Price Gouging, It Hurts All of Us
- Thread starter Musicmaster
- Start date
If all of you realized what has been happening to YOU all of these past years.
Having been in retail sales I can tell you the facts. When a retailer, say Walmart buys a product, say shampoo.
It pays $1.00 for it. They sell it for $1.50 = a "profit" of 50%.
That bottle sits on the shelf and many more in their warehouse, all being bought for $1.00. Then one day Walmart gets a
notification that all FUTURE purchases of that same shampoo will now cost $1.25. Now Walmart rushes to raise their retail price to $1.75 to keep that 50 % profit margin.
But here is the kicker......they raise the prices on the EXISTING PRODUCT ON THE SHELF AND IN THE WAREHOUSE TODAY,
not on the future deliveries!
ALL retail establishments RUSH to change prices because the sales on existing products went from 50% tp 75 % profit.
ALL retailers have built-in audit programs demanding that new prices increases be changed immediately! That is not really price gouging as much as it is takeing advantage of a business opportunity.
Price gouging is when there is a Hurrican, no electricity, and a retailer ups the price of a bottel of water from .99 cents to $5.00.
There are undoubtedly people in the supply chain that benefit from taking advantage of geopolitical and social-economic opportunities.
However, as Major writes, all is not as it seems. For instance, your local grocery store, in general, the net profit margin at a grocery store is between 1% and 3%.
Net profit is what’s left over after you pay for inventory, utilities, rent, employee expenses, and associated costs for maintaining fixed assets, such as land, buildings, and equipment, oh, and taxes, lots of taxes.
So how do they make money?
They sell the A LOT of milk and eggs.
The company I worked for is a well known high-end national retailer with 350 stores and 60,000 employees. Most people would be surprised to learn their average yearly net profit is 8-9 percent. That’s in a good year… if nothing goes wrong, like a mortgage crisis, market crash or a pandemic.
This is why so many companies, large and small, are closing unprofitable mall stores, cutting inventories, laying of sales and support employees, and still, many end up filling for bankruptcy. Retail at least, is tougher than it looks.
Support your local merchants folks, or our only choice someday may be Amazon or Walmart.
Amen!
I worked for a Drug Store chain. The bottom line profit for those companies is much higher than grocery stores. We had a target goal of 7 % and in the store I managed, the last year there it was 14.7%. That was a really good year and it fact was the highest in the 2500 store chain, and it was before Walmart opened about a mile away.
By the way, that store is still operating under the name of CVS but does not do the business that used to be done.
In 1982, we were filling 1200 Prescriptions A DAY. We had 2 Pharmacists working a day plus 4 clerk RX typists and 4 drug clerks daily on each shift.
That was just the Drug dept! We also had a Complete photo shop, Cosmetic counter and eye glass shop along with a full restaurant.