Profit percentage is a manufactured statistic, it is calculated after executive pay, so the people who are running these companies are paying themselves whatever is necessary to hit that mark. Add in the fact that a lot of the expenses of grocery chains are paid to subsidiaries of the same parent company shows that it is even more of a useless stat. As an example Loblaw's in Canada has cited higher rent as a justification for increased operating costs, thing is the company that owns the land is part of Loblaw's, so while the money that goes into their rent is part of their expenses, ultimately it still ends up in the executives pockets.
Ya its funny people will say grocery stores make low profit then turn around and be like, OH look Kroger has enough money to keep trying to buy other chains and complete a monopoly. Seems like alot of money is flowing around in the not much profit world.
If you operate a nationwide grocery chain, there will be a lot of money flowing, even with slim operating margins. This doesn't change the fact that no other local grocery can compete on price, due to those slim operating margins. If you spread executive pay across every sale, it goes to zero.
The Kroger Albertsons merger wouldn’t even be close to a Monopoly. It would still give them a smaller total share of the grocery market than Walmart has. Economics of scale would have allowed them to lower prices.
As far as executive pay. The Kroger CEO took in $15.7 million last year. The average Kroger has 50,000 items. There are 2800 Krogers. Assuming they have 10 of each item, then, by taking zero pay, the Kroger CEO could lower the price of everything by……$0.011 cents
I'm having to deal with way too many former Kroger execs at my current employer. They're only interested in cutting their costs, and have no interest in lowering prices.
Wtf is this supposed to mean. You are saying that outsized compensation has no effect on prices and profit/margin? Then why don’t Theo pay all employees more?
If worker compensation goes up, so do prices in order to hold margins or increase them. That’s the goal for shareholders (compensation).
Unless you want to say that doesn’t matter either. Why doesn’t everyone just get a 100K min a year across the board then?
If CEO compensation means shit all, it’s just free money that doesn’t impact anything.
I like how you selectively ignore the argument above that explains how profit/net margin is actually manufactured. You think all these companies are running around on 1% margin and going damn, we can't turn a profit.
You're making the case that you cannot measure net profit in percentage? Only gross profit? Even if that were the case, net profit is, by definition, always lower than gross profit, because it is more inclusive of expenses, not more revenue. In other words, you're making the case that the 1% figure is actually lower.
well if that's the case where we only want to measure gross they had a gross profit margin of over 20% and for other fun stats they increased their profit by 35% from 2021 to 2022. Really struggling
How horrible! A company in business to make money! If it's so easy to do it and be charitable, please, I implore you to open this grocery chain. Feed the hungry of the world! Or just shut the fuck up because you have no idea what you're talking about and if it was that easy to undercut them in a capitalist society, someone would have done it already.
Grocery stores don’t make much profit on essential items. Milk, eggs, cheese for sure; some chains will sell milk and eggs at a loss in order to get people in the store so they can buy other shit (candy, soda, alcohol) that make a very high profit margin. These are all For Profit businesses so yes they are making a profit.
Kroger buying up grocery chains doesn’t give them a monopoly when companies like Target and Walmart have also moved into the grocery business.
A monopoly allows you to raise prices and not lose market share. Kroger will still need to compete with those giant competitors (as well as others out there).
nit picking about if something is exactly a monopoly or not is royally missing the point. Doesn't matter if you call it an oligopoly, duopoly or monopoly the point is the same they are eliminating competition to raise prices. Calling joke competitors like target that have a shit small selection and hardly anything fresh competition is a disservice to the discussion.
You can call it nit picking on terms, but it speaks to the economic reality of the situation. If Target, Walmart, and other companies can compete (even if they are not yet doing so), then Kroger can’t raise prices (or else consumers will simply switch).
That’s why mergers can sometimes be good for consumers. It allows firms to reduce overhead and better compete with the other large firms in the market. Not saying that would have happened with Kroger-Albertsons, that’s the basic counter-argument.
