How do Tesco make profits?

nomoneytoday

lawrie28 wrote: »

If something sell for £1 at tesco, chances are Tesco pay 30p or less for the product on many items, and less than 50p on everything.

Supermarket margins generally aren't that high. With a turover of £60,900mm they made a net profit of £2655mm, which equates to about 4%, not 200-300% ...

jemb

It's all due to the buying power. Ie they can screw the manufacturer down on price so their profit is way low compared to others that dont have the buying power. Fore xample, Tesco could buy 100,000 jars of coffee from a client, where as morrisons may only be able to buy and shift 10,000 due to their stores, customers etc. Tesco therefore cansay, I will take 150,000 if you knock 25% off our price. Ie then they can sell for a smaller price. It all ends up that the person who makes the product gets screwed. All about the big man and how he will squish the smallers! Ie the world will belong to Tescos in a few years! lol

camaj

The short answer is it's not that they're making no profit, it's just that they're making less profit than the others per store but larger profit overall

nathand_2

Supermarkets are also able to pay some suppliers on 30-90 day cycles which means for up to 3 months they are earning interest. I don't know if Tesco specifically do this but it's definitely how Aldi and most other low cost supermarkets do it.