, far higher margins than that. Ah yes, it's important to remember we should only care about ourselves.