Grocery stores have famously low margins. Everyone thinks they’re cash cows, but they have some of the thinnest profit margins of common consumer businesses.
Stores often sell common staples like bananas, generic milk, and other basics at close to cost. They’re the things that get people in the door. They make their profit on things like cereal, deli meats, packaged goods, and other non-staple items that people also buy once they’re inside.
It’s similar to how many gas stations compete on cost of gas to get people there, but hope that you’ll stop inside and get a $6 drink or some $5 packaged snacks.
Then you have to consider all of the other things that go into a store are also tariffed. The parts for the trucks that transport the bananas have tariffs. Many of their cleaning supplies. Parts for the checkout registers. The light bulbs they have to replace. Many of those tariffs could be well over 100%. They have to make up that price in the cost of bananas and everything else.
I moved to the USA from Belgium, and in the USA I have also seen that the lessee of said space stocks the shelves.
Of course, I didn't know this, which was very weird when I saw someone those stocking shelves, only to be met with a 'sorry, I don't work here' response when asking them a question.
It depends. Some companies choose to stock shelves themselves in order to make sure their products are properly stocked. Coke/Pepsi and their subsidiaries are this way. It ensures that old out of date product isn’t getting shoved to the back of a shelf, allows them to keep a better track on refills (thus an estimate of sales), so on and so forth. In other cases, the store sometimes requires it to alleviate their own stocking burdens. The vendors are also generally the ones who set up the sale advertisement displays (end-cap or stand-alone). It tends to be a win-win because the vendor gets to advertise with a large display and the store may sell more product (and doesn’t have to set the crap up or take it down). Though, anything can be anything from store to store, so these aren’t “rules”.
Everything in the world makes more sense when you accept that it’s all supply and demand. The net worth of the family that owns the business is irrelevant.
Supply and demand can both be impacted by perception, which can be tweaked by humans.
If tariffs increase the wholesale cost of an item by $1, but you can make consumers think $5 retail is what the increase should be, that’s an extra $4 in your pocket.
Economics education doesn’t stop at 101 for a good reason. “Supply and demand” is like “veins carry deoxygenated blood” - it’s largely true, but further learning reveals complexity.
Yes. If people are unwilling to pay $5 more, they will buy less or buy none. That decreases profits due to decreased demand. Now there is more supply than demand, which means you need to make the purchase more attractive, which generally means spend more on advertisements/rebates, lowering the price to an acceptable rate or improve the product value. Or strike a balance where you shrink both the cost (size), and price, and advertise the cheaper price to make people think they are getting a better deal when they are really just buying less for the same price (or more). Round and round it goes; supply, demand, and misleading.
People should remember that it isn’t just the corporations who raise the price that are at fault, it is the people who are unwilling to go without it when the price is overinflated. Yes, then we nit-pick into things like medical necessity and … thus back to the point that it is both supply and demand, and not.
It's not a pity. It's a valuable tool to understand behavior as it relates to supply and demand.
Supply and demand isn't the only thing that exists, but basically everything else feeds into and informs it. It isn't the only starting position, but you can reach basically any point from it.
The chain, itself, did $11B in revenue in 2020 for its ~100 stores. It's privately held, largely by the family and their friends. I certainly don't doubt they've purchased other investments with the proceeds over time, but they're making plenty.
no - I guess that the massive net worth of that family is related to capital investments.. the value of the property that a store sits on, with no debt.. skillful use of traditional investment vehicles using a predictable cash flow. things like that. Many frugal and tireless small business in the large port city here in California fail.
Stores often sell common staples like bananas, generic milk, and other basics at close to cost. They’re the things that get people in the door. They make their profit on things like cereal, deli meats, packaged goods, and other non-staple items that people also buy once they’re inside.
It’s similar to how many gas stations compete on cost of gas to get people there, but hope that you’ll stop inside and get a $6 drink or some $5 packaged snacks.
Then you have to consider all of the other things that go into a store are also tariffed. The parts for the trucks that transport the bananas have tariffs. Many of their cleaning supplies. Parts for the checkout registers. The light bulbs they have to replace. Many of those tariffs could be well over 100%. They have to make up that price in the cost of bananas and everything else.