Greedflation - combating the supermarkets & big brands?

I thnk it's tough... we have our village shop the same as yours and everything is massively more than the supermarket, enough so that we simply don't use it (sorry).

a tin of beans is 40p more, a Snickers 30p more.... it's just insane, so we just don't go there. I don't know how much of that is enforced pricing or how much is profiteering from the new owners... but even going in for a baguette used to be £1.20 and is now £1.80...60p increase in 2 years.. it does mean we eat less baguettes lol.

Shopping local for veg and meat - local grocer and butcher are cheaper than supermarket. Buying a lit less meat too.

We've been Lidl/Aldi shoppers for a long time and the difference is marked. A comparable shop is 1/3 to 1/2 less at Lidl compared to Sainsburys.

As far as our local shop goes (was a Co-op, now is a McColls) I just don't really go there anymore. The prices just seem ridiculously high.

That consumer demand for branded goods seems to be the problem. Could you promote your shop as an anti-brand outlet and say why (i.e. as above)?

I'm not convinced that big brands, who have competed on price for so long, would suddenly choose to whack their prices up to increase profits, right at a time when energy prices are sky high taking everyone's money and forcing them to price-shop even more.

We've a business who've taken over our old Co-Op and next to it a by weight / sustainable shop next door. It's properly marketed as different, alternative, sustainable, eco - and it's not cheap. But they seem to be doing well.

This in wealthy Dunblane with 9000 people living here.

https://www.greens.co.uk/dunblane

And

https://weighahead.scot/

I’m not convinced that big brands, who have competed on price for so long, would suddenly choose to whack their prices up to increase profits, right at a time when energy prices are sky high taking everyone’s money and forcing them to price-shop even more.

I have to disagree, it seems blatantly obvious to me that they are doing just that. And the last thing big brands do is compete on price.

Take cat food, huge price increase, recipe changes, shrinkflation of portion sizes. I’ve given up and started buying fresh chicken to feed instead. It’s far cheaper, better for the cat, reduction in packaging waste. Bit more effort of course.

I’m not convinced that big brands, who have competed on price for so long, would suddenly choose to whack their prices up to increase profits, right at a time when energy prices are sky high taking everyone’s money and forcing them to price-shop even more.

Eh?

Brands don't compete on price, Heinz for example don't compete on price, the market the brand specifically as being worth more. There's a mark up on anything they sell just for having their logo on it, whether it's 'better' or not is debatable.

The OP is very much caught in the middle of all that, carry a brand for it's perceived demand, but the brand is effectively cutting his margins on price marked goods by refusing to let him pass that on Vs carrying non-brand items which might affect demand...

TBH I'm going to shop by price but also availability if I'm in our local shop and there's only expensive beans or bacon on offer and we "need it now" I'll suck it up and pay, if there's no real pressing need I'll wait for a supermarket trip...

At the risk of being flippant Branston beans are better than Heinz as well as a lot cheaper.
We went away with friends who eat Branston beans.
After tasting them ,we swapped as has everyone we have given the beans to.
Our balloon gas supplier hasn’t had any since October. We looked at a new source ,put the tank in the basket, went off to serve a customer and in that time it had gone up £80.

One of my colleagues has just challenged a couple of our suppliers - a few items have doubled in cost and yet seem 'outsude' of some of the inflation costs for raw materials. We understand overheads and delivery has gone up.

Example- log rounds for seating area over double last year's cost, and last year they were rather pricey in cost already...

As has been widely reported over the last 24hrs UK inflation is still extremely high & and it’s widely being blamed on food prices.

This is the bit I don't understand as a starting premise.....

ONS says the average UK household uses 10.8% of its spending on food. So if say food prices doubled, and whilst that have gone up a lot they have not doubled, it would only lead to a 10% rise in total household expenditure. The 20% rise we have seen roughly equates to a 2% rise in overall average household costs. Average is doing a lot of heavy lifting there of course as the poorest spend a lot more on food as a proportion of their household income than the wealthy. So whilst its clearly one of the factors that has a clear impact, you can't blame the whole inflation issue on food prices.

I get the impression that Tesco / ASDA / Sainsburys are using this as an opportunity to get folk to switch to their brands long term which presumably have better margins than Heinz. The pricing on Heinz stuff at the moment is commical vs the own brand sitting next to it. E.g. £4.70 for the Heinz sauce vs £1.49 for the own brand. £1.70 for the Heinz soup vs pennies for the own brand next to it.

a tin of beans is 40p more, a Snickers 30p more…. it’s just insane

This is the price you pay for a couple few reasons, smaller shop=bigger overheads, but also it's the price fixed by the wholesaler or brand. Food shops run on very small gross margins, often around 20 to 25%, when buying in small quantities the wholesaler or manufacturer dictates the RRP to the smaller shops. Shops with a symbol group can provide offers base don buying power - shops labeled as Premier, Spar etc.

I'm increasingly having to find product that has a high margin of 30-40% to make up for the 'brands'.

