Quote:
Originally Posted by njmom66
I think this quote pretty much sums up the whole thread. It always surprises me how inconsistent they are. I hear about really nice Walmarts elsewhere, and if that were the case here, maybe I would go there more often. I don't go to ours for ANYTHING.
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its easy in the grocery aisle's - most of the food has a long shelf-life, and its not too difficult to open a box and stock the shelves..
when it comes to perishables, its a whole different world..and not all grocery stores are the same..
the whole foods shopper has different motives, than the cherry pickers/price shoppers.
so whole foods can get 50-60% margins on produce, because their customers will pay for it-this means they can cull deeper for any imperfections/reduce/mark down,
for what whole foods charges-they should have an exquisite presentation-they are not in the battleground most supermarkets are- and thats the battleground of price
the beloved trader joes, found a whole foods niche' but is not held to any variety standards, they buy what they can at better prices,(and have the luxury of the whole foods-higher price shoppers) and very few complain about what they dont have ..
the traditional supermarkets are in a survival battleground every week
why?? because ironically, they are held to the highest standard that any store has... and thats PRICE
whole foods, trader joes, and other niche markets are exempted from this
PRICE drives most of this industry-most shoppers know benchmark pricing on many items and wont pay above it-
like bread,,,some wont buy a loaf of bread above 1.00-just the way it is...
most shoppers today, still cherry pick the specials they look at flyers, look for the best prices and often the supermarket, because of feirce competition has to sell at or below cost, for front page specials, just to get customers thru the door (whole foods and trader joes have the luxury not being in this price battlefield-losing money every week on a lead sale item)
so, its a race to the bottom on prices,
and if your margins are lower, then you cant pay expenses,,,so you have to cut expenses, that can be payroll, or the guy that waxes the floor at night..
its a cut - throat business.
some stores- and here is the key-with large volume - some do 500k to a million dollars a week,,some do more..
they have figured this out thru the years, like wegmans, and other top stores (but again if they compete on price-they need to do big volume)
also keep in mind- large volume, cures all ills in a grocery store- if all products are selling, then much less shrink/mark-downs
in smaller towns, this is a major issue- if perishable product doesnt sell (often within 3 day shelf life) you need to mark it down- these stores that may get 400-500 customers a day are competing with stores nearby in a populated city- that get 2000 people a day that does ten times the smaller stores volume
yet, most compare the same prices
here's the other issue- labor
when you are in a low price war, you are also making low margins (no profit)
so its tough to pay a big wage if you are selling most of your items at cost..
again whole foods -because of much higher margins/retail prices they make much more money, that can pay their employees more
before whole foods- the supermarkets, could pay higher costs for better fruits/veggies and make a little more margin for a premium item..(they had the whole foods shopper).. but because whole foods attracts that segment of shoppers, the traditional supermarkets are losing them- leaving a higher percent of shoppers just on price,,,again,,no profit= smaller wages.
and fixed expenses are always going up.
over the past 5 years, thousands and thousands of grocery stores have closed, mostly because of buying on price- (in affluent areas, the niche' markets can do good, because people will pay 18.00lb for lamb chops, or 2.50 for an organic orange) this is a whole different world than a traditional supermarket.
if in poor areas, foodstamp week affects a stores business- up to 50%, that is huge!! and this is all on price, not how well the store sparkles, not how many organic items are displayed.
years ago, the supermarkets were the supermarkets, 85% of the groceries were bought in traditional supermarkets, now its in the low 50% range-it is getting segmented(years ago there was no wal-mart, sams club, costco, whole foods. trader joes)