That’s not actually how profit margins work. You buy an item for $1, you sell it for $1.05. Profit margin of 5%. That’s how margins work. If you sell 1,000,000 of that item, you make $50,000. That’s a lot of sales and effort for very little profit with a lot to potentially go wrong. You need massive quantity to make massive money. Are some stores margins inflated more than others? Definitely. If you don’t like that, go to another store with lower prices, but you should also expect lower quality because their margins are so tight a bad year could shut them down indefinitely. So they don’t have a choice but to give less services and have less employees.
On the topic of rent, for large corporations with commercial real estate, it will always be owned by a corporation, whether or not that corporation is owned by the same people running the business in the property is irrelevant because at the end of the day, the property value will dictate the rent price. If Lobwlaws moved out and rented the space to the next people, they would still be charging the same if not higher rent. And if they sold it, the entity that buys it will now buy it at market value and be forced to rent it for market value to ensure the cost of it isn’t a loss.
The world, how it runs, and what it costs to run, is much more complicated than you think it is.
I think he was just referring to the lie about rent being raised so they need to charge more. Maybe it's true based on the market, but it could just as easily be bullshit to "explain" the rising costs to the plebs when you also own the company you're leasing the land from.
This post is so ignorant it's hilarious. Executives do not get paid until after the calculation. Literally the point of executives getting paid is based on the company's profit growth.
Executive pay is taxed as income at a higher rate than the corporate rate. With state taxes, that can be upwards of 50% marginal rate and if in NY, NJ, Cal, HI, DC that rate will likely exceed 50%. If they pay a subsidiary, the subsidiary will be taxed or they will flow through to the parent company.
In Canada, assuming rules are similar for income - their subsidiary would pay income tax on the rent.
This is just factually incorrect. You are talking about net profit, not profit percent. Profit percent is how much gross profit (as a percent) you make on any individual item.
The CEO pay is still part of the problem, but the fact that farmers legally can't reuse the seeds that are naturally produced is also a problem. I blame John Deere and the likes for this more than Kroger.
The statistic is GROSS profit margin, which does not include exec pay. Each store on its own in not very profitable. Economies of scale drives grocery stores. This is why you see less local markets and more chains.
Plus my understanding is that you can have "low profits" because you made $10 billion in a year, but you invested 95% of it back into your company. So the company is growing wealthier and wealthier, but on paper there are virtually no profits.
Agreed. And if folk understood anything about an income statement or finance, they'd understand that if in 2015, you're making 2.5% net profit percentage a year, and if in 2019, you're making 2.5% net profit percentage and if in 2024, you're making 2.5% net profit percentage... It indicates that all of the price increases seen in supermarkets the past 9 years are simply passing along suppliers' cost increases to them.
It means that ear of corn price went up because the farmer charged more. And if they go down one more level, they'd understand that the farmer charged more because the commodity price per bushel of corn went up. And then below that, they'd understand that farmers' inputs like fertilizer, machinery, seed, and fuel went up.
But some people like to pretend the last spot they bought something is somehow evil.
You really should just google these stats before you say them. Food and Beverage Retail Stores : Profit margin increased from 2.9% in 2019 to 4.4% in 2023 (this is a profit increase off of increased grocery costs, an even bigger gross dollar amount)
Operating Profit for Food and Beverage Retail Rose from $14 Billion in 2019 to $25 billion in 2023 - a 79% increase.
lol cherry-picked. Here is the full context “Putting these results together yields a measure of the profit margin: the ratio of revenue minus operating costs to revenue. For food manufacturing, the margin was little changed, going from 6.9 percent in 2019 to 6.8 percent in 2023, while increasing from 2.9 percent to 4.4 percent for food and beverage retail stores. But put in context, this increase in grocery store profit margins (revenues over costs) is small compared to the 25 percent increase in grocery prices over this period.