Unfortunately we are too small a shop to sign up for even a basic symbol group, so are completely independent. This has worked to our advantage in the past, I can shop around for product such for example - so we had toilet roll, flour, yeast etc during the pandemic. But also is a disadvantage as you won't see as many(if any) BoGoF offer or 2for3 in the shop.

We try to combat perceived under value with price marked items - choc bars and sweets price marked rather than 'extortionate' but as per my original post even this is becoming untenable.

I’m not convinced that big brands, who have competed on price for so long

This is a misconception - the brands don't compete on price, the shops do. Supermarkets have loss leaders, anything on offer is making a  loss or breaking even for them, it's the other stuff in your basket that makes them money. Largely the value of a Brand is the name, not the product and they know this.

Heinz globally makes around 30% net profit,  Tesco 2%... The big brands also dictate pricing, Tesco dropping Heinz last year is a good example.

Logs have doubled in price apparently which is just profiteering..... Trees haven't doubled in cost to grow and transport isnt "that" much more expensive.

😠

Interesting - our have gone up a £1 a bag or around 5% a load...

This is the price you pay for a couple few reasons, smaller shop=bigger overheads, but also it’s the price fixed by the wholesaler or brand. Food shops run on very small margins, often around 20 to 25%, when buying in small quantities the wholesaler or manufacturer dictates the RRP to the smaller shops. Shops with a symbol group can provide offers base don buying power – shops labeled as Premier, Spar etc.

I understand the why.... it just makes it sting too much so we don't bother. I'd rather go to Tesco and spend £100 and get a full shop and do without the thing i 'needed' that was only 30p more... but all those 30p's add up.
Things like when you got to the local shop and they have Cravendale milk which is £3.00 or so.... or i can head to Tesco and pay £1.20 for the same amount.

Not what you want to hear as a small shop.... but that's the reality for many.

I tend to agree with weesky. When it comes to a decision between feeding my kids or local business owners kids, mine are always gonna get fed first.

Also I can't remember the last time I bought a Heinz product. Tend to just shop at Aldi/Lidl. Morrison's seems to have gone crazy expensive as well! Local co-op does have some decent deals though, and at least we give something back to the local through our co-op card thingy.

OP - can I ask where your shop is? I know you're Cotswolds/Ciren area (or at least I think I do)

I get complaints If I don’t sell Heinz as a brand.

Complaints that are actually an issue, i.e. reducing sales, or just whinging from a certain type of person I can imagine uses a small village shop? If I go into a small shop for some baked beans, I know I'm pretty much going to get what I'm given and that's fine.

Or, maybe make a 'thing' of how much Heinz is now, and how you've managed to help your punters by finding a better value alternative. Some kind of 'brand-beaters' display/promotion maybe?

As an aside (if you haven’t already), can you join the nice coffee club (*with basic food, croissants, cake etc) very common where I am, small village shop had a crap machine, then nice coffee and 1 table inside, couple outside in summer, about a year later 3 inside, 8 outside under a sunsail. Lots of people meet, coffee, small shop, home. If you have good parking can you do sandwiches - a few places seem to be known to the trade and at the dinnerish get quite a few vans, esp with a preorder facility - in, pickup and coffeee back to work, easy parking seems to be their win

OP – can I ask where your shop is?

Not too far from 417 Flyup.

Yeah, the markup on coffee is outstanding. My BIL used to own a cafe, he told me that the biggest cost in a £2.50 takeaway coffee is the 5p paper cup...

Sorry my reply up there was a bit off.

As others have said either ditch the branded goods or source some cheaper alternatives and show in nice big signs that they are cheaper side by side with the Heinz stuff. See which sells first. Some people will still buy Heinz but I reckon lots will buy the cheaper alternative.

Good luck to you though, it must be hard running a business like yours in these times.

Not too far from 417 Flyup.

Now I'm trying to think which of those villages has a shop. I don't think Cranham does. Or Coberley. Birdlip?

I’ve been buying alternatives, for example I can sell a can of organic baked beans (£1.49) now for less than a can of Heinz baked beans (pmp £1.79) , but I get complaints If I don’t sell Heinz as a brand.

From your previous posts I see your shop as more of a convenience store. If they are stuck for beans on a Saturday afternoon they'll buy the organic ones, rather than drive to the nearest supermarket. They'll have a chunter but they'll be back because of the convenience!

We've all done it - you've gone into the local shop for something urgent. Look at price - go HOW RUDDY MUCH!! But you still go back and shop there because you see it as a tax on your lack of planning!

The important question though is are you making as much profit from the organic beans and the Heinz. No point doing your self out of profit.

And IMO - Heinz Baked Beans are rubbish - Aldi's own are far better! 🙂

From your previous posts I see your shop as more of a convenience store. If they are stuck for beans on a Saturday afternoon they’ll buy the organic ones, rather than drive to the nearest supermarket. They’ll have a chunter but they’ll be back because of the convenience!

I'm mostly in agreement with this, but as a village shop in an area with piss-poor local transport and a reasonable amount of elderly people, I'd imagine he has to balance the needs/wants of the people who don't want to drive to the supermarket with those who can't get to the supermarket, for whom this is their only shop.

I am sure you already know this but for the sake of another opinion.

