The traditional ways of looking at retail profitability considers customer purchasing behaviors as well as product costs, costs to serve the customers, operational expenses and other such factors.
Grocers profitability is affected even more by secondary factors, typically related to the complexity of the vertical: Perishables and short shelf life—from a daily newspaper to crispy lettuce; relatively high level of DSD—ranging from bulky products to local fresh; the unique costs of operations—high utility bills of refrigerated displays, labor intensive replenishment and more. Service departments such as bakery, butchery, and deli are adding sales and customer traction yet they have so many inherent threats to profitability.
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