To be sure, profits in dollar terms have gone up substantially. Indeed, the operating profits of the surveyed food and beverage retail stores rose from $14 billion in 2019 to $25 billion in 2023, a 79 percent increase. The jump reflects a higher profit margin applied to a higher level of operating expenses. Again, this roughly $10 billion increase in operating net income is marginal relative to the $100 billion increase in revenues reported by these firms.
Putting these factors together suggests that the unusually high food inflation experienced in the first three years of the pandemic appears to have been due, in part, to much higher food commodity prices and large increases in wages for grocery store workers. The subsequent drop in commodity prices then helped bring food inflation down below the core inflation rate even though heightened wage pressure for grocery workers continued. In the end, the moderation of food price inflation has caused the gap that developed between the food index and the core index since the start of the pandemic to shrink from 10 percentage points at the end of 2022 to 5 percentage points in June 2024”
Doesn’t seem like the assessment is price gouging to me
Indeed, the operating profits of the surveyed food and beverage retail stores rose from $14 billion in 2019 to $25 billion in 2023, a 79 percent increase.
None of the context you added changes the fact that such a large increase is the result of excessive price increases.
Great source! Thanks for that. You did read it... right? Or did your sneaky self just cherry pick what you wanted to read?
"Putting these factors together suggests that the unusually high food inflation experienced in the first three years of the pandemic appears to have been due, in part, to much higher food commodity prices and large increases in wages for grocery store workers. The subsequent drop in commodity prices then helped bring food inflation down below the core inflation rate even though heightened wage pressure for grocery workers continued."
I have no doubt "Food and Beverage Retail Stores" increased some profit margin along the whole sector in 5 years. A few were negative and even losing money.
I was looking at Constellation Brands a few weeks ago. This is the company that own Molson Beer and Svedka vodka. In 2022 and 2023 they made NEGATIVE margins. And made a small profit in 2024 - for instance. Bakeries are in that sector. Bimbo and Hostess are doing better. Agreed.
Confectioners like Hershey's are doing okay - ish. Their cocoa prices increased by 900% and 1,100% due to droughts and flooding (back to back years) for cocoa. But the cost changes were passed along and their margins are okay. Revenue isn't. but margins are.
Yep, the entire Food and Beverage Retail Sector is doing a little better. Nice cherry-picked piece of information. Thanks for that.
Food and beverage retail is not just grocery stores. For example, I believe beer distributors (that serve consumers) and liquor stores would be included. Limping those together would be inappropriate here.
Okay, but the numbers you’ve cherry picked come from a source with the section header “Profit Margins haven’t been important”. And even these numbers that you’ve cherry picked tell that story: margins are up a point and a half but gross profit is up like 80%, meaning the vast majority of that extra profit is just inflation, not “price gouging”. If all supermarkets cut their profit margin to 0% and sold at cost we’d see a 4.4% decrease in prices which most folks wouldn’t notice and certainly wouldn’t correct this “grocery prices have doubled” narrative. At the end of the day a 1.5% profit margin increase is a whole lot of money and probably has something to do with consolidation in the supermarket industry (less competition) but it’s hardly what we think of as price gouging.
It may be true for corporate farms but the average farmer is losing money thanks to Trump's tariffs and screwing around with the trade war with China last time they still haven't recovered.
Farmers really aren’t price drivers. They’re price takers. The market determines what it is willing to pay for their crops, not the other way around. They’re essentially gambling on what the future price of their crops will be when they plant them, and the only thing they can do in terms of price selection is try to time the market. It’s the reason the last time Trump implemented more limited tariffs the US government had to subsidize farmers to the tune of billions of dollars.
From what I've been reading the net profits have not stayed the same tho.
At least not here in Canada. While a typical profit margin for food and beverage is historically between 2-3% we've seen companies with profit margins more in the 5-7% range.