Our local village* londis is rubbish, hence we don't buy much from there. I expect it to be expensive due to convenience. The thing that stops me is it doesn't stock what I want to buy. It has the usual beans, crap biscuits sweats cheap cider and crap beer. It doesn't have a good baked goods section, nice beer and a pleasant environment. Now this is probably because what sells is crap beer and cheap cider, but it's catch 22, I only drop in if I actually have to not because I want to.

* A bit of a weird village not the usual pretty village.

I’m not convinced that big brands, who have competed on price for so long, would suddenly choose to whack their prices up to increase profits, right at a time when energy prices are sky high taking everyone’s money and forcing them to price-shop even more.

https://amp.theguardian.com/business/2023/mar/12/global-greedflation-big-firms-drive-shopping-bills-to-record-highs

Large corporations have fuelled inflation with price increases that go beyond rising costs of raw materials and wages, pushing shopping bills to record highs, according to an analysis of hundreds of company accounts.

Highlighting a trend dubbed “greedflation”, the research indicates that supermarkets, food manufacturers and shipping companies are among hundreds of major firms who have improved their profits and protected shareholder dividends, giving an extra lift to prices, while the cost of living crisis has meant workers face the biggest fall in living standards in a century.

I do 90% of my shopping at Lidl, and even their prices are shooting up now (relatively speaking).

a tin of beans is 40p more, a Snickers 30p more…. it’s just insane

Doesn't seem unreasonable for a local shop, I'd expect more like 2x or 3x the price.

My local shop sells off-brand stuff now, and I'm sure I recognise some of the names from budget supermarkets.

I worked in the food industry for many years and have been watching the current round of price increases. For many years prior to Covid, food ingredient prices had been pretty static (more or less). And the UK pays the least in W Europe for food.
Covid has been a huge opportunity for the supermarkets and the big grocery companies to realign their profitability. People have to eat - and boy, you can blame anything on Covid. Energy prices have obviously gone up - and is a factor come into play in both manufacturing and distribution.
But Tesco, Sainsbury , Unilever, Heinz etc are completely milking it.
It will be interesting to see Tesco's figures when they come out ( but they also made a killing during Covid). It is certainly a good time to be a supermarket - as nobody asks questions.

But they are going to start buying less ...

I really feel for you and other small shops. I don't know what the solution is, you are a service that will be sorely missed if you have to give it up.

Our village shop is a Tesco Express, so prices are higher but not subject to the pressure of proper independent stores, and it gets a lot if trade from surrounding villages - we have the doctors, chemist, takeaways etc to draw people in. (But no pub, currently)

The post office that my mum goes to every week (which is part of a symbol group like Nisa, Premier etc) now seems to stock a lot of Tesco brnads for things like orange juice, butter, even milk. I suspect that the owner is buying from the supermarkets when they are cheap, or when normal supplies fail, and just adding a bit of profit on top.

It is certainly a good time to be a supermarket – as nobody asks questions.

Not nobody, trade unions have been on the case for a while:

"Despite the rise in wholesale prices, Tesco, Sainsbury’s and Asda still managed to increase their profits by an astonishing 97% in 2021. At the same time the 8 top UK food manufacturers made profits of £22.9 billion. Profiteering is happening right along the food supply chain and workers are paying the price.

“It’s more evidence that the British public are hostage to greedflation . It’s time our elected leaders and policy makers woke up to corporate greed and challenged it head on.”

https://www.unitetheunion.org/news-events/news/2023/march/food-prices-the-british-public-are-hostages-to-greedflation/

Unfortunately the political party whose election campaigns they pay for don't seem to be on the case.

the shop is having to spend more on an item, but retaining a comparable net margin to the previous price.

Assuming people are still buying the same number of tins of beans/dog food then you're still making the same profit, it's just more money tied up in stock?

Hypothetically if the price of something crashed (hypothetical post Brexit deregulation of farming leading to an oversupply for example) would you just shrug and accept that you would have to reduce your margin in absolute terms because the price had dropped? Or would you maintain the same absolute margin because that's what it costs to buy and re-sell that product?

I'm waiting for the big reveal that this thread is really just a metaphor for the bike industry, brand snobbery and supporting local bike shops...

I’ve been buying alternatives, for example I can sell a can of organic baked beans (£1.49) now for less than a can of Heinz baked beans (pmp £1.79) , but I get complaints If I don’t sell Heinz as a brand.

That's interesting. That suggests that the input costs (fertilizer, sugar, all the bad stuff) to creating Heinz baked beans have increased to beyond the higher labour costs of creating an organic product.

Either that, or Heinz are rinsing their customers. Either way - don't buy Heinz. Buy organic, better for the environment, your health and your wallet 🙂

We hardly buy any big brands. A no brainer. Even if the taste isn't identical it is usually just slightly different, not worse. Only examples are Baxters Baby Beetroot. And Liddle detergent wasn't dissolving in the tray. Went back to Daz, issue solved.

