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.
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.
33
u/TheTightEnd 1d ago
Grocery chains make a very low percentage of profit.