I am looking for a list of supermarket profit margins by category. I do not easily find this on the internet. Any ideas? I am in USA if that makes a difference.
Example:
Catsup: margin = …
Frozen dinners: margin = …
Ready to Eat cereal: margin = …
Soda: margin = …
etc
Thank you.
Tough question.
It would vary with marketing agreement with various brands (Hell, no, Campbells, you are putting you soup on the bottom shelf!!!)
‘specials’ from the suppliers (damn, how we ever going to get rid of all that kraut juice and circus peanuts?)
mix of sales (does store sell more staples vs impulse items?)
overhead, taxes, insurance plan for employees , and for a certain store in my area, how much the owner is lavishing on his mistress this week
Or the market manager. Or asst. manager.
Been there, seen that…
I used to manage procurements systems for a couple of large supermarket chains. I could have figured this out myself at one time but I don’t have the data now and it isn’t something that is easy to find. I can tell you it is much harder to calculate and interpret such numbers even if you could find them than you think. Even looking at something as simple as wholesale cost versus retail price won’t always give you the whole story. The supermarket industry is awash in deals like slotting fees and advertising allowances that are not part of the simplistic numbers but can add up to huge money on their own.
I can tell you that many people think margins are much lower than they really are. It isn’t all a low profit game. Some things like batteries and candy are just a plain rip-off. Most regular grocery items are marked up anywhere between 5% and 30% while specialty items more but it depends on the store. Not all of them try to compete at the lowest cost game because many consumers are not that sensitive to it and prefer things like nicer stores instead.
I know this isn’t what the OP is asking, but it does serve to bracket the big picture.
Looking at Kroger’s latest 2010 Income Statement:
Pre-Tax Margin after COGS = 23% (17.8 / 76.7)
Pre-Tax Margin after COGS and SG&A = 1.3% (1.1 / 76.7)
I didn’t bother to grab comps besides Kroger, but they can be computed in a similar fashion.
1.3% pre-tax margin doesn’t seem like a lot of cushion. In the portfolio some individual products will have really big margins and others will be loss leaders. If you get the portfolio mix and margins wrong, you might get killed on the volumes.
As others have noted, some stores don’t compete on cost, but they still have to manage a huge portfolio of margins on individual products.
Maybe, but remember they’re selling everything in the store something like 8 -10 times a year (on average of course, canned anchovies maybe less, and cans of soda probably more). So if they screw up, they’ve got plenty of chances to get it right later.
And it’s worth noting that 1.3% margin, turned over ten times a year, means 13% return on investment (well, a little less, accounting for cost of the land and store, but you get the picture). So don’t feel too sorry for grocery retailers.