Supermarkets making profits or PROFITEERING??

[DistinguishedSocialCommentator]

I posted on this forum couple of months ago on some thread that supermarkets were IMO profiteering. Yes, a business has to make profits but not this

As you know almost everything has gone up in the supermarkets, IE prices up, size and weights of items down

AIBU to feel that the supermarkets are profiteering?

https://www.dailymail.co.uk/news/article-13368851/fury-supermarkets-profits-cost-living-crisis.html

Well yes they are but most companies will charge the maximum they can get away for their products with while keeping customers. It's capitalism, what else would you expect them to do?

Yes, posting hundreds of millions in profits looks excessive until you realise that compared to the billions in turnover, it only works out at 3% profit.

They have all got used to big bucks profit but it's the sneaky ways they go about it that pisses people off.smaller amounts,high weekly rises for goods that were in the warehouse the week before,,same packaging and the contents one less etc.the warehouse bit I know to be fact a dw works in the supermarket we shop in.

Unless there is something huge I am missing here, that's disgusting in the middle of a Cost of Living Crisis. They've been saying they've putting up food prices as their costs have increased, which they likely have and is understandable, but how have their profits DOUBLED in the middle of this unless they've used this as an opportunity to further inflate prices? Is there another explanation?

Why are you SHOUTING at us, and why so many question marks????? There has been a thread on the use of the latter; any more than one is unnecessary and harrying

The bit that’s really awful is how the tax credit system means we are subsidising their business expenses (their employees’ wages) via our own taxes. It’s insane.

They may declare huge profits but divide that number by number of stores or number of staff or number of customers and you see it’s not that excessive and they’re working on very low margins. On a size proportion basis they don’t really make more profit than a decent independent convenience store.

You'd be surprised at how little profit supermarkets make.

Minimum wage increases / energy increases / business rate increases etc are crippling some supermarket chains. Billions in sales doesn't always add up to huge profits.

'You'd be surprised at how little profit supermarkets make.'

The article suggests Tesco made 2.3bn, and increased their profits by 30+%. Considering many of their staff's wages will be topped up by the taxpayer because they're not paid enough to survive, and food prices have increased astronomically, I'm not sure we should be feeling sorry for Tesco.

That article is a year out of date. Tesco made 2.83 billion in profit last year, up from £2.3 billion a year ago.

Supermarkets are in one of the most competitive sectors in the economy. Tesco's profits last year were less than 4% of turnover. Sainsbury's, Asda are all reporting similar levels.

For a business that is incredibly low. If most small businesses only retained 4% of turnover it would be squeaky bum time for the directors.

Captive market and capitalism. They can do pretty much what they want, because they know we need them. It’s a great time to be a shareholder in a supermarket, that’s for sure!

For every £1 put through the tills they make 3-4p profit. It’s a knife edge. The UK grocery industry is one of the most competitive in the world. If they decided to halve their profits it would make a negligible impact on the cost of your weekly shop because the margins are so slim.

😂😂

It's not the supermarket changing the size or weight of products. What are you blaming Tesco for Cadbury making their chocolate bars smaller?

Since when did manufactures dictate terms to supermarkets,I think you will find it's the other way round.

If you think they are profiteering you should report them to the CMA. I doubt they will investigate unless you have some actual hard evidence.

Or do you just mean “making more money than I think they should?” In which case welcome to capitalism - no-one is forcing you to play along, there are alternatives if you can be bothered.

They’re making profit. It’s not profiteering.

I assume you’ve read the accounts in some detail - why do you think it’s profiteering?

Actually I think supermarkets are one of the only thing where competition works well in this country and the customer gets a decent deal (as opposed to utilities, transport and pretty much every else in the UK...).

Aldi helps keep prices low and the others have to stay competitive.

It is a shame though that the profits are not used to pay staff and suppliers such as farmers a decent wage/price for goods...

If shrinkflation wasn't used and weights and amounts stayed the same people wouldn't be so pissed off at price rises as it is we are paying a lot more for a lot less.

Yep. The new improved recipes of filler, the oversized packaging, ‘sales’ where the sale price is higher than it was regularly a few months ago. It’s insane.

Supermarkets are businesses looking to make profit. That’s hardly surprising. The way we keep our shopping costs down (as much as we can) is by being selective on where we buy certain things. We go to Aldi for the majority of our food and then Asda to top up what we couldn’t get the brand/decent alternative.

Shopping now takes twice as long as I’m there reading the labels to get the most for my money. Just yesterday, a tube of toothpaste declared itself a value pack but was £5 (£4 per 100ml). A slightly smaller tube of the same toothpaste was £2 (~£3 per 100ml) so actually better value. It’s the same throughout the shop.

It's a competitive market. They have to make profits to reinvest in new and updated stores, technology etc.

As others have said, their margins are surprisingly small - which is as it should be because they don't really add value to anything, they just take stuff out of big boxes and put it on a shelf. But they have to be efficient to do it profitably.

The alternative would be for the government to run everything - see the former communist countries to see how that worked out.

And we have authorities to monitor companies so they can't collude on pricing or abuse a dominant market position. And, on the whole, that works well.

@Gorgonemilezola taxpayers don't top up supermarket workers wages. How would you say this works? They may receive UC or similar but that will be to do with their circumstances, considering that minimum wage is a legally set amount.

As a PP says, supermarkets are on a knife edge in terms of profits. 30% for Tesco will not be an actual profit amount. That might be the PR they are releasing but you'll find it closer to 3-4%, that's about industry average.

I work very close to these numbers so I have experience here.

So, if supermarket profits are “on a knife edge”, how are they obtaining the money to pay their shareholders millions and pay the fat cat salaries?

https://www.bbc.co.uk/news/business-68776913.amp