‘Golden era’ of cheap food is ending, says ex-Sainsbury’s boss

jon81uk

JJC1956 said:

jon81uk said:

GaleSF63 said:

Tesco loose brown onions or one kg bag, 85p per kilo. Pack of 3 brown onions £2.34 per kilo. Doesn't make sense does it? Are they hoping that at least some people will not notice the difference in price and prefer the pack?

The three pack is large onions, they seperate off the ones of big enough size and charge a premium for it. If you aren't fussed about that then buy the standard loose ones. Yes some won't notice, but some people may be willing to pay the premium for the size difference.

JJC1956 said:

Do you buy bags of carrots? Loose carrots much cheaper, just a shame the major supermarkets don’t sell many items of  veg loose such as Green Beans, Fresh Peas, Mange Tout, Sugar Snaps etc
I bought 3 loose Red Onions in Sainsburys a couple of weeks ago, cost 30p, 3 Red Onions pre packed cost 90p, doesn’t make sense.

At Tesco carrots are the same price bagged and loose. 40p per kilo.
https://www.tesco.com/groceries/en-GB/products/305953125
https://www.tesco.com/groceries/en-GB/products/254638565

With the onions its as above, the three-pack are large onions, a sifferent product. standard red onions at Sainsbury's are £1 a kilo both bagged and loose (well the loose are actually on offer at 90p right now but usually £1.
https://www.sainsburys.co.uk/gol-ui/product/sainsburys-red-onions-1kg
https://www.sainsburys.co.uk/gol-ui/product/sainsburys-red-onions-loose
But the larger size onions are hugely more expensive at £2.47 a kilo
https://www.sainsburys.co.uk/gol-ui/product/sainsburys-large-red-onions-x3
The large ones aren't worth a premium in my opinion, just buy an extra one, but maybe if you have a specific use for large ones then people do pay.

In terms of bagged beans, mange tout etc I think the wastage from them being damaged when loose might be too high, generally the pack sizes are fine for two people though, I've never though of it as a problem really as the pack sizes are so small. Its not like potatoes where I am forced to buy 2.5kg when I only need four potatoes.

I have started buying loose Jacket Potatoes and where possible Loose Jerseys or similar, 2.5kg is just going to sit in my fridge for 2 weeks or more.
Problem I find with buying 1kg bags of carrots is i probably end up throwing some away, so as I am quite near a number of Supermarkets I have started shopping 2 or 3 times a week but obviously that doesn’t suit everybody.

I have just been to my local Sainsbury's this morning, no walk through aisles open, very few self-service open, one of the assistants told me they are replacing ALL of the walk through aisles with self-service, I predict chaos or loss of custom with people that drive, as they will just drive somewhere else.

Carrots are the same price loose so don't buy a bag, just get the loose ones.

I use the scan-as-you-go at Sainsbury's anyway because it is easier to pack as we go round, can't remember the last time I went to a proper checkout with a conveyor at any supermarket (except Costco).

rhcp

I think some people feel that they are driving a Rolls Royce without understanding that it has a Fiat Uno engine!

MattMattMattUK

A._Badger said:

Thrugelmir said:

MattMattMattUK said:

rhcp said:

I doubt it will be the end to the golden era of Sainsbury's profits.  All these companies seem to do well out of the cost of living crisis.

The supermarkets make fairly small margins, especially on food, the reason the headline profits figure of "billions" sounds large is because of the scale of their operations. The thing is, if they made zero profit food bills would only reduce by a few percent at most.

Sainsbury's overall profit margin is around 2%. 

And yet still Aldi and Lidl manage to undercut them very considerably. Which, if nothing else, shows how unreliable a guide are published profit figures.  

A huge part of that is the much smaller range that the discount supermarkets offer, not only overall, but within the product range itself eg. Sainsbury's offer 30-40 different variations of fresh chicken, Aldi offer 8. Also being mostly own brand the margins can be higher and/or prices lower. Sainsbury's and Tesco are generally price match against Aldi on a range of products now, especially the base own brand products, or occasionally branded, but on Branded Aldi rarely discount as heavily as the major supermarkets will do on a cyclical basis anyway. 

