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Grocery store greedflation could be seen as collective producer discovery of demand curves, by dramatically spiking list prices and then slowly lowering them to

Grocery store greedflation could be seen as collective producer discovery of demand curves, by dramatically spiking list prices and then slowly lowering them to find a new equilibrium above the previous stable price. See grocery stores where 30% price increases in perishable goods lead to items sitting on the shelf until near expiry, then going "on sale" close to the original price. Over time, higher list prices are slowly reduced, in search of an optimal price to maximize revenue. This manipulation only works when there are no defectors in the pricing cartel, otherwise non-gouging producers happily accept new customers and market share that may never return to producers enamored with algorithmic discovery of price-vs-demand curves. What software is being used for revenue management of perishable food products? Are the algorithms similar to the software used to manage sales of perishable airline seats and "unbundling" of related benefits like seating and baggage? In a cyberpunk novel, consumers would wield OSS price discovery.

datadrivenangel 3y ago
People have built food price trackers to help monitor inflation. [0] 0: https://mastodon.gamedev.place/@badlogic/111071396799790275 https://mastodon.gamedev.place/@badlogic/111071396799790275
- walterbell 3y ago
  Thanks for that fantastic analysis of Austrian grocery stores exploring demand curves via both pricing and sizing. It should be possible to adapt the OSS code to North American grocery supply chains, https://github.com/badlogic/heissepreise https://github.com/badlogic/heissepreise
lotsofpulp 3y ago
> Grocery store greedflation could be seen as collective producer discovery of demand curves, by dramatically spiking list prices and then slowly lowering them to find a new equilibrium above the previous stable price. Yet the profit margins of the biggest grocery stores (Walmart/Kroger/Costco/Albertsons/etc) remain at 2%-3%, as they always have. So there is no “greed”, just higher expenses, or there is massive fraud in the US’s financial sector. Edit: to reply to below comment due to posting limit. Kraft profit margin (11%, which was ~10% 15 years ago): https://www.macrotrends.net/stocks/charts/KHC/kraft-heinz/profit-margins https://www.macrotrends.net/stocks/charts/KHC/kraft-heinz/pr... ADM (4.3%, which was ~3% for years before): https://www.macrotrends.net/stocks/charts/ADM/archer-daniels-midland/profit-margins https://www.macrotrends.net/stocks/charts/ADM/archer-daniels... Bunge (3.77%, not increased compared to history): https://www.macrotrends.net/stocks/charts/BG/bunge-global-sa/net-profit-margin https://www.macrotrends.net/stocks/charts/BG/bunge-global-sa... The point is, complaining about greed in food businesses when they are historically low profit margin businesses, and still are for the most part (search Tyson/pilgrim/Hormel for meat, and other categories for similar profit margin trends) does not make much sense to me. These are high labor, high liability, and low ability to scale businesses. It’s mostly their costs rising due to increased labor prices that causes price increases, and one you would expect with less and less poorer working age people in the world at the very bottom end. I would reserve the term “greed” for software businesses with infinite scalability that not only deliver 20%+ profit margins year after year, but growth on top of that.
- walterbell 3y ago
  > Grocery store greedflation Apologies for the imprecise statement, "Greedflation visible in grocery stores" would have been better. With the possible exception of grocery house brands, greedflated pricing was mostly set by grocery suppliers. As TFA noted, some grocery house brands have gained customers due to competitive pricing against branded suppliers. https://www.theguardian.com/business/2023/dec/07/greedflation-corporate-profiteering-boosted-global-prices-study https://www.theguardian.com/business/2023/dec/07/greedflatio... > food and commodities businesses Kraft Heinz, Archer-Daniels-Midland and Bunge all saw their profits far outpace inflation ... Four food companies – the listed suppliers Archer-Daniels-Midland and Bunge, plus the privately owned Cargill and Dreyfus – control an estimated 70%–90% of the world grain market. Edit: thanks for the 3 data points. Will look for further analysis, beyond the 1350 companies in the study linked above. My only counterpoint is that grocery house brands and profit margins have been relatively stable, while some branded competitors have spiked prices. In theory, all should be subject to comparable labor and energy cost changes. I have also seen spiked prices inching back downwards on some groceries, in series with varying discounts, implying demand testing.
- fuzzfactor 3y ago
  >reserve the term “greed” for software businesses with infinite scalability that not only deliver 20%+ profit margins year after year, but growth on top of that. Hey wait a minute, that's the kind of returns I like to do with a regular business, and I'm as non-greedy a non-consumer non-capitalist as you probably will find. I'm just a plain entrepreneur by nature, and a respectable return is always a worthwhile target. Software businesses can do way better than that, absolutely no greed should be necessary. And when greed does pop up (prevail?) it's so disgraceful. When you do the math over the long run, the amount of upside is drastically limited by the presence of greed.
- fuzzfactor 3y ago
  Not my downvote bacause I'm with you all the way that groceries have not had the margin to attract the greed bros very significantly. The cash-flow sharks will circle ominously, but seldom bite groceries when there are fat things like real estate and pure financial operations with a much sweeter underbelly.

