Philanthropy, or shrewd business economics?

vivatifosi

Stelios opens a 25p food store, from the Indie:
http://www.independent.co.uk/life-style/food-and-drink/features/forget-aldi-and-lidl-the-new-easyfoodstore-sells-food-at-25p-an-item-a6849626.html

EasyFoodstore, says Richard, was partly inspired by the soup kitchens that Stelios had opened in Greece and Cyprus as the economic crisis bit. “The idea for this shop comes from that,” he says. “We have food banks in this country. But what happens if you have a low-paid job and you are no longer entitled to benefits or the food bank?”
But if Stelios is being philanthropic, he is also being shrewd?
EasyFoodstore may prove that money is tight for many. It also shows how budget shopping is now a boom business. Iceland has branched out into Food Warehouse stores. Aldi and Lidl have made inroads on the dominance of Tesco, Sainsbury's and Asda, doubling their joint market share to 10 per cent in just three years.

Interesting concept... I wonder what the prices will be in March. Currently they say they are selling at a loss, so prices will have to rise at some point, but still could be cheaper than the budget stores.

PasturesNew

Prices don't have to rise. Think of all the "free advertising/PR" he gets from running the shops.

Plus, it'll be on the books as a loss, offsetting any tax he might've paid.

padington

vivatifosi wrote: »

Stelios opens a 25p food store, from the Indie:
http://www.independent.co.uk/life-style/food-and-drink/features/forget-aldi-and-lidl-the-new-easyfoodstore-sells-food-at-25p-an-item-a6849626.html

EasyFoodstore, says Richard, was partly inspired by the soup kitchens that Stelios had opened in Greece and Cyprus as the economic crisis bit. “The idea for this shop comes from that,” he says. “We have food banks in this country. But what happens if you have a low-paid job and you are no longer entitled to benefits or the food bank?”
But if Stelios is being philanthropic, he is also being shrewd?
EasyFoodstore may prove that money is tight for many. It also shows how budget shopping is now a boom business. Iceland has branched out into Food Warehouse stores. Aldi and Lidl have made inroads on the dominance of Tesco, Sainsbury's and Asda, doubling their joint market share to 10 per cent in just three years.

Interesting concept... I wonder what the prices will be in March. Currently they say they are selling at a loss, so prices will have to rise at some point, but still could be cheaper than the budget stores.

A better way to help the poor and everyone else would be to make really tasty fresh home cooked food like chicken stew and cottage pie and stack it high and sell it cheap plus individual frozen portions. Maybe with demo's in the shop how to make it yourself and explaining how much better for you it is.

Otherwise you're just encouraging obesity with people living on ultra cheap Jaffa cakes etc.

Maybe include pictures of how fat you'll look if you shop only in 25p and pound shops.

wotsthat

A lot of the cost of food is spent on margins. If a retailer is willing/ able to run at a loss, cuts costs to the bone and can persuade others in the supply chain to do the same then the consumer will see lower prices.

However, much of the food sold by economy outlets is quite high margin (because it's only cheaply processed fat, salt and sugar) compared to fresh foods where there's less margin to save. Also, crap food is mopped up by discounters near the end of shelf life whereas fresh food has to be dumped.

The net result is people who are living on this food purchased from Poundland, Home Bargains and B&M aren't really doing themselves any favours. It's an irony that poor people are being flogged high margin crap instead of low margin healthier staples.

Thrugelmir

If anything may hurt the discounters rather than the majors. Neat marketing to sell everything at 25p.

Generali

PasturesNew wrote: »

Prices don't have to rise. Think of all the "free advertising/PR" he gets from running the shops.

Plus, it'll be on the books as a loss, offsetting any tax he might've paid.

A loss is still a loss, regardless of the tax position.

If I make a profit of £100 in my business and pay 30% tax then I end up with £70.

If I make a profit of £100 and a loss of £40 then I end up saving £12 in tax at a cost of £40.

In many ways tax is a nice problem to have. I'd love to pay lots more tax as it means I would have lots more income.

antrobus

vivatifosi wrote: »

...Interesting concept... I wonder what the prices will be in March.

About 50p.

It's in the press release. The 76 items for 25p is a "special introductory offer for February".

vivatifosi wrote: »

..Currently they say they are selling at a loss, so prices will have to rise at some point, but still could be cheaper than the budget stores.

Standard business practice. Think of all the free publicity Stelios has received.

antrobus

padington wrote: »

....Otherwise you're just encouraging obesity with people living on ultra cheap Jaffa cakes etc....

Oddly enough, jaffa cakes are one of the 76 items avilable at 25p. Presumably we must therefore conclude that they qualify as a "basic food".

Stevie_Palimo

It is student heaven, Not for me though as I'll stick to Waitrose and M&S.

PasturesNew

padington wrote: »

Maybe include pictures of how fat you'll look if you shop only in 25p and pound shops.

I shop at these shops, I'm not that fat (about 9 stone 3 ish).

It's not just what you eat, but how much.

vivatifosi

antrobus wrote: »

Oddly enough, jaffa cakes are one of the 76 items avilable at 25p. Presumably we must therefore conclude that they qualify as a "basic food".

Thanks. The 76 items weren't in the link yesterday. Not sure if this is a slightly different link, so will post:
http://www.independent.co.uk/news/business/news/easyfoodstore-stelios-haji-ioannou-of-easyjets-latest-business-opens-selling-76-basic-foodstuffs-for-a6848396.html

I guess it depends on what people buy. I don't think cheap pasta, tinned veg etc are bad things to offer, they are essentially the same items as at foodbanks. If poor people can buy these things even more cheaply than in shops currently, then that's a good thing.

On the other hand, if they want to spend all their money on crisps, digestive biscuits and pot noodles, that's up to them. However having worked in a poor area and seen what people put in their shopping basket, many don't live on pot noodles and digestives. So good for Stelios if he's identified a gap in the market. 76 items though... I think the novelty will wear off pretty quickly for all but those who have to shop there or can also shop somewhere else. A month shopping there and I'd be drooling at the thought of a salad.