We use our corner shop but only for papers, morning rolls, and the odd thing we have run out of

Strangely, our local shop is one of a pair of shops side by side which are both corner shops selling almost identical stuff. It has always been that way. Seems logical to only have one especially as there is a Tesco, Waitrose, Lidl, Asda, M andA food, and Aldi within 2 miles.

Not nobody, trade unions have been on the case for a while:

“Despite the rise in wholesale prices, Tesco, Sainsbury’s and Asda still managed to increase their profits by an astonishing 97% in 2021. At the same time the 8 top UK food manufacturers made profits of £22.9 billion. Profiteering is happening right along the food supply chain and workers are paying the price.

“It’s more evidence that the British public are hostage to greedflation . It’s time our elected leaders and policy makers woke up to corporate greed and challenged it head on.”

I wonder why profits might be higher than they were in 2020.........

Tesco profits:
2019/20 £2.2B
2020/21 £1.3B
2021/22 £2.2B
2022/23 £2.4-£2.6 (final figures not released yet)

Looks like business as usual apart from a crap year when we were all at home shopping online. And bearing in mind their turnover is ~£65Billion, the profit margin is ~3%.

More on the "greedflation"

Aussie study finding 69% of inflation felt by consumers is due to excess profits of large corporations.

https://www.wsws.org/en/articles/2023/02/25/xnvj-f25.html

Looks like business as usual apart.....

"Despite the rise in wholesale prices"

Despite huge increases in transport costs, energy prices, grain prices, poor weather, etc etc Tesco's profits remain totally unaffected - all the costs are passed on to the consumers, they simply increase their profit margin.

Hence the term "greedflation".

And on the BBC News today the real life consequences:

London
Tower Hamlets: Calpol most shoplifted item in borough

https://www.bbc.co.uk/news/uk-england-london-65316305

"Desperation has led to an increase in theft. Shoplifting of essential items and medicine has increased. Theft of essential products for babies is also on the rise."

Always good to get knowledgeable info on these threads from people in the business.

I'm not sure baked beans are a good example though as there's basically one brand that everyone wants, because historically all other brands were terrible. Catfood though, there are two brands of dry food - Purina and IAMs - and one would assume price would be a factor in people's choices there? Or bread - there are about 5 brands in our bakery section.

Maybe it's a case of them both being owned by the same Megacorp so they can collaborate on prices? Or perhaps shoppers have become less price-sensitive over the years and more sensitive to other things, and no-one noticed until inflation kicked off?

Despite huge increases in transport costs, energy prices, grain prices, poor weather, etc etc Tesco’s profits remain totally unaffected – all the costs are passed on to the consumers, they simply increasemaintained their profit margin.

Their profit margin is ~3%

It's 3% of 27% of the entire grocery market in the UK, but it's still only 3%.

Tesco's gross profit margin decreased in 2021 (6.2%, -5.8%) and increased in 2019 (6.2%, +31.5%), 2020 (6.6%, +6.2%), 2022 (6.9%, +10.9%), and 2023 (7.3%, +5.6%).

https://finbox.com/OTCPK:TSCD.F/explorer/gp_margin/#:~:text=Tesco%27s%20gross%20profit%20margin%20decreased,7.3%25%2C%20%2B5.6%25).

Looking back at the last 5 years, Tesco's gross profit margin peaked in February 2023 at 7.3%.

Some people are completely wedded to these brand names, the psychological grip they have is amazing. I was chatting to a guy at work about this kind of stuff and he mentioned they tried lidl once and couldn’t bare the inferior quality rip off products. Went straight back to buying the usual brands. No money worries for him and just wasn’t interested in trying different products again. Each to their own, I much prefer the Lidl and Aldi model.

Our local strawberry farm is selling early season fruit that I think requires extra heating at this time of year. Has gone up a bit, but not by the huge amounts in supermarkets.

ernielynch
Full Member
Tesco’s gross profit margin decreased in 2021

So you agree (or at least agree that statistics can be made to show whatever you want if you like if you look at them through a tight enough vignette).

Looking back at the last 5 years, Tesco’s gross profit margin peaked in February 2023 at 7.3%.

I'm going to hazard a guess that coming off the back of a period with the highest inflation for a generation they may be reaping the short term benefits of stabilizing wholesale/commodity prices. In the same way rising prices in their supply chain would have reduced their profits 12 months ago.

Some people are completely wedded to these brand names, the psychological grip they have is amazing.

As someone has already alluded to, it's not just in food though, cycling brands aren't exactly immune/innocent either.

Unfortunately to OP I think COVID created a very different business model to what you will have going forward.

We live fairly remote, a village shop 2 miles away and Sainsbury home delivery.

I very rarely use the village shop, maybe for the odd chocolate bar and drink. Very occasionally we will be making some food and realise we dont have something in the cupboard and will go to the local shop 1. On the expectation it will be expensive 2. They probably wont have what we need.

Local shops also individually price items. When we are doing a 'big shop' online or in a store you tend to ignore the prices until you get to paying and then go WTF ! in a local shop you might only buy one or two things so you concentrate on price and brand.

Could you stock a cheap brand and premium brand of same product as a test for a while and see what sells?