If one buys comparative own brand products in Sainsbury's or Tesco there is little difference against Aldi or Lidl, however often people compare a shop that contains branded and premium items in the major supermarkets, against one that does not in the discount supermarkets. The majority of any difference can often depend on what products are on offer and where. 

MattMattMattUK

rhcp said:

I think some people feel that they are driving a Rolls Royce without understanding that it has a Fiat Uno engine!

Some people think that they can afford to drive a Rolls Royce, without realising that they can only afford to drive an Uno.

arnoldy

jon81uk said:

Carrots are the same price loose so don't buy a bag, just get the loose ones.

But generally speaking the bagged items will be overweight. The packs will vary in weight. A "1kg" pack of carrots might be 1.08kg So cheaper in packs if the same price per Kg.

A._Badger

MattMattMattUK said:

A._Badger said:

Thrugelmir said:

MattMattMattUK said:

rhcp said:

I doubt it will be the end to the golden era of Sainsbury's profits.  All these companies seem to do well out of the cost of living crisis.

The supermarkets make fairly small margins, especially on food, the reason the headline profits figure of "billions" sounds large is because of the scale of their operations. The thing is, if they made zero profit food bills would only reduce by a few percent at most.

Sainsbury's overall profit margin is around 2%. 

And yet still Aldi and Lidl manage to undercut them very considerably. Which, if nothing else, shows how unreliable a guide are published profit figures.  

A huge part of that is the much smaller range that the discount supermarkets offer, not only overall, but within the product range itself eg. Sainsbury's offer 30-40 different variations of fresh chicken, Aldi offer 8. Also being mostly own brand the margins can be higher and/or prices lower. Sainsbury's and Tesco are generally price match against Aldi on a range of products now, especially the base own brand products, or occasionally branded, but on Branded Aldi rarely discount as heavily as the major supermarkets will do on a cyclical basis anyway. 

If one buys comparative own brand products in Sainsbury's or Tesco there is little difference against Aldi or Lidl, however often people compare a shop that contains branded and premium items in the major supermarkets, against one that does not in the discount supermarkets. The majority of any difference can often depend on what products are on offer and where. 

With respect, that wasn't really the point (which JJC1956 grasped). Thurgelmir was citing Sainsbury's profit margin, with the implication that it was only making 2% profit. If that were actually the case, there is no way that Aldi and Lidl could undercut it by as much as 50% (which they sometimes do) - there simply wouldn't be enough margin availble.. Anyone in business can work out how the German discounters keep their costs down, part of which is due to the own brand policy as you point out, but Sainsbury's indulges in a lot of other things which soak up money - whatever their accountants might want shareholders (and the tax man) to think - hence the appropriateness of the Fiat/Rolls Royce analogy.  

MattMattMattUK

A._Badger said:

MattMattMattUK said:

A._Badger said:

Thrugelmir said:

MattMattMattUK said:

rhcp said:

I doubt it will be the end to the golden era of Sainsbury's profits.  All these companies seem to do well out of the cost of living crisis.

The supermarkets make fairly small margins, especially on food, the reason the headline profits figure of "billions" sounds large is because of the scale of their operations. The thing is, if they made zero profit food bills would only reduce by a few percent at most.

Sainsbury's overall profit margin is around 2%. 

And yet still Aldi and Lidl manage to undercut them very considerably. Which, if nothing else, shows how unreliable a guide are published profit figures.  

A huge part of that is the much smaller range that the discount supermarkets offer, not only overall, but within the product range itself eg. Sainsbury's offer 30-40 different variations of fresh chicken, Aldi offer 8. Also being mostly own brand the margins can be higher and/or prices lower. Sainsbury's and Tesco are generally price match against Aldi on a range of products now, especially the base own brand products, or occasionally branded, but on Branded Aldi rarely discount as heavily as the major supermarkets will do on a cyclical basis anyway. 