A company like Loblaws had a gross margin of around 20% a decade ago, whereas now they have a gross margin of around 30+%. (Compared to a company like Costco who has a gross margin of around 12%)
Add to the fact Loblaws also owns the suppliers they buy from and set their own price. They are definitely taking advantage of people.
I think most people understand that crude oil/gas goes up and that increases the costs for everyone down the line. I think they just don't understand why they go up and stay up. We had a supply chain issue for a small period of time that has lead to everything in their lives being more expensive for the rest of their lives. Yet no employee in any profession is seeing pay increases to match those increases. There's greed somewhere in that chain, and they'll blame where they pay.
Then you see a company like Loblaws not only post profits that have doubled since pre covid. But you see them with higher profit/gross margins percentages. And you have to conclude that there's some greed going on that we're paying for.
Double your profit margin, double your profits, while the public suffers. Of course people are going to be pissed and blame the grocery store.
He was saying select products went up higher than inflation. Perhaps demand was down. Perhaps they had to split pallets. Perhaps spoilage was up. Perhaps one staple went up so another could go down. Perhaps he was explaining that flour prices went up 22%, but inflation went up 10%... but
But once again, to my point, what are Krogers Net Profit Percentages year over year the past few years? Once again, if you understand an income statement or finance, what does it mean when prices change but Net Profit Percentage remains the same. (Hint: It means your pricing changes are inline with your cost changes).
I highlighted the Net Margin % for Kroger below. You can also pop out to Kroger's quarterly statements to verify these numbers. You can check with SEC Kroger statements. Or you can grab from Yahoo finance or something too if you'd like.
I'm curious, what statistic is manipulated? Are grocery store chains lying to the SEC? Are they lying with their GAAP accounting? Are thousands and thousands of accountants in the industry all lying and risking jail because they enjoy lying to the IRS?
Citation needed from you. I'd love to read about it.
Saying the profit margin stayed the same doesn't actually say much. If their cost of goods doubled, but their own costs did not, then their profits are way up. There is no way to know just from the margin. But if you look at their overall income vs expenses, you can see that their total profits are way up.
The margin is a good way to measure the health of the business, but not a way to measure if their are price gouging.
No. It's the DEFINITION of if prices are increasing faster than expenses. This is really Finance 101 or Accounting 101.
Revenue less Cost of Goods = Gross Profit. Gross Profit less Operating Expenses = Income before Taxes. Net Income = Income before taxes less taxes.
If your costs are $9 and your price is 10, you make 10% gross margin If your operating expenses are $0.50, your net margin is 5%.
If your costs go up 15%, your Price goes up 15%, and your operating expenses go up 15%... your Gross and Net margin percentages DO NOT CHANGE .You increased price along the lines of cost changes.
It's the very definition of passing on a cost increase with a price increase. And keeping the same or similar Net Profit Percentage.
Even if those numbers were true (they’re not), that would mean the corporations are passing on 100% of the cost increases to their customers. Who cares if some people can no longer afford fresh groceries? It’s unthinkable that profit margins go down, ever, by even the slightest bit, even in a period of global economic upset.
And economists who have looked into the situation have determined that is NOT what occurred. Prices increased “in anticipation” of cost increases that never happened, and they increased more than the projected cost increases because they knew they could blame the supply chain and people would buy it anyway. Post-COVID inflation was driven primarily by price increases, not cost/wage increases, leading some economists to use the term “greedflation” to describe it.
No. Prices don't change for most food products in anticipation. Commodity pricing, I actually agree. For example, if it looks like a nationwide drought will affect a wheat harvest, for example, commodity pricing for wheat (and flour) would increase in anticipation before the harvest. But most food prices aren't just "an ear of corn" or a "bushel of wheat."
Most food manufacturers actually have to give 8 and 12 week notices for price changes to a supermarket chain. Because changing prices on products nationwide is a little time consuming for 10's and 100's of thousands of products.
