4 ms·

Every retail business has a “priority” of preventing theft. When profit margins are 2%, it doesn’t take much theft to put the business in the red.

Zigurd 10mo ago
Turnover dominates margins as a factor in physical retail profitability.
vlovich123 10mo ago
a) that puts an upper cap on how much it makes sense to spend on theft prevention (notably target does not indicate how much money it spends on such activities) B) such activities can reduce revenues in the first place. For example I don’t even bother going to retailers because they have so many obstacles with locked cabinets that online shopping is just a smoother experience.
hnlmorg 10mo ago
The markup is around 30% or higher on each item (or at least that was the case back when I last studied business) I get there are overheads but that’s spread across all products and supermarkets have a lot of products. So you’d still have to have a lot of theft in a supermarket before you get close to a dent in those 2% margins. Edit: as an aside, this is also why high value items such as alcohol are usually at the back of the store. It’s easier to identify and catch someone stealing if they’ve attempted to conceal a product for the entirely length of the shop.
- mikkupikku 10mo ago
  [flagged]
  - hnlmorg 10mo ago
    That’s not even remotely what I was saying. > Please respond to the strongest plausible interpretation of what someone says, not a weaker one that's easier to criticize. Assume good faith. https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html ——— My point is that shop lifting is small scale compared to legal sales. So for a supermarket to make a loss from shoplifting, they’d either have to see a significant jump in items stolen. This doesn’t mean that I condone theft; it just means I’ve ran the operating costs and margins for running retail stores and thought I’d share that insight.
  - deleted 10mo ago
    [deleted]
  - cogman10 10mo ago
    That wasn't what was said. Businesses price in shrinkage. The more theft occurs, the more employees they hire and the higher they mark up goods. There's a difference between having a 2% margin and having a 30% markup. Margin includes things like employee salaries, spoilage, theft. That's why buying goods in a remote location will often carry a high price tag. The store selling that produce needs to account for these things in order to stay afloat. So even though they are selling something for $10 that you can get in a city for $5 that doesn't mean they aren't making the same 2% margin.
  - tomhow 10mo ago
    It's not OK on HN to use quotation marks to falsely attribute a quote or position to another user. Please don't do this again here, and please make an effort to observe the guidelines, which start with being kind and conversing curiously. https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html
- etchalon 10mo ago
  You understand that that 30% "markup" has to cover literally everything involved in running the store, right? The building, lights, shelves, labor, website, marketing, HVAC, etc etc etc A 30% markup spread across 1 product or 3000000 products is still a 30% markup.
  - cogman10 10mo ago
    Yes, and you realize "theft" is a part of everything. I don't think the comment you responded to was arguing that theft was moral or companies were being greedy. Rather, just that 30% markup is typical and it takes a fair bit of theft before that starts closing the gaps on the margins.
    - etchalon 10mo ago
      Then I think the parent comment lacks an understanding of the difference between gross and net margins.
      - cogman10 10mo ago
        That's an uncharitable reading of their comment.
        etchalon 10mo ago
        It's the only reasonable reading if someone is dismissing 2% loss due to theft for a retailer.
        hnlmorg 10mo ago
        I wasn’t dismissing theft and supermarkets do not have 2% of their stock lost through theft (if 1 in 50 items were already stolen then that supermarket is dysfunctional at preventing theft). Thus what you’re describing simply has no basis in reality. Furthermore, you’ve completely misread every single comment in this thread and taken the least charitable conclusion from them.
nothercastle 10mo ago
Most because it’s hard to quantify how much money they don’t earn because we refuse to shop there due to everything being locked up

Zigurd 10mo ago

Turnover dominates margins as a factor in physical retail profitability.

vlovich123 10mo ago

a) that puts an upper cap on how much it makes sense to spend on theft prevention (notably target does not indicate how much money it spends on such activities) B) such activities can reduce revenues in the first place. For example I don’t even bother going to retailers because they have so many obstacles with locked cabinets that online shopping is just a smoother experience.

hnlmorg 10mo ago

The markup is around 30% or higher on each item (or at least that was the case back when I last studied business) I get there are overheads but that’s spread across all products and supermarkets have a lot of products. So you’d still have to have a lot of theft in a supermarket before you get close to a dent in those 2% margins. Edit: as an aside, this is also why high value items such as alcohol are usually at the back of the store. It’s easier to identify and catch someone stealing if they’ve attempted to conceal a product for the entirely length of the shop.

mikkupikku 10mo ago
[flagged]
- hnlmorg 10mo ago
  That’s not even remotely what I was saying. > Please respond to the strongest plausible interpretation of what someone says, not a weaker one that's easier to criticize. Assume good faith. https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html ——— My point is that shop lifting is small scale compared to legal sales. So for a supermarket to make a loss from shoplifting, they’d either have to see a significant jump in items stolen. This doesn’t mean that I condone theft; it just means I’ve ran the operating costs and margins for running retail stores and thought I’d share that insight.
- deleted 10mo ago
  [deleted]
- cogman10 10mo ago
  That wasn't what was said. Businesses price in shrinkage. The more theft occurs, the more employees they hire and the higher they mark up goods. There's a difference between having a 2% margin and having a 30% markup. Margin includes things like employee salaries, spoilage, theft. That's why buying goods in a remote location will often carry a high price tag. The store selling that produce needs to account for these things in order to stay afloat. So even though they are selling something for $10 that you can get in a city for $5 that doesn't mean they aren't making the same 2% margin.
- tomhow 10mo ago
  It's not OK on HN to use quotation marks to falsely attribute a quote or position to another user. Please don't do this again here, and please make an effort to observe the guidelines, which start with being kind and conversing curiously. https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html
etchalon 10mo ago
You understand that that 30% "markup" has to cover literally everything involved in running the store, right? The building, lights, shelves, labor, website, marketing, HVAC, etc etc etc A 30% markup spread across 1 product or 3000000 products is still a 30% markup.
- cogman10 10mo ago
  Yes, and you realize "theft" is a part of everything. I don't think the comment you responded to was arguing that theft was moral or companies were being greedy. Rather, just that 30% markup is typical and it takes a fair bit of theft before that starts closing the gaps on the margins.
  - etchalon 10mo ago
    Then I think the parent comment lacks an understanding of the difference between gross and net margins.
    - cogman10 10mo ago
      That's an uncharitable reading of their comment.
      - etchalon 10mo ago
        It's the only reasonable reading if someone is dismissing 2% loss due to theft for a retailer.
        hnlmorg 10mo ago
        I wasn’t dismissing theft and supermarkets do not have 2% of their stock lost through theft (if 1 in 50 items were already stolen then that supermarket is dysfunctional at preventing theft). Thus what you’re describing simply has no basis in reality. Furthermore, you’ve completely misread every single comment in this thread and taken the least charitable conclusion from them.

nothercastle 10mo ago

Most because it’s hard to quantify how much money they don’t earn because we refuse to shop there due to everything being locked up