If one buys comparative own brand products in Sainsbury's or Tesco there is little difference against Aldi or Lidl, however often people compare a shop that contains branded and premium items in the major supermarkets, against one that does not in the discount supermarkets. The majority of any difference can often depend on what products are on offer and where. 

With respect, that wasn't really the point (which JJC1956 grasped). Thurgelmir was citing Sainsbury's profit margin, with the implication that it was only making 2% profit. If that were actually the case, there is no way that Aldi and Lidl could undercut it by as much as 50% (which they sometimes do) - there simply wouldn't be enough margin availble.. Anyone in business can work out how the German discounters keep their costs down, part of which is due to the own brand policy as you point out, but Sainsbury's indulges in a lot of other things which soak up money - whatever their accountants might want shareholders (and the tax man) to think - hence the appropriateness of the Fiat/Rolls Royce analogy.  

You are mistaking net and gross margin. The net margin can often be higher than 50%, they may and often do discount particular products to low margin, or even sell them at a loss, so long as the overall net margin stays positive. 

A._Badger

MattMattMattUK said:

A._Badger said:

MattMattMattUK said:

A._Badger said:

Thrugelmir said:

MattMattMattUK said:

rhcp said:

I doubt it will be the end to the golden era of Sainsbury's profits.  All these companies seem to do well out of the cost of living crisis.

The supermarkets make fairly small margins, especially on food, the reason the headline profits figure of "billions" sounds large is because of the scale of their operations. The thing is, if they made zero profit food bills would only reduce by a few percent at most.

Sainsbury's overall profit margin is around 2%. 

And yet still Aldi and Lidl manage to undercut them very considerably. Which, if nothing else, shows how unreliable a guide are published profit figures.  

A huge part of that is the much smaller range that the discount supermarkets offer, not only overall, but within the product range itself eg. Sainsbury's offer 30-40 different variations of fresh chicken, Aldi offer 8. Also being mostly own brand the margins can be higher and/or prices lower. Sainsbury's and Tesco are generally price match against Aldi on a range of products now, especially the base own brand products, or occasionally branded, but on Branded Aldi rarely discount as heavily as the major supermarkets will do on a cyclical basis anyway. 

If one buys comparative own brand products in Sainsbury's or Tesco there is little difference against Aldi or Lidl, however often people compare a shop that contains branded and premium items in the major supermarkets, against one that does not in the discount supermarkets. The majority of any difference can often depend on what products are on offer and where. 

With respect, that wasn't really the point (which JJC1956 grasped). Thurgelmir was citing Sainsbury's profit margin, with the implication that it was only making 2% profit. If that were actually the case, there is no way that Aldi and Lidl could undercut it by as much as 50% (which they sometimes do) - there simply wouldn't be enough margin availble.. Anyone in business can work out how the German discounters keep their costs down, part of which is due to the own brand policy as you point out, but Sainsbury's indulges in a lot of other things which soak up money - whatever their accountants might want shareholders (and the tax man) to think - hence the appropriateness of the Fiat/Rolls Royce analogy.  

You are mistaking net and gross margin. The net margin can often be higher than 50%, they may and often do discount particular products to low margin, or even sell them at a loss, so long as the overall net margin stays positive. 

No, I really am not doing any such thing. If I were unable to understand the difference between gross and nett profit, I would have gone broke over 30 years ago. But I don't feel inclined to keep trying to explain why the original post to which I was responding was somewhat misleading. Either readers will understand it, or they won't. 

sammyjammy

One of the biggest pluses for the discounters is not just the lower prices but the lack of choice!  I'm a random kind of shopper, never write a list, am only buying for me and the cats so at a Sainsburys, Tesco etc I'd overspend on crap I don't even need and won't help my ever expanding waistline 

Rosa_Damascena

Why does everything on why is supposed to be a friendly thread descend into a pedantic argument?

It's as if DT never went away!