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The Magic Cafe Forum Index » » Not very magical, still... » » Profit margins? (0 Likes) Printer Friendly Version

kihei kid
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Hey everyone,

I’m doing some research on convenience stores and grocery stores in America.

One of things I have been unable to find deals with profit margins. Probably searching in the wrong places so I’m looking for some help from anybody who knows what is the best profit margin in the both these different types of stores (guessing greeting cards) and what that profit margin is?

I would also be curious as to what a store owner would consider a poor profit margin, middle of the road, and, obviously a tremendous profit margin.

Thanks for any help you can provide.
In loving memory of Hughie Thomasson 1952-2007.

You brought something beautiful to this world, you touched my heart, my soul and my life. You will be greatly missed.

Until we meet again “my old friend”.
insight
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Try to look at the annual reports on the grocery chain's websites. Those annual reports are also called 10-Ks.

Regards,
Mike
stoneunhinged
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Forget the Internet. Go to the nearest college library and talk to the reference librarian.

The reference librarian is your friend.
acesover
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Grocery stores have a small profit margain as they count on volume. However Convience stores are a different matter altogether. From what I remember I believe bottom line (net profit) for Grocery Stores profit at the end of the year is around 3 or 4 persent of total volume.
If I were to agree with you. Then we would both be wrong. As of Apr 5, 2015 10:26 pm I have 880 posts. Used to have over 1,000
MagicSanta
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Let’s take the easy part first: what’s the typical or profile gross
margin for supermarkets? There’s a wonderful site called Bizstats
which profiles sectors of business from published reports and
government data:
Bizstats
Home page
http://www.bizstats.com/

According to their retail profiles for "grocery and beverage stores"
any store in the $15-$20 million range, the gross margins are 25.6%
(net margins are 6%).

If you check the grocery store sales for leading chains, you’ll find
from Supermarket News that this is the range for large chains such as
Kroger’s, Albertson’s or Safeway:
Supermarket News
"SN’s Top 75" (2002)
http://www.supermarketnews.com/sntop75.htm

If you look at earnings for Albertson’s or Kroger EBITDA (earnings
before interest, taxes, depreciation and amortization) you’ll find
that these net margins are good. Kroger reports net margins of 7.6%
and Albertson’s shows 5.1%. However, one must be aware that both
companies operate other retail stores, including pharmacies, gas
stations, convenience stores and even jewelry stores:
Kroger
"Financial Information" (2001)
http://www.kroger.com/Binary2/sec6a,2.pdf

Albertsons
"Annual Report" (2002)
http://www.albertsons.com/

You’ll also find the conclusion on net margins supported by this
McKinsey report on retail stores, which notes a supermarket target of
6% for one chain:
McKinsey & Co.
"Competing in a Value Driven World" (February, 2003)
http://www.mckinsey.com/practices/retail......orld.pdf
S2000magician
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It sounds to me as if the original poster isn't looking for overall profit margins. Rather, it appears that he's interested in profit margins for specific product lines, and wants to know which product line generates the highest margin.
landmark
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Cup of coffee?
MagicSanta
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That info is also available.
acesover
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I still believe that for a pure grocery store (super market) 6 or 7% seems way to high as a net profit bottom line. If my memory serves me correct Weiss super markets a small chain in Pa. that has around 110 stores used to operate in the 1980s at I believe 4% and were one of the nations leadinig net profit percentage for grocery stores.

Probably highest markup in grocery stores is produce initally but there is a large amount of spoilage so if you have a great produce manager you will do well. Usually the highest markup items are along the wall not in the aisles.
If I were to agree with you. Then we would both be wrong. As of Apr 5, 2015 10:26 pm I have 880 posts. Used to have over 1,000
MagicSanta
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I know baked goods is pretty low on the profit pole while hard goods are higher profit.
stoneunhinged
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I thought the guy was serious about doing research, which does not consist in gathering a few figures from the Internet.

If the OP is working on something academic, like a term paper or bachelor's or master's thesis, he needs to go see the reference librarian.

If he just wants some quick, reliable information, he should get on the phone (rather than posting a thread in a magic forum) and call up a business professor at the nearest college--preferably one with expertise in retail. These people earn their living with knowing this stuff, and they are typically very flattered when someone calls them up asking for some help. Especially if you are from the media. Especially big time media like CNN or Time or Newsweek.

Wait! I'm losing my train of thought....

What was the question?

All I know is that the answer is in the library--cross-referenced, peer-reviewed, verifiable, and non-biased. (I mean, would anyone in their right mind check out BP's website for accurate information?) A good reference librarian can take you by the hand and walk you to the right place and get the exact information needed in just a few minutes. The whole trip to the library would probably take less than an hour.
tommy
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I bought some greeting cards for two grand with a retail value of 150 grand. Go figure.
If there is a single truth about Magic, it is that nothing on earth so efficiently evades it.

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Davit Sicseek
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Quote:
I still believe that for a pure grocery store (super market) 6 or 7% seems way to high as a net profit bottom line. If my memory serves me correct Weiss super markets a small chain in Pa. that has around 110 stores used to operate in the 1980s at I believe 4% and were one of the nations leadinig net profit percentage for grocery stores.


Agreed. I seem to recall hearing (a fair while ago) 3% net profit for Tesco (UK).
Send me the truth: davitsicseek@gmail.com
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