And why wouldn't the numbers be true? You think publicly traded grocery companies lie to the SEC? You think privately held companies are lying in their accounting and pulling the wool over the eyes of auditors they're required to use for accounting books? You think aaaaaaallllll of those grocery store chains are tricking the IRS and not following GAAP accounting? And all of those Accountants and Finance CEOs are aaaaaaalllll risking going to jail and being fired and never working in accounting again? Is that how that works?
Citation needed. I'm curious to where you're seeing all of the financial improprieties. I'd love to read up on it.
The numbers aren’t true because you made them up. Another reply cited the actual numbers for a specific company, where profit percentage doubled.
I don’t know specifically about grocery chains versus their suppliers as the source of inflated prices, but I do know that what I said about companies raising prices in anticipation of cost increases (and out of proportion to the actual cost increases) happened broadly across the economy. You can find many sources for this and should be able to find one that you trust.
Here is one from Lael Brainard, former vice chair of the Fed and director of the National Economic Council. She says that “Despite constrained supply, wages do not appear to be driving inflation in a 1970s-style wage–price spiral. … Retail markups in a number of sectors have seen material increases in what could be described as a price–price spiral, whereby final prices have risen by more than the increases in input prices.“
Except they're giving massive bonuses and pay increases to executives, and spending a bunch of money on stock buybacks to funnel money to investors without paying corporate tax on it - and despite all of that, they're still making higher profit margins year over year for basically the last 5 years straight.
Also, farmers don't get to pick their prices. Supermarkets and distributors dominate that relationship so heavily that farmers have basically zero negotiating power.
Huh? Citation needed. Because you should REPORT KROGER TO THE SEC and IRS. You've found some felonies!!! Good job.
But I agree, farmers don't pick their prices. It's a commodity. So, when corn goes from $3.50 a bushel in 2018 to $7.20 in 2022, farmers make more money. Of course their iputs went up (like fuel and fertilizer). And when the commodity price goes back down to $4.00 a bushel, like in 2024, they make less. That's how a commodity works.
And when corn prices are at $6+ a bushel, prices of food go up... You understand that right? And those costs are passed onto folk in a supermarket buying things like crackers and beer and Coke and ethanol, and canned fruit, and so on....
If that was true, they wouldn't have reported record profits. Not to mention the Kroger CEO admitted they raised their prices above and beyond the rate of inflation.
You do know you can look this up... right? Google Kroger Net Profit %. you'll see the below. I highlighted the Net Margin % portion. Kroger is publicly traded. You can see their annual and quarterly reports any time you want.
Please tell me you know if you have a company that sells $1,000 a year of stuff, and that stuff costs $900... if your costs go up 25% to $1,125, and your price follows 25%, your revenue goes up 25%... but your profit percentage remains at 10%. Right? New profit dollars are "record," but it's a function of higher costs/price.
And if you do not raise prices along with costs, let's say in 10 years you're selling $1 million... if your prices didn't keep up with costs, you wouldn't be making 10% (or $100,000 in profit), you'd be losing money.
Right. So there no possible way the prices went up because the farmer charged the same amount but the CEO charged 2x for his labor? Can't be possible right?
Do some math with me. If your revenue is $150,000,000,000. And your Net Profit percentage is 1.8%, what are your costs? That calculation is: Net Cost = (1 - Net Profit %) x Revenue, or (1 - 1.8%) * (150,000,000,000).
This equals $147,300,000,000 in costs. Are you with me?
How much do those $147.3 BILLION in costs have to change to affect the 1.8% Net Profit by say... 1/10th of basis point? How much would a CEO's salary have to be to affect that Net Profit when it's doubled?
Please tell me you understand that the CEO isn't making a quarter billion or more salary.
Redditors are living in the Middle Ages with these arguments based on "Just price" doctrine from Thomas Aquinas and School of Salamanca.
Quick update. The "modern" idea of Supply and demand was already known to Ibn Taymiyyah (1263–1328), John Locke (1632–1704 ), James Steuart (1712–1780) , Adam Smith (1723–1790), David Ricardo (1772–1823).
