Our cost +10% ??

[bumpus7]

.
Look at it this way.

You put in your shopping cart $100.00 worth of groceries that the store paid for and there cost to stock them and now they charge you 10% extra on top of that.

You pay $110.00 for those items.

The store made $10.00 off of you.
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[dbbd]

Originally Posted by Bakeneko

Shopping at the commisaary reveals which items have the higher mark-ups at our local stores - things in th health and beauty aisle (diapers, meds, tampons, formula), cleaners, cereal, cheese - all much cheaper at the commissary. Milk, produce, meat - cheaper bu not by as much

Don't forget to add the 6% surcharge, which eliminates some of the perceived savings.

[hueyeats]

Eek!!!

Aren't we already charged enough????
Is it the government (new social mentality) way of enforcing that we the public should be at a "certain weight" due to the highly advertised "fact" from media groups that we are an overly fat population in USA that the price hike will be OK to control what we eat????

Yup... beware of "control" & loss of more freedom = since we are fat, its OK to tax us more / hike our price so we eat less!!!!

Like someone else to justify how you spend your own money???? NOT!!!

[OC Investor2]

Originally Posted by Mike From NIU

delgabob,

Thanks for your insight. One question for you, as someone who dealt with a number of grocery stores. I have heard about the premiums that retailers are paid for prime shelf space, end-caps, etc. How does this work for smaller chains that don't have the volume to demand the type of premiums that the Krogers, Food Lions, and Safeways of the world can demand? For instance, the retailer in question is part of the Supervalu supply chain. Supervalu has two sides- they operate their own stores (Albertsons, Shoppers, Jewel-Osco, Cub), but they also provide supply chain logistics (including marketing and warehousing) to small independents. In this case, who gets the slotting and ad fees? Is it the Cost Plus store, Supervalu, or a split? I know this may be outside your expertise, but figured you might have an idea.

I will agree with you- in general, I would not want to be in the grocery industry. You make a million dollars in the grocery industry the same way you make a million in the airline industry- you start with a billion and go down from there. There might be individual locations where small, independent chains and stores can make it, but not many.

By the way, most of the 30 point margins were in health and beauty and alcohol, weren't they?

I would'nt be so dismissive about being in the retailing business. Worked out pretty good for Sam Walton, right?

I used to work in sales for a major food manufacturer dealing with independent grocers in PA & NJ and later here in CA. Alot of the folks I dealt with owned 1-5 grocery stores and they did VERY well.

As to your earlier question about where the manufacturer's trade dollars go, the answer is - it depends. Most manufacturers will keep one pool of money to deal with the distributor/wholesaler and the other to use to cut deals with the retailer. But it all depends on the relationship between the 3 parties, the buying power of the wholesaler and the retailer and the manufacturers go to market strategy.

[pvande55]

They probably get rebates and "slotting fees" (for best shelf position) which helps out on the overhead expenses.

[Cost plus guy]

Do the math...I work for a cost plus 10 grocer in central Alabama. 10% is a tiny margin to operate on. After the 10% employees, rent, insurance, power bills etc all have to be paid. I know for a fact we are lower than other grocers, and lower than wal mart on most items. You have to sell a lot of 68 cent cans of green beans at a 10% margin to pay for 1 cashier who makes minimum wage. Now add in the 20 plus cashiers, meat dept, produce dept, stock crew etc.( over 50 employees)if anyone thinks a 10% gross operating margin is excessive, and some replies seem to indicate so, they need to go back to grade school. We have done tremendous business, and continue to grow. Customers wouldn't keep shopping if the price wasn't good.