Winners for me are local shops that have good quality 'home made' pies/samosas, bread etc. I would imagine there is more margin in that than a tin of Heinz baked beans?

I do know that farmers are not getting inflated income for the raw products they provide, they are just getting squeezed further by the buyers. So someone is making money out of all of this.

So you agree (or at least agree that statistics can be made to show whatever you want if you like if you look at them through a tight enough vignette).

I agree that your figures are wrong 😏

I also agree with the widely held view that supermarkets are guilty of "greedflation" and simply increase their profit margin during a cost of living crisis so that the only losers are the consumers.

Dog food is mental as well, we were paying less than £60 for 2x 12kg bags 2 years ago, now we're up at £80 and the price goes up every time we re-order.

I do 90% of my shopping at Lidl, and even their prices are shooting up now (relatively speaking).

Two bags in Aldi cost me £60 the other night, I remember I could have filled the trolley for that not so long ago.

The post office that my mum goes to every week (which is part of a symbol group like Nisa, Premier etc) now seems to stock a lot of Tesco brnads for things like orange juice, butter, even milk. I suspect that the owner is buying from the supermarkets when they are cheap, or when normal supplies fail, and just adding a bit of profit on top.

Nope, the symbol brands seem to be partnering up with the supermarkets for "own brand" supplies. McColl's down the hill from me have Morrisons stuff hiding under the old Safeway branding, Nisa has Tesco IIRC and I'm sure the others have their own suppliers.

We're going off-track somewhat analysing percentage profits for supermarkets! (yes I know this is STW)! 🙂

The OP really just needs to do what's best for him and his business.

Heinz is the safe option - everyone knows it and as a convenience buy people know they are safe with it. If sales of beans drops off a cliff if they substitue Heinz for an unknown brand then that's no good to anyone.

For those customers who depend on your shop why not offer a discount card (5% or 10%). It's pretty cheap to get some sturdy business cards printed. That way you can rip-off those who come in twice a year, and barely nod at you, but support those who buy on a regular basis.

increase their profit margin during a cost of living crisis so that the only losers are the consumers.

Fluctuating between 6.2 and 7.3, you'd have to dig a little deeper to actually prove that that change was statistically significant.

There's plenty of actual sticks to beat the big 4 supermarkets with, like their ability to dictate a price to farmers* rather than allow an actual competitive market to exist (or offer terms that would meet the fairtrade criteria) without having to make them up. Although arguably the supermarkets putting farms out of business does benefit the consumer so it depends who's side you're on.

*case in point, eggs this last winter. Farmers could have probably met demand with barn eggs, but supermarkets wouldn't pay what they cost to produce so a lot of farms just scaled back production and we were left with empty shelves.

I’m not convinced that big brands, who have competed on price for so long, would suddenly choose to whack their prices up to increase profits, right at a time when energy prices are sky high taking everyone’s money and forcing them to price-shop even more.

There was a quote in the Sunday Times last week from the CEO of one of the big brand owners and that was exactly their strategy. The whole point of owning a big name brand is you have more price insensitivity eg people want 'Heinz' baked beans and will pay a premium for having the logo on the tin. Their strategy was to use the current inflation spike to full advantage and maximise profits.

Paid £4 for some Heinz ketchup as Aldi had run out of bramwells.

Saw 48 Weetabix for £7 the other day.

I'll stick to Aldi/Lidl anyway. Prefer less choice. Makes my life easier.

If you simply must have brands, try Home Bargains. Usually far cheaper than Tesco/Morrisons but choice is often limited.

It's undeniable that some things are better from the brands; Crunchy Nut Clusters are a case in point; Kelloggs are at least twice the price of the Aldi/Lidl equivalent but more than twice as nice, and Heinz ketchup is nicer than any other I've tried making the savings a false economy as it's far more likely to get binned before it runs out.

Kelloggs are at least twice the price of the Aldi/Lidl equivalent but more than twice as nice

Conversly, Lidl cornflakes have zero added sugar (unlike Kellogs!) which is a massive win for me.

There’s plenty of actual sticks to beat the big 4 supermarkets with, like their ability to dictate a price to farmers* rather than allow an actual competitive market to exist (or offer terms that would meet the fairtrade criteria) without having to make them up.

It hardly 'making things up' FFS.

All your figures were wrong and you falsely claimed that profit margins haven't been increased, try reading stuff written by people that have looked into the issue. "Greedflation" as it is called, is very real.

the research indicates that supermarkets, food manufacturers and shipping companies are among hundreds of major firms who have improved their profits and protected shareholder dividends, giving an extra lift to prices, while the cost of living crisis has meant workers face the biggest fall in living standards in a century.

Higher profits margins are the result of “tacit collusion” by large companies, adding to the prices of hundreds of goods and services that were already under pressure after the Covid-19 pandemic and Russia’s invasion of Ukraine, the report said.

https://amp.theguardian.com/business/2023/mar/12/global-greedflation-big-firms-drive-shopping-bills-to-record-highs

It is not simply business back to usual post pandemic as you claim. Costs have risen massively, transport, energy, food production, etc, since pre pandemic but supermarkets have been maintaining their eye watering profits by increasing their profit margins and hammering their customers.