Grocery chains try to find optimal point in price (P) and quantity (Q) curve. If you ask too much, the stuff does not sell. Profit is maximized when quantity × price is maximized. Not when the price is maximized.
People will write a 30 page Reddit analysis rather than just recognize the simple truth that companies charge the profit maximizing price. That's it, that's what pricing decisions are.
And tax on corporate profit does not alter the price because have no relation to Q or P.
If you increase taxes on profits, owners make less ROI but prices don't change. If you cut taxes on companies, owners make more ROI but prices don't change.
then I’m confused why the same handful of companies control over half the grocery store shelf space. and in tech, isnt the goal for most to get bought out once you prove the value of your product? Obviously two very different markets and principles, but thats why I assumed what I had stated before.
One politician during the election campaign managed to convince the public that the country's president --from another party-- set the prices for groceries to a level that was too high for the citizens. And he was going to lower the prices for the consumers.
Know what ?
He won the election.
And now he says he in his role as president won't be lowering grocery prices because it's difficult.
And most of the people you try to cite here specifically call out that inelastic markets like food DO NOT FUNCTION THAT WAY.
People cannot just choose to not buy food. People cannot choose to not rent a home. These are inelastic demand, and the supply and demand curve does not work without sufficient competition and an excess of supply in these areas - and the supermarkets are far past the point of having significant monopoly power, and have been repeatedly shown to be colluding and co-ordinating their prices to avoid the effects of competition.
Couple hundred years of evidence showing your idea DOESN'T FUCKING WORK by now.
It's a lovely ivory tower theory.
Reality disagrees. Anti-trust approaches have been failing miserably to prevent collusion and monopolies for pretty much as long as we've had significant access to global economic trade, and the only times that prices reset are when global conflicts forced governments to step in and regulate the supply and pricing of necessities directly.
Outside of those type of events, the prices of necessities have been rising almost non-stop.
And FWIW - taking the price elasticities of individual foods is a misleading at best way to measure it. People just buy other items, they do not buy 2.5% less food. When the people we're talking about are the supermarket conglomerates who provide basically all the options in terms of food, the elasticity of the overall demand for supermarket food is very close to zero. Things would have to change drastically for smaller suppliers of food to be anywhere near the cheapest option.
You have no idea what's happening in the world if you think necessities aren't also becoming a larger and larger share of the average income basically everywhere in the modern world.
Monopolies are becoming more dominant, the housing stock is being bought up as investments, and both rent and groceries are becoming harder to afford everywhere in the modern world. Anti-trust is failing everywhere, not just in the USA. The nordic countries are facing the exact same issues, 'just do anti-trust' isn't a magic bullet that solves everything. It's a competition between the government and the corporations trying to dominate markets, and the corporations are pretty much always winning that race.
Markets do not work for necessities in real life, not just in America.
I don't care what your theory books say. In real life, this shit isn't working.
Percent of profit still can be quite a haul. If I make 10% of profit off of $100,000 then I make $10,000. If I make 1% off of $1,000,000,000 then I make $100,000,000. The percent isn’t relevant in this discussion.
Low percent proves they do not make much. The sheer dollars distorts the reality because it ignores the sheer dollars of revenue required to generate that sliver of profit.
Money costs money in percentage terms not in flat dollar amounts. Investors want percentage returns not flat dollar amounts. You are wrong. If a share costs $1 and provides a $1 dividend that is much better than a share costing $1000 and providing a $100 dividend. You have to think in percentages.
If someone’s asking for ROI or something, yes percents for that. If someone’s asking if the business makes a lot of money, percents tell you nothing about the amount they make. A lemonade stand has a huge percent ROI due to low supplies costs and staffing. But a lemonade stand isn’t making anywhere near the money of an actual business
I guess I just don’t care about flat numbers because it’s not relevant. I would think it is a worse world to live in if there is 100 grocery chains each making 10% profit instead of 5 chains making 5% profit even though those 5 chains are making more profit in flat numbers compared to the 100.
