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All around the "developed world", the shop/retailer/supermarket/distribution part of the price of a product is around 50%. Whatever the product or its price. I

All around the "developed world", the shop/retailer/supermarket/distribution part of the price of a product is around 50%. Whatever the product or its price. I'm wondering if part of our issue with crazy inflated prices despite low margin for industry and manufacturing actors is not because of this abused margin for retailers. That have also a huge power as it is difficult to negotiate when you depend on your product to be buyable in the market. To me, that explain a big difference with asian world, where you notice, even for asian shops in western countries that prices are still quite cheap. Something parallel to that that I have noticed is that decades ago we were used to buy from small individual shops, but now a few retailers and chains have almost a monopoly on the market. I see the same pattern for movie theaters. They used to be independent mostly with affordable prices. Now 2 or 3 big chains bought them all, and it is very rare to still encounter independent movie theater. And once they got a good monopoly, ticket prices skyrocketed to insane levels.

netsharc 2y ago
Isn't what you're describing the effect of hedge funds moving into everything in order to "maximize returns"?
bryanlarsen 2y ago
> retailer part of the price of a product is around 50% Not according to the article. The retail price is $100 for a shoe they buy from the manufacturer for $50, but $24 of that $100 is "discounts". Therefore the average price sold at is $76, making the retail part of the price 1/3.
potato3732842 2y ago
While retail gross margins are not atypically on the order of 100% (less for more expensive goods, much more for cheaper ones) actual net margins are typically single digits. It costs money to retail goods.
DoneWithAllThat 2y ago
You’re essentially just claiming price gouging without saying as much because otherwise the economies of scale would not exist (which anyone with any knowledge of how the economy works knows does in fact exist). “Smaller number of larger players with greater buying leverage as well as lower marginal costs leads to higher prices for consumers” is just using a lot of words to say “evil corporations are price gouging”, which is not true.
vel0city 2y ago
> I see the same pattern for movie theaters. They used to be independent mostly with affordable prices. Movie theaters used to be extremely integrated with the movie studios. You had to go to a Paramount movie theater to see a Paramount movie. Antitrust laws broke that up until just recently Sony bought Alamo Drafthouse. But that said, there's still a lot of different brands of movie theaters around me. On top of the normal Cinemark and AMC there's also Alamo Drafthouse, Studio Movie Grill, B&B, Angelika, and several other single-location theaters.
toast0 2y ago
If you look at the retailer margin on an individual product, it looks pretty big. But if you look at their overall financial report, their overall margins aren't anywhere close to that. There's a lot of cost to running a retailer. If it was so easy to avoid the costs and the margins, you'd see more brands going direct to consumer exclusively, but most brands do a little direct to consumer and most of their sales through retailers. Movie theater economics basically suck and have gotten worse over time. The projectors are very expensive, the pricing to show a film is bad, so ticket and consession prices go up and people stop showing up. Big chains have more negotiating power for film terms and equipment, which can help them survive. Sometimes the independents band together for group purchases, but I think that doesn't always happen.
pjc50 2y ago
A lot of that retailer margin goes into (a) wages, i.e. the jobs that everyone is supposedly trying to create, and (b) rent.
- Gothmog69 2y ago
  I think part of the bet of tariffs is that people will be less likely to go to physical stores moving forard anyways
  - themaninthedark 2y ago
    Things have been moving in that direction since at least 2008: https://en.wikipedia.org/wiki/Retail_apocalypse https://en.wikipedia.org/wiki/Retail_apocalypse I would argue earlier as malls stopped being built by 2007.... https://en.wikipedia.org/wiki/Dead_mall https://en.wikipedia.org/wiki/Dead_mall

netsharc 2y ago

Isn't what you're describing the effect of hedge funds moving into everything in order to "maximize returns"?

bryanlarsen 2y ago

> retailer part of the price of a product is around 50% Not according to the article. The retail price is $100 for a shoe they buy from the manufacturer for $50, but $24 of that $100 is "discounts". Therefore the average price sold at is $76, making the retail part of the price 1/3.

potato3732842 2y ago

While retail gross margins are not atypically on the order of 100% (less for more expensive goods, much more for cheaper ones) actual net margins are typically single digits. It costs money to retail goods.

DoneWithAllThat 2y ago

You’re essentially just claiming price gouging without saying as much because otherwise the economies of scale would not exist (which anyone with any knowledge of how the economy works knows does in fact exist). “Smaller number of larger players with greater buying leverage as well as lower marginal costs leads to higher prices for consumers” is just using a lot of words to say “evil corporations are price gouging”, which is not true.

vel0city 2y ago

> I see the same pattern for movie theaters. They used to be independent mostly with affordable prices. Movie theaters used to be extremely integrated with the movie studios. You had to go to a Paramount movie theater to see a Paramount movie. Antitrust laws broke that up until just recently Sony bought Alamo Drafthouse. But that said, there's still a lot of different brands of movie theaters around me. On top of the normal Cinemark and AMC there's also Alamo Drafthouse, Studio Movie Grill, B&B, Angelika, and several other single-location theaters.

toast0 2y ago

If you look at the retailer margin on an individual product, it looks pretty big. But if you look at their overall financial report, their overall margins aren't anywhere close to that. There's a lot of cost to running a retailer. If it was so easy to avoid the costs and the margins, you'd see more brands going direct to consumer exclusively, but most brands do a little direct to consumer and most of their sales through retailers. Movie theater economics basically suck and have gotten worse over time. The projectors are very expensive, the pricing to show a film is bad, so ticket and consession prices go up and people stop showing up. Big chains have more negotiating power for film terms and equipment, which can help them survive. Sometimes the independents band together for group purchases, but I think that doesn't always happen.

pjc50 2y ago

A lot of that retailer margin goes into (a) wages, i.e. the jobs that everyone is supposedly trying to create, and (b) rent.

Gothmog69 2y ago
I think part of the bet of tariffs is that people will be less likely to go to physical stores moving forard anyways
- themaninthedark 2y ago
  Things have been moving in that direction since at least 2008: https://en.wikipedia.org/wiki/Retail_apocalypse https://en.wikipedia.org/wiki/Retail_apocalypse I would argue earlier as malls stopped being built by 2007.... https://en.wikipedia.org/wiki/Dead_mall https://en.wikipedia.org/wiki/Dead_mall