And greedflation is a European-wide issue btw.

https://www.theguardian.com/business/2023/mar/02/ecb-looking-out-for-price-gouging-greedflation-price-rises-eurozone-inflation-profit-margins

Unless you think that the European Central Bank is 'making stuff up' too?

Logs have doubled in price apparently which is just profiteering….. Trees haven’t doubled in cost to grow and transport isnt “that” much more expensive.

It's not the cost to 'grow' but the TCO that counts, plus what someone else is prepared to pay that dictates the cost of logs. Also need to take into account demand, as this too increases costs where suppliers/retailers now need to be less price competitive to make their 'numbers'.

Saw 48 Weetabix for £7 the other day.

£7/kg for Weetabix!

I pay less than that for my lah-di-dah organic date and walnut muesli from the local deli!

O.P - have you got room in your shop for some locals to sell their wares/crafts/art etc. E.g. I used to sell my cushions, handbags, tea towels and other crafts to a cafe. The owner took a percentage and therefore didn't have any stock to buy (this came to a halt when she later wanted 25% mark up, that meant I was making the goods at a loss).

The situation with buying wood is interesting. This is a product where a supplier is stitching up the retailer and consumer. The dowelling rods I buy for work were £2.00 each 18 months ago, then up to £3.00, now £3.20, If I'm using several on a job that's a massive mark up which has to be passed onto my customer.
At the moment I am 'taking' per hour less than the minimum wage for running a tiny business, it's just insane and certain business people cannot keep sucking up the price increases. We're being taken advantage of.

Tesco’s gross profit margin decreased in 2021 (6.2%, -5.8%) and increased in 2019 (6.2%, +31.5%), 2020 (6.6%, +6.2%), 2022 (6.9%, +10.9%), and 2023 (7.3%, +5.6%).

https://finbox.com/OTCPK:TSCD.F/explorer/gp_margin/#:~:text=Tesco%27s%20gross%20profit%20margin%20decreased,7.3%25%2C%20%2B5.6%25).

Looking back at the last 5 years, Tesco’s gross profit margin peaked in February 2023 at 7.3%.

Tesco's profit margin is a nebulous thing - because they throw a whole lot of other stuff in there. Losses on projects, depreciation on assets, building land re / de valuation.

A senior buyer I knew there told me real food profits are nearer 30%. Which is more than the food companies make.
The there is the costs to the suppliers of position on shelves, late delivery "fines", lost profitability if a product is recalled, suppliers paying for Tesco staff to attend the annual bash, and also having fund all the raffle prizes.

BTW, pet food and pet treats are a real cash cow. Pet owners will pay anything for Fido.

Assuming your consumers will pay more, go for the artisan approach. Buy from local producers and focus on the added value of your products. You'll never compete with Tesco on price/volume but can get apples from a local orchard each week and make a profit. It's a lot more effort on your part but would insulate you from corporate activity.

All your figures were wrong

We've posted basically the same figures except you're posting TESCO plc, I'm posting Tesco UK (Turnover about £65billion, profits about £2.4billion).

The argument is whether an increase in profit of 1% is "greedflation", or regression to the mean after COVID.

Is the TUC correct that TESCO's profit was up almost 100% in 2021, yes.
Is that because TESCO's 2020 profit was a bit over half it's normal amount, also yes.

Did TESCO make 1% more profit in 2022 than 2021, also yes (ish).
Was that against a background of food price inflation being ~20% whilst raw materials and energy costs went through the roof, also yes.

Chap near me just sells short dated foodstuffs at c half supermkt prices, mostly branded but I bought 500ml Heinz ketchup for 1.50, he s really busy no idea if he s making money.

Our village shop does ok as has a post office, I just get weekend papers.

So even the IMF, an organisation historically notorious for demanding that workers tightening their belts and pay the price for economic mismanagement, with scant regards for the human cost, is on the greedflation case now.

The International Monetary Fund said last week it was “unconvinced” by evidence of a wage-price spiral where excessive worker pay demands result in a “baked-in” inflation, which the Bank of England says it is keeping a close watch on.

He said companies were doing rather better out of the cost of living crisis than workers were. The flipside of steeply rising prices but only modestly higher wages was that profit margins had “surged”, he added.

https://12ft.io/proxy?q=https%3A%2F%2Finews.co.uk%2Fnews%2Fbusiness%2Fgreedflation-greed-driving-price-surges-firms-prioritise-profits-customers-experts-2285246

A senior buyer I knew there told me real food profits are nearer 30%. Which is more than the food companies make.

Depends how that is defined.

The net profit on a can of beans ie difference between what you buy it for and sell it for, doesn't mean a lot on it's own as it hasn't accounted for the cost of running the supermarket you have to have to sell it in the first place.

Gross margin will be much much lower and it may have a few write offs in there, but fundamentally, it will be dominated by the gross margin on selling stuff as that's the bulk of what Tesco does....

We work with a number of the big supermarkets including the discounters, we provide services not products. The vibe we're getting is they are all cutting internal costs like mad and things are pretty tight and there's been quite a lot of redundancies. Sorry that doesn't fit the conspiracy theories of big corporate greed but that's what I'm seeing from the inside.

