How do supermarkets make a profit when they buy more than they can sell?

121 views
0

How do supermarkets make a profit when they buy more than they can sell?

In: 60

Because in monetary terms, they don’t. If I buy 100 cereal boxes for $1 each and sell them for $2, I can sell 51 and throw 49 in the trash and still profit.

Supermarkets make most of their profits by renting shelf space to produce manufacturers, they don’t actually buy all the food in the store.

I worked in, and was in charge of the ordering for a fairly large grocery store.

While there is relatively a lot of waste, the vast majority of our product was sold.

The margins are low, but as long as you know what you’re doing and don’t just order insane amounts, it’s not going in the garbage.

Just like anything, you need to learn how to do it right.

TLDR: By selling things for enough $ that the profit from the ones they DO sell covers the cost of the ones they end up not selling.

Slightly more: Unsold merchandise is just one of the many costs a business has. For a typical store, they have to rent a building, pay utilities, pay for ads, pay employees, pay taxes, and pay for merchandise they might not end up selling. They either make enough profit on what they DO sell to cover all those costs and STILL make a profit overall, or they don’t (and go bankrupt).

A few strategies:

– High profit margin. Example buy in 20 cents, sell for a dollar. As long as you sell more than 20% of your stock, you’ve made a profit.

– Sell products that have long shelf life, and only restock when they are running out.

– Sometimes they don’t buy-and-sell. They sell the rack space instead. Product owners will manage their own stock, and the supermarket will take a cut from all sales.

– For some products, supermarket can return the unsold products back to the supplier for a (partial) refund.