We've seen a rise in the "Half Price" catalogue deals in Supermarket catalogues.
I wanna know - who pays for it?
So if Flora margarine is normally $3, but is $1.50 this week, who's eating the profit loss? I can't believe it's Coles/Woolies, but it's not fair to expect the manufacturer to swallow it either.
Tell me if you are on the inside and know the answer, please! I've been wondering for years and only now thought to ask the expert (You!!)
I suppose the more that Masters fall by the roadside the market will be open for Bunnings to increase profit and prices.
They increase the prices then reduce them to a pretend 50% off for a short while then jack the prices back up.
Supermarkets don't lose, that's for sure.
That's right.
What I'm asking is if a box of Corn Flakes is normally every day price of $2.99, and then for one week is $1.50, who is missing out on that $1.49 difference in profit for the amount of time it is on special?
Look at it this way… they can sell the cornflakes for $1.50 and still make a profit… they have made you believe that $2.99 is the normal selling price.
Last weeks CC's were $1.59 at Woolworths. This week "on special" 2 for $5!!!!
Comper in me still bought, I will win a fkn xbox! Lol
I bought 10 bags last week. Put through one ….at……a……….time
All is budgeted and the pricing pattern is scheduled months ahead. So the price rises and falls like a whore's drawers until they achieve the aim of establishing a higher average price than last year's.
JV pays for it. Well…heshe should, for making us deal with hisher's bad jokes.
So if Flora margarine is normally $3, but is $1.50 this week, who's eating the profit loss? I can't believe it's Coles/Woolies, but it's not fair to expect the manufacturer to swallow it either.
Fair would be a split between the supermarket and the supplier. However, my guess is that the supermarket/supplier relationship is not a fair one.
It is probably a split between both the supermarket and supplier. Not necessarily 50/50.
The split probably varies wildly between items.
Somethings the supplier subsidises and others by the supermarket.
i thought it was the supplier. the supermarket gets its normal % cut. same applies for reduced to clear items at coles/woolworths - the supplier has to bear the cost
It's all to lure you inside the shop, the supermarket usually bears the cost but sometimes they share it with the vendors.
The discounts are negotiated on a case by case basis with suppliers (but suppliers often fund the bulk). Source: friends in the industry
Have a look at this article. It will tell you a lot about the relationship between supermarkets and suppliers: https://www.themonthly.com.au/issue/2014/august/1406815200/m…
what a scary article - thanks for the recommendation/link
The supermarkets often sell items at a loss, just to get you in their store.. Because he chances are once they've got you in their store you may as well do the rest of your shopping here as well
This question was rewarded with a fair bit of fun styled comments. I do have a serious answer for it though, inside info can be so ….boring but helpful sometimes. Although this is not 100% exact as every business has there own ways and reasons, but essentionally, it is in the advertising budget to sell cheaply as an incentive to get you in the store.
Pretty simple, and for the like of the bigger companies this budget can be six figures++. It is also in cahoots with the manufacturer/distributor to pay subsidies for reduced prices for the exact same reason and this is all good for us, the consumer. Generally though against some opinions, other goods and special priced items are not temporally over priced to make up for it.
As they own the store, and it is still a free country here is Australia, anyone can charge as little as possible for any product for any reason, but there are some products/services with a lawfully protected maximum price, like some staples, petrol, milk, bread eggs etc. A special is always good, but if any product you want is at full price, that is just fair for the seller too.
Thanks for your (imho) very unboring answer.
So with Corn Flakes, regular selling for $7 at Coles, they will twice-ish a year have a promotion where it is selling for $3.50 (half price). What you're saying is that this "loss" will be part carried by Coles and part by Kelloggs (for example) out of Kelloggs' advertising budget.
Normal - Coles buys for $3.50, sells for $7.00 (profit $3.50)
Special - Coles buys for $3.50 but receives $1 rebate from Kellogs, net price $2.50, sells for $3.50, profit $1 (so still worth selling rather than not.
So manufacturer makes less per product, but might break even because of increased volume, and hopefully it is pattern-changing for the consumer to get them repeat purchasing these Corn Flakes because they have tried them when this special is on.
Does this seem about right?
Exactly, nearly, as sometimes it is just the retailer promoting, just the distributor, or just the manufacturer. Or, a combination of all 3, but essentially, it is a promotion, which is advertising.
That my learned friend is a TAX writeoff, exactly the same as me buying equipment to run a business.
So, the loss is not all that it seems.
Oh the wierd world of consumerism.
I actually think sometimes the manufacturer has to pay extra to have their products half price because it is free advertising for them
Probably the shopper. I'm sure they shift the prices elsewhere to make up for it like they do with fuel. We always end up paying in the end. I notice price creep. Recently especially in Bunnings.. but that's going off topic I guess.