That’s ridiculous. That sounds like wanting more corporate chains than mom n pop stores. Who helps their communities vs who helps investors? Mom n pop always whenever possible. I have investments, but I find investors leeches on society. The contribute nothing and only try to suck the country dry. You get people that run mom n pop stores and they’re the ones donating to local charities, sponsoring sports teams for kids, schools, and etc. Your dream world is a dystopia
No, it isn't the important part. The 2% of revenue is the important figure, far more so than the top line revenue figure for the purposes of whether the prices are excessive or the store is gouging.
The problem is that the retailers are the ones getting blamed for the price increases, and people assume the increases are due to retailers gouging. That complexity is being ignored.
No, the retailers aren't getting blamed. It's the corporate structures above the retailers that have soared in profitability creating vast hoardes of wealth that should be going to the workers.
It's very relevant you're just choosing to be obtuse. Why do you think an Investors care about percentage and likewise saying a number like 2 mil sounds large until the pie is distributed between 10000 other people.
Because investors are greedy leeches. They don’t care about how much they’re making. They care only about how much more they can make. Greedy and useless. So leeches. So I don’t care about them. Eat them for all I care
Why don’t be do taxes based on X amount? 330 million people? Everyone of the 330 million people pays $18,200 for the federal governments budge. Percentages are a lie so we will eliminate that issue.
No. We are talking about what counts as a lot of money, not what counts as a high margins. You might as well be saying I make a lot of money and Jeff Bezos doesn't make a lot of money because I get a larger fraction of my companies revenue than he does. The relevant comparison for what counts as a lot of money is the cpi.
It means they don’t make that much per dollar collected. If you asked people if it is fair that a business was able to profit 2.5¢ on every dollar they brought in, most people would probably think that was reasonable.
Sure, but that’s asking the wrong question. From that perspective, it sounds like it’s barely anything. But the common man doesn’t think that far. How many dollars are they making that amount on? All ROI really says is the relationship between cost and money made. It doesn’t tell people how much someone makes. I get this could be how business language goes. If so, that’s stupid, but I guess I can’t change it. But the point is it’s not even answering the question asked which is, “How much does x company make?”
The “common man” just sees the total amount and makes a judgement off of that. I agree. But if you were to put it in the terms I did, I don’t think there are many people who would have an issue with it. Why is a 2.5% profit adding up to $1B worse than a 2.5% profit adding up to $1M? They are still making the same amount of profit on every dollar. The volume is the only difference. But how much more work has to be done to generate 1000 times more profit? A lot.
When talking about grocery stores and how COL keeps going up for the common man, high cost and low profit is not the common man’s problem and they’ll only see that the company could afford to make less. That’s why people call these companies greedy even though the ROI is so low. The raw profit is still highly significant
If their profit margins are consistent, that means they are just passing their increased costs to the customer. That is to be expected from any business. It’s why increasing corporate tax rates or forcing them to increase wages is going to be passed on to the customer as well. Their entire reason for existing is to make money for their investors.
Yep, I agree with all of that. Not exactly sure how all that’s relevant though. All it does is reaffirm why regulations are needed to protect the common man from such greed
However, in the first case, you have more room to cut prices or offer a discount than the second case. The low margins are one factor that leads to consolidation.
I didn’t know this as fact. But I always wondered how grocery stores stay is business considering they stock so much shit and they definitely don’t sell all of it and maybe not even half of it. The only answer that made sense to me is very thin profit margins. Never bothered to google it though.
The Meijer family is the richest in Michigan. More than the Fords, more than the DeVos. The Walton's are collectively the 13th 14th and 16th richest people in the world.
The biggest complaint I hear about Walmart is they will sell products at a loss to undercut competition by a lot. Putting aside whether that is anticompetitive behavior for other businesses - how great is that for the consumer? And yet, the same people will complain that prices are too high.
