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The grocery industry generally has pretty low margins. Wal-Mart's profit margin is 2.39%. If you go into a grocery shop to grab lunch, spending $8 on 4 items,
by michaelt 3y ago
The grocery industry generally has pretty low margins. Wal-Mart's profit margin is 2.39%.
If you go into a grocery shop to grab lunch, spending $8 on 4 items, and they make 5 cents of profit per item? They need to run an extremely lean operation.
Or target price-insensitive customers, I suppose.
- fsckboy 3y ago>They need to run an extremely lean operation. they simply need to run a good ordering/inventory system. If they sell every item (on average) in each store every week, that's 2.39% return on the value of the inventory investment each week, or 52*.0239 or over 100% annual return on money they borrow for free because the store pays its grocery bills to suppliers in arrears, net 10 days, etc
- michaelt 3y agoWhat I mean is: If you're making 5 cents of profit per item, and your workers cost $10/hour then the difference between a profit and a loss is 18 employee seconds per item. Which is not much.