Newsgroups: ont.general
Path: utzoo!snell
From: snell@utzoo.uucp (snell)
Subject: 2% Profit in Supermarkets
Message-ID: <1989Nov6.010418.14215@utzoo.uucp>
Organization: U of Toronto Zoology
Date: Mon, 6 Nov 89 01:04:18 GMT

In article <89Nov5.163837est.18444@me.utoronto.ca>,
rwh@me.utoronto.ca (Russell Herman) writes:

>>The grocery business works (primarily) on a 2% profit margin.  That
>
>I've heard this number bandied about, and frankly, I find it heard to believe.
>[stuff deleted]
>Does this 2% include just the retailing profit, or does it include the
>vertically-integrated portions like dairying as well?  2% of gross revenues,
>or assets (including farmland)?  Anyone know the details of the food-processing
>business and the relevant GAAP?  Is this an accounting trick or another
>urban legend?

It is pretty close to true, and the margin may even be less than 2%.  
However, the 2% does not refer to the average annual return on investment. 
Rather, it refers to the typical mark\-up and profit margin per item sold.  
The secret to lots of profits is a very high turnover in the stock on the 
shelf.  Supermarkets are not philanthropic organizations...
-- 
Name: Richard Snell
Mail: Dept. Zoology, Univ. Toronto, Toronto, Ontario, Canada    M5S 1A1
UUCP: uunet!attcan!utzoo!snell      BITNET: snell@zoo.utoronto.ca