datadrivenangel 3y ago

People have built food price trackers to help monitor inflation. [0] 0: https://mastodon.gamedev.place/@badlogic/111071396799790275 https://mastodon.gamedev.place/@badlogic/111071396799790275

walterbell 3y ago
Thanks for that fantastic analysis of Austrian grocery stores exploring demand curves via both pricing and sizing. It should be possible to adapt the OSS code to North American grocery supply chains, https://github.com/badlogic/heissepreise https://github.com/badlogic/heissepreise

lotsofpulp 3y ago

> Grocery store greedflation could be seen as collective producer discovery of demand curves, by dramatically spiking list prices and then slowly lowering them to find a new equilibrium above the previous stable price. Yet the profit margins of the biggest grocery stores (Walmart/Kroger/Costco/Albertsons/etc) remain at 2%-3%, as they always have. So there is no “greed”, just higher expenses, or there is massive fraud in the US’s financial sector. Edit: to reply to below comment due to posting limit. Kraft profit margin (11%, which was ~10% 15 years ago): https://www.macrotrends.net/stocks/charts/KHC/kraft-heinz/profit-margins https://www.macrotrends.net/stocks/charts/KHC/kraft-heinz/pr... ADM (4.3%, which was ~3% for years before): https://www.macrotrends.net/stocks/charts/ADM/archer-daniels-midland/profit-margins https://www.macrotrends.net/stocks/charts/ADM/archer-daniels... Bunge (3.77%, not increased compared to history): https://www.macrotrends.net/stocks/charts/BG/bunge-global-sa/net-profit-margin https://www.macrotrends.net/stocks/charts/BG/bunge-global-sa... The point is, complaining about greed in food businesses when they are historically low profit margin businesses, and still are for the most part (search Tyson/pilgrim/Hormel for meat, and other categories for similar profit margin trends) does not make much sense to me. These are high labor, high liability, and low ability to scale businesses. It’s mostly their costs rising due to increased labor prices that causes price increases, and one you would expect with less and less poorer working age people in the world at the very bottom end. I would reserve the term “greed” for software businesses with infinite scalability that not only deliver 20%+ profit margins year after year, but growth on top of that.

walterbell 3y ago
> Grocery store greedflation Apologies for the imprecise statement, "Greedflation visible in grocery stores" would have been better. With the possible exception of grocery house brands, greedflated pricing was mostly set by grocery suppliers. As TFA noted, some grocery house brands have gained customers due to competitive pricing against branded suppliers. https://www.theguardian.com/business/2023/dec/07/greedflation-corporate-profiteering-boosted-global-prices-study https://www.theguardian.com/business/2023/dec/07/greedflatio... > food and commodities businesses Kraft Heinz, Archer-Daniels-Midland and Bunge all saw their profits far outpace inflation ... Four food companies – the listed suppliers Archer-Daniels-Midland and Bunge, plus the privately owned Cargill and Dreyfus – control an estimated 70%–90% of the world grain market. Edit: thanks for the 3 data points. Will look for further analysis, beyond the 1350 companies in the study linked above. My only counterpoint is that grocery house brands and profit margins have been relatively stable, while some branded competitors have spiked prices. In theory, all should be subject to comparable labor and energy cost changes. I have also seen spiked prices inching back downwards on some groceries, in series with varying discounts, implying demand testing.
fuzzfactor 3y ago
>reserve the term “greed” for software businesses with infinite scalability that not only deliver 20%+ profit margins year after year, but growth on top of that. Hey wait a minute, that's the kind of returns I like to do with a regular business, and I'm as non-greedy a non-consumer non-capitalist as you probably will find. I'm just a plain entrepreneur by nature, and a respectable return is always a worthwhile target. Software businesses can do way better than that, absolutely no greed should be necessary. And when greed does pop up (prevail?) it's so disgraceful. When you do the math over the long run, the amount of upside is drastically limited by the presence of greed.
fuzzfactor 3y ago
Not my downvote bacause I'm with you all the way that groceries have not had the margin to attract the greed bros very significantly. The cash-flow sharks will circle ominously, but seldom bite groceries when there are fat things like real estate and pure financial operations with a much sweeter underbelly.