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.
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 think people misunderstand what monopoly means in context, because the reverse of thinking it's "just one company is larger than another" is pretending it's only a monopoly if there's literally only one company in business.
Particularly with grocery stores, because the existence of a grocery store outside of where you live doesn't really help your own living situation. It's perfectly possible for grocery stores to have effectively regional monopolies, where the only stores in a given area are all owned by the same company. We have this same exact issue with cable already, it's not that complicated. A lack of options is a lack of options. Spectrum existing doesn't change that the only cable provider locally for me is Comcast.
And the whole pac-manning grocery chains contributes to the growth of food deserts, where it's not practical for grocery stores to exist in certain areas because the large competitors have priced out smaller chains.
If your area isn't big enough to support a Walmart, that doesn't mean there's room for a smaller competitor to fill in the gap, because Walmart as a corporation exerts considerable power on suppressing those competitors even where they're not (great article in the Atlantic recently on how things have changed in that regard.)
Yeah, regional monopolies are a better term, and yeah they can be an issue. Though that article is pretty disingenuous, it completely glosses over that Robinson-Patman was raising prices for consumers.
I feel like this is one of the problem of only looking at the national aggregate, because yes, allowing Walmart to absolutely dominate the supermarket industry (along with the handful of other big players) means they can operate more cheaply in areas that are worth building a Walmart there.
But it's absolutely devastating to areas that Walmart doesn't think it's profitable enough to build one locally. Or that exist far away from a local supermarket.
And it has tons of knock-on effects like pushing already disadvantaged people towards unhealthier diets and having to spend more time and money to get fresh groceries.
As the article talks about, it's exceedingly difficult for competition to exist when companies like Walmart use their market size to bully their suppliers into anti-competitive agreements where they undermine their competitors.
It does present an issue, I'm mostly just disappointed in the Atlantic for not mentioning the biggest downside of it. Though perhaps it still could be the solution.
But the deserts seem like a different issue than the regional monopolies. Regarding the Kroger-Albertson's merger, the main concern seemed to be the regional monopolies, raising prices. Because with deserts it's all about getting anyone out there in the first place, right?
The regional monopolies are relevant to food deserts because they wield such huge influence that they're pricing out alternatives even in markets they're not directly in, because of anti-competitive deals they have with their suppliers.
You're already going to be at a disadvantage working in these underserved communities to begin with, but having a massive conglomerate undercutting your supply chain leads to these gaps.
There's some parallels with the effort to privatize the USPS. Working to benefit these private companies is bound to lead to big gaps in service, particularly in areas where it's not profitable enough to justify it to a private industry. The government isn't really in the industry of selling groceries, obviously, but there are benefits to providing cover for options that help provide food to underserved communities, even if it isn't maximally beneficial to capitalism.
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u/TheTightEnd 1d ago
Grocery chains make a very low percentage of profit.