Sometimes there is no next guy over. I know plenty of towns that only have one supermarket. If they could reduce their costs by five percent, they wouldn’t have any overwhelming motive to reduce their prices. The only way their prices become uncompetitive is if they’re so high above average that costumers are willing to drive twenty miles to shop in another town. And in many cases, the supermarket in the next town is just another branch of the same chain.
I don’t think there is a GQ response to this, other than to say you have conflated Socialism with Anarchism.
But if costs are reduced because there is no theft, then the competitor in another town can lower prices to attract more people to do the drive, so the local store then has to cut prices to persuade its customers not to go elsewhere.
Sorry. All those Commies look alike to me.
I think that crime has very little to do with the lack of supermarkets in the inner city – as this thread says, shoplifting isn’t a big part of grocery store costs. Much more important is that first, there aren’t a whole lot of 2-acre open fields in the inner city that you can plop a superdupermarket+ parking lot on. Even if the neighborhood is more tenements and empty lots than million-dollar condos, buying the amount of space for a suburban mega-mart would still be ridiculously expensive compared to the cost of undeveloped land on the outskirts of a suburb. And the less important second, the bit about the parking lot is key: A lot of inner-city residents won’t drive six miles to do their food shopping (either because they don’t have cars or don’t have time). You’re never going to get enough foot traffic to support a giant megamart, so there’s no point in building one where most traffic is by foot. And finally, a very distant third, a supermarket in a poorer neighborhood might have slightly lower margins, because they’re selling more cheaper staples with lower mark-ups instead of imported cheeses, lobster, organic frozen dinners, and other expensive things with high mark-ups. But that last one is a tiny factor and I guarantee you, if you gave away for free (or even for the cost of a field in the suburbs) a large site in the inner city, in convenient driving distance of enough customers to support it, no supermarket chain would turn you down.
The reason prices are higher at bodegas and corner stores is far more about volume than theft. Volume is king in the supermarket business, and economies of scale happen for virtually every single thing a supermarket does, from what they pay wholesale for goods, to stocking to recordkeeping, to cashiering, to advertising, to rent.
Did you miss where I explicitly acknowleged that people could drive to another town? But people can’t drive to another town for free. All the supermarket in town has to do is keep its prices below the level of the other stores prices plus driving cots. If an average bag of groceries costs you fifty dollars in town or forty-five dollars out of town plus six dollars to drive out of town, then you’re going to buy your groceries in town and your store has no incentive to lower its own prices down to forty-five dollars.
People have to realize that while the free market does work overall, it only works perfectly in the land of theory. In the real world there are situations where free market forces are out of kilter.
Er, no. In fact, I was acknowledging and specifically addressing that point.
Yes, and my point is that, using your numbers, if the out of town supermarket can cut its prices to forty-three dollars because of the cost savings it has made, then now more people will make the drive. So now the local store has to lower prices to restore the benefit of shopping locally.
But in your example the free market does work inasmuch as price changes affect the competition even if the competition is not immediately local - it is just that the numbers are such that the price of the goods is not the only factor in the equation.
Just so.
Sometimes the big chains will find it in their interest * not* to compete. As Adam Smith said, “People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.”
Well…yes.
But the point is, retailers often say “shoplifting costs us X per year”. I don’t think you can fairly include all security devices in that figure. Because even if a business was never the victim of shoplifting, they would still want the security devices as a deterrent and for peace of mind.
The hypothetical where a business owner knows that no theft is possible OTOH is so far from reality as to be irrelevant.
This is pedantic as hell, but the way they’ve calculated it, it adds £180/year to the average non-shoplifting family’s shopping bill. It has no net change at all on the overall average.
And how do they accomplish that cost reduction? Have the store wizard cast a spell?
The premise of the thread was that supermarkets were able to cut their costs because theft is somehow eliminated. That’s going to affect all supermarkets equally. You can’t just arbitrarily declare that supermarket A is somehow able to lower its costs two more dollars per bag just to make your math work.
That’s a good point. If there was no theft, most people would see their grocery bills go down. But shoplifters would see their grocery bills sharply increase.
Seeing we are in pedantic hell already, I will get out my pitchfork of pedantry. The BBC article said:
They didn’t say families will save an average of £180. Assuming the “average family” does not shoplift at all, the figure might be correct. Define “average family” in this case as a family which commits the median amount of shoplifting (which I assume is no shoplifting) and we are OK, I think.
Nowhere have I said that one supermarket is able to cut costs more than another. Your particular comment that started this sub-discussion was that a supermarket with no local competition would not have to cut prices because it had no competitive pressure.
The numbers quoted show that they do have to cut prices at least to remain competitive with driving to another town and shopping there. They do not have to charge the same prices, but they are likely to have to come down in parallel.
For the fun of it, I’ll raise you another pedantry 
The £180 figure came from a paraphrasing of a quote by a representative of the retailers, Neil Matthews of Checkpoint Systems.
And that original quote was actually: “Shoplifting results in a £180 financial burden on every family in the country”
Returning to the OP though, I’m not sure that a figure could really be worked out for this, and I suspect that the figures touted are often overestimates.
Firstly, there is the question of what proportion of stolen stock would actually have sold, and without discounting. This is a more significant question for shoplifting in, say, a high end clothing store than a grocery store. And it’s the former that incur the greatest claimed losses.
(Obviously the OP mentions groceries specifically, but much of the discussion since has been on general shoplifting losses).
Secondly, as I said upthread, you can’t really include security costs. If shoplifting were to go down 50%, security costs would barely budge.
Only if you consider the case of zero thefts / damage would security costs go down (eventually to zero), but that is a completely unrealistic scenario. We may as well talk about the future of grocery stores if humans did not require sustenance.
In a supermarket with no local competitors, why do they have to wait for the magic of low theft to increase margins? Why don’t they just increase margins right now until it hits the marginal point where enough people start defecting? And, if they’re already at that marginal point now, when them and their competitors gain a way of cutting costs, their competitors will lower their prices which means they now have to do the same to maintain the same marginal position.
I’ve worked at a tomato packing plant in California and a papaya packing plant in Hawaii. Both places would throw out all the tree (or vine) ripened fruit. It didn’t have any shelf life and we threw out massive amounts. Ironic how the sweetest best tasting fruit all got thrown out. Employees could take this fruit home, but pretty soon everyone (and their families) got pretty sick of tomatoes and papayas.