Sunday, March 22, 2009

Super profit for two super markets… YR

Recession or the threat thereof certainly highlights the state of economic knowledge amongst the populace at large and nowhere more so than with “bargain hunting enthusiasts” and those with a “conspiracy bent”.

We are apparently – and as reported on the nations state run TV channel – under threat of continued and systematic “rip off” from the country’s corporate grocers – the supermarkets…. one chain of which is organised in that hallowed and much vaunted N.Z. favourite of governance “the coo operative” a beast designed to be sharing and caring.

We are reliably informed that the twin evils of the Foodstuffs chain and Progressive Enterprises have (alone in the world and history to date – so this is some achievement) figured a way to snare enormous profits (3.8% is their net profit claim ) on a systematic basis from the hapless consumer by charging far too much for what they sell.

Alternatives apparently are simply not to be found.  That famous institution the “farmers market” is oh so much cheaper. Quite why the supermarket is so full then is beyond me. How they make even 3.8% is a mystery really – and if making all this money in supermarkets is merely a matter of raising prices at will, why are the prices as low as they are?

Frustrating and annoying is this nonsense we are peddled in the form of documentaries is we have to acknowledge too that when our regulator the Commerce Commission also cowers before the twin demons of a co operative of grocers and a diversified Australasian conglomerate that has for decades struggled to beat its cost of capital it may be little wonder that a few super shoppers figure they live in a world of rising prices, no competition and even fewer choices.

We await their opening night of course…

Those who feel retail margins are “obscene” should take a look at these actual margins – all before tax. They are an investors nightmare and a consumers delight.

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