Supermarkets are extremely competitive with low margins, if one starts to profiteer the others will happily cut their legs out from under them. Brands are also vulnerable, it's a fine line between premium aspirational prices and being too expensive.

Sorry that doesn’t fit the conspiracy theories of big corporate greed but that’s what I’m seeing from the inside.

So are you claiming that the European Central Bank and IMF on part of "the conspiracy theories", or are you claiming it isn't true that big supermarket profits have been unaffected by the cost of living crises?

Edit:

we provide services not products. The vibe we’re getting is they are all cutting internal costs like mad and things are pretty tight and there’s been quite a lot of redundancies.

Am I right in assuming that you probably supply subcontracted labour to the big supermarkets and that they are currently pleading poverty because things are so tight?

The IMF comment above refers to how they are deliberately exploiting the situation to suppress wages and increase their profits.

Am I right in assuming that you probably supply subcontracted labour to the big supermarkets and that they are currently pleading poverty because things are so tight?

Nope complete opposite actually, we also work with many other sectors including the public sector.

are you claiming it isn’t true that big supermarket profits have been unaffected by the cost of living crises?

Nope, never said that either. I'm happy to accept their profits up to the end of last year were constant as a percentage of turnover. However margins have been tight in the supermarket sector and their investors will demand the margins be maintained. The supermarkets are struggling to maintain the realtively modest percentage margins and are having to cut jobs and investment plans to try and maintain them. They are not raking it in like people like to think they are. They are also private business. If you want food distribution to be not for profit you could try and nationalise it but based on historical evidence governments distributing food hasn't worked so well.

The supermarket system is far from ideal but what's the alternative.

They are also private business. If you want food distribution to be not for profit you could try and nationalise it but based on historical evidence governments distributing food hasn’t worked so well.

The supermarket system is far from ideal but what’s the alternative.

LOL! That is one hellva leap! We have gone from 'greedflation is unacceptable' to 'well what's the alternative?' 😂

Here's some more conspiracy theories for you, this time from Investors Chronicle

https://www.investorschronicle.co.uk/news/2023/04/14/greedflation-is-only-making-things-worse/

Note :

Food and beverage inflation rose to 18 per cent last month in the UK. Supply conditions have been tough, but analysts at Pantheon Macroeconomics said that it would be a stretch to link these big increases to the impact of poor European harvests: “instead, supermarkets appear to have widened their margins”.

Yet, according to Pantheon, people are curtailing their consumption of goods that have risen most quickly in price, while discounters Lidl and Aldi have seen their market share soar. They add that “shoppers are not brand loyal but will flock to where prices are lowest”. For the same reason, quarterly results from the likes of consumer goods companies continue to be closely scrutinised for signs of shoppers trading down. Firms that are engaging in ‘greedflation’ could yet find that it backfires.

Just like unbridled greed eventually caught up with the big banks (but what's the alternative?) it might eventually catch up with the big supermarkets.

Been at 417 today so not had a chance to catch up on the thread yet...

OP – can I ask where your shop is? I know you’re Cotswolds/Ciren area (or at least I think I do)

Miserden - small estate owned village between Cirencester/Stroud/Cheltenham. Was recently in the news for fox hunting on the estate land - but that's a whole other thread ..

The post office that my mum goes to every week now seems to stock a lot of Tesco brands

If it's a Premier it's getting stock from Booker, which is owned by Tesco - they've removed what was the budget happy shopper brand and replaced it with Jack's, part of the Tesco brand. I only ever sell this in the shop if I absolutely have to and can't find the product elsewhere.

I’d imagine he has to balance the needs/wants of the people who don’t want to drive to the supermarket with those who can’t get to the supermarket, for whom this is their only shop.

I've only one elderly customer in the village who doesn't shop either in person at a supermarket or gets online delivery.

Assuming people are still buying the same number of tins of beans/dog food then you’re still making the same profit, it’s just more money tied up in stock?

This is difficult to tell, primarily due to COVID the last few years were a boom for the shop and ment we could significantly reinvest in the shop, it went back to being a propper village shop up until the end of last year when 'cost of living' started being in the press. Sales have dropped but I'm selling the same as 2019 though & yes it's more money tied up in stock which is my issue.

My electric bill has doubled but that is small fry in comparison to the stock bill. I have around a 6month turn around on general grocery. So for example I sell an item bought for .80p with a rrp of 99p margin of around 20% making approx 20p, I go to replace the case of the item 6months later but find that I'm having to buy it for £1 and now sell at £1.20 do in effect I've made no money in that size months on it and still have to cover all overheads.

Our village shop does ok as has a post office, I just get weekend papers.

P

Tbh the post office pay is a joke - it's commission based so with the way royal mail is, falling rapidly.

Weekend papers unfortunately again is a falling market. If I could remove magazines from sale without removing newspapers, I would (sorry STW), mags have been a falling category for well over a decade, but we are forced to have them as part of our supply of newspapers (can't have one without the other).