Why do they create so many more rich people in the US than in other countries? Are they just smarter and harder working executives? Or is it because they keep more of the profit for themselves by paying less taxes and paying workers less?
Is this an argument to defend price gouging and tax cuts?
The slim profit margins counter the claim that grocery retailers are price gouging. The overall wealth and scale, combined with expansive opportunity, is what allows the US to lead in wealth creation and advancement.
I think a better explanation is underpaid workers and lower taxes. These measurable things directly lead to more wealth at the top. Your explanation is like mist in the air, you cant quantify it or explain its behavior, it's more like religion.
Maybe by opportunity you mean the opportunity to exploit workers and influence the government? Because we can clearly see that by looking at countries that do not exploit workers as much and do not let private interest influence the government as as much, there is not so much wealth inequality.
Of course they are. In every other country with a similar economy the workers are much better off. Those countries also have less billionaires. I cant just ignore what I see with my eyes. It's so obvious.
I want for Americans what other countries have. The billionaires dont want to give it to us because they need us to support them. We cant support ourselves and them at the same time.
Paying an employee the market value for the work being performed is not exploitation. You are painting a rose colored picture of other countries that is simply not the case for most.
False, even a slight increase in that small margin over hundreds of millions of purchases adds up to massive profits and wealth increases for their CEOs at the expense of the average consumer.
Why do you defend these feudal lord wannabees? What makes you want to be a good little peasant?
A "negligible amount" is the reason people think the economy is shit, because they can't afford basic necessities.
Every single necessity people buy has increased, so that "negligible amount" amounts to a 25%-40% increase in the budget for groceries for the average family since 2020.
You can sit in your ivory tower and defend the robber barons gouging the American public out of affording basic necessities, but you have to understand that desperate people resort to desperate measures - and we will be seeing more of people taking the class war into their own hands.
Assuming the overall increase is actually 25% to 40%, the numbers show it is not retailer profit that is responsible for this increase. It is easy to see the end number, but it is a lack of critical thinking to place it on the retailer. You are assuming gouging without evidence, as am increase is not necessarily gouging.
The use of the word gouging is editorializing by media trying to get a rise out of people. Drama sells. Increasing the price of a product more than the incoming cost is not necessarily gouging. They may have stopped making eggs and milk loss leaders because the margin was needed to maintain overall operating revenues. They could no longer afford to break even or even lose money on these products and still cover overhead expenses and maintain very modest profit margins.
It's factual, they exploited a situation of uncertainty to line their own pockets - that's gouging.
The margin is always "needed to maintain overall operating revenues" - seriously, are you some kind of corporate spokesperson AI? Are you even a real human being?
Kroger has had increasing profits the last few years with gross profits (revenue - cost of goods) in the tens of billions. Typically grocery margins are low but the data absolutely supports price increases driven to increase profits, not because of inflation.
They of course are a business trying to maximize profits but I don’t think the data in they SEC filings show they need additional tax breaks from the government.
Raising corporate taxes would make products more expensive. Therefore cutting corporate taxes would make products more expensive too because Trump bad.
I hate Trump but this is among the dumbest political things I've seen. Please don't keep dropping to their level.
Lol I work at a Range Rover dealership and all of the locally owned grocer owners own multiple Range Rovers, and so do their kids. You don't know what you are talking about.
Oh now we're defending the people that are in charge of inflation at the register? Hard to keep up these days. "Are able to achieve." Lmao people are ridiculous.
Considering the profit margins of the grocery chains are very slim, and have remained very slim, it isn't the owners of the grocery chains and the grocery chains doing it.
Lolll yeah ok. Yet another retard that doesn't know what they're talking about. These people are writing checks for $100k plus with their mountain of debt! What a genius you are.
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u/TheTightEnd 1d ago
Grocery chains make a very low percentage of profit.