Hacker News new | past | comments | ask | show | jobs | submit login

Supermarkets have absolutely tiny net profits, usually just a couple of percent. They have substantially greater labour costs than a wholesaler. They have higher rents, because their stores are less densely stocked and in more convenient (and more expensive) locations. They have high shrinkage on many products, losing >30% of their fresh produce and bakery goods to spoilage and a significant proportion of product to theft and employee fraud.

Food is cheap to buy from a cash-and-carry because it's cheap to sell. It's sold straight off the pallet, in an out-of-town warehouse with dirt cheap rent. Average SKU value is much higher, massively reducing labour costs. Shrinkage is tiny, because of the high turnover of perishable goods and the greater security possible in a warehouse store. Cash-and-carry wholesalers still have very tight margins, but they have much lower costs than supermarkets.

Food retail is ruthlessly competitive on price, because there are so few other points of differentiation. The idea that there's a malevolent conspiracy in food pricing is utterly farcical to anyone with even a rudimentary understanding of the food supply chain.

Guidelines | FAQ | Support | API | Security | Lists | Bookmarklet | Legal | Apply to YC | Contact