Someone asked earlier in  the thread about coffee and cake - yep, have both and seating. Coffee is a good earner, but the machine costs alot (like new small car amount) so takes a year or two (or three or four) to get any money out of it - but our coffee profits now pay for our new shop van.

Assuming your consumers will pay more, go for the artisan approach. Buy from local producers and focus on the added value of your products

We do both - local product and artisan foods. Only a really really small shop though. Artisan stuff is great for a local draw of people but a slow sell. There's an artisan shop not far from us called Jolly nice - know locally as jolly nice price as it's f'in expensive. £3 aubergines anyone?

Winners for me are local shops that have good quality ‘home made’ pies/samosas, bread etc. I would imagine there is more margin in that than a tin of Heinz baked beans?

We have home made pies, but they are generally a loss leader as the one pie you don't sell (and end up eating for tea) is the one that actually had any profit In it. Bread is the same - we have local bakery bread and have to sellout every 2days to retain profits.

Here's my view on supermarkets and going back to my op.

Tesco - the original discount food shop, typically has a very low profit margin ~2% & small fry in global food terms.

Aldi and Lidl - mis branded by the media as 'discount' supermarkets, as don't actually provide any discount as don't sell the same brands as anyone else it's just (sometimes) cheaper food.

Much of what the press have been talking about has been complete BS as it's the multinational food companies who actually dictate pricing, not the supermarket or shops.

.Depends how that is defined.

The net profit on a can of beans ie difference between what you buy it for and sell it for, doesn’t mean a lot on it’s own as it hasn’t accounted for the cost of running the supermarket you have to have to sell it in the first place.

Gross margin will be much much lower and it may have a few write offs in there, but fundamentally, it will be dominated by the gross margin on selling stuff as that’s the bulk of what Tesco does….

Thanks for the mansplaining
After 35 years in sales and marketing I do know different between net and gross margins - and margins and profits. And I also know all about the accountancy tricks so that businesses report as little as possible / pay as little tax etc.
Tesco is a huge business - covering grocery, white goods, electrical, property, petrol, land management, insurance etc.
The grocery business makes more than 8% as a business. How Tesco allocate this is the over all business is kind of the game that all companies play.
As you seem to have the Tesco details annual report , if you could send it to me, so I can have a better look?

Aldi and Lidl – mis branded by the media as ‘discount’ supermarkets, as don’t actually provide any discount as don’t sell the same brands as anyone else it’s just (sometimes) cheaper food.

I wouldn't say they're misbranded as opposed to lost their way in the UK. They used to be really cheap because they had cheap stores and nothing in the way of style. Say what you like but both are a long way from the stark white of Tesco now, probably to appeal to small minded folk who would rather pay a premium for a nice "experience" (it's shopping, get over it).

Cost is subjective as well, they are usually cheaper but with equivalent or better quality.

mrmoofo - don't disagree with anything in your post but would add...substantial 'hidden' revenues from volume/retro rebates and the chunky payments by brand owners to ensure optimal positioning of their products on store shelves.
There are lots of other revenue generators which stores deploy.
None of those revenue generators are ever used to benefit the customer.
The headline margin is meaningless.
I've worked for two of the major retailers - not as a trader/buyer but with enough insight to understand some, but not all, of the numbers which are being massaged.
Let's take your 8% and assume it applies to a customer spending an average of £100/wk over a 40 year shopping lifespan; that's (upto) £16.5k of profit at risk if/when that customer moves on.
That is a huge motivator in customer loyalty programmes; they should be re-named/branded aa customer retention schemes.
Supermarkets - necessary evil but never to be trusted.
What they know about us - based on just our shopping basket and 'loyalty' cards - should scare us but...it doesn't appear to.

Liddle detergent wasn’t dissolving in the tray. Went back to Daz, issue solved

been using Aldi color and Aldi biological for whites for years now. AOK. They’ve changed formulation recently and have smaller packages with the same effect. 🤷🏻‍♂️ what the ‘padding’ was but less volume, less mass, and the same effect work for me.

Found it amusing when a child came home from uni and said ‘I thought Tesco was cheap. I was wrong. It is really expensive compared to Aldi, Lidl, and specialist stores’.

Edit
Supermarket stuff I go to Aldi for. Artisanal stuff I go to my local French bakery, specialist cheese shop, and other specialist stores for.
Necessary brands I go to a supermarket or cash and carry for.

Aldi and Lidl – mis branded by the media as ‘discount’ supermarkets, as don’t actually provide any discount as don’t sell the same brands as anyone else it’s just (sometimes) cheaper food.

Not sure it’s the media, perhaps clever marketing by them both, which in turn has been latched on to by not just the media.

Ive never looked at Lidl it Aldi as being cheaper as their quantity always tends to be less than the competitors per unit. Some stuff is nice and slightly cheaper, but not much.

B&M is way cheaper than most supermarkets for food stuffs. M&S is more expensive than other supermarkets for food, but the quality is better. All the others are in the middle trying to kid people they are ‘cheap’

Booths is an odd one, some stuff high quality/high price. Others bits cheap ie they often have good deals on booze…maybe they just know their customers