[hnlmorg]

The markup is around 30% or higher on each item (or at least that was the case back when I last studied business)

I get there are overheads but that’s spread across all products and supermarkets have a lot of products.

So you’d still have to have a lot of theft in a supermarket before you get close to a dent in those 2% margins.

Edit: as an aside, this is also why high value items such as alcohol are usually at the back of the store. It’s easier to identify and catch someone stealing if they’ve attempted to conceal a product for the entirely length of the shop.

[etchalon]

You understand that that 30% "markup" has to cover literally everything involved in running the store, right? The building, lights, shelves, labor, website, marketing, HVAC, etc etc etc

A 30% markup spread across 1 product or 3000000 products is still a 30% markup.

[cogman10]

Yes, and you realize "theft" is a part of everything.

I don't think the comment you responded to was arguing that theft was moral or companies were being greedy. Rather, just that 30% markup is typical and it takes a fair bit of theft before that starts closing the gaps on the margins.

[etchalon]

Then I think the parent comment lacks an understanding of the difference between gross and net margins.

[cogman10]

That's an uncharitable reading of their comment.

[etchalon]

It's the only reasonable reading if someone is dismissing 2% loss due to theft for a retailer.

[hnlmorg]

I wasn’t dismissing theft and supermarkets do not have 2% of their stock lost through theft (if 1 in 50 items were already stolen then that supermarket is dysfunctional at preventing theft).

Thus what you’re describing simply has no basis in reality.

Furthermore, you’ve completely misread every single comment in this thread and taken the least charitable conclusion from them.

[hnlmorg]

I literally said that.

The part you missed is that supermarkets sell a significant amount of stock.

If shop lifting is a serious enough problem in a particular store to make it financially unprofitable then there’s more at play than just the theft:

1. The store isn’t following best practices of having electronics tagged, and high value items at the back of the store.

2. The store isn’t making enough legal sales. This could be for a multitude of reasons from the stores location to its cleanliness. Or maybe they’re just stocking stuff people don’t want to buy or at the prices they’re advertised for

3. The overheads are unsustainable regardless of the sales. For example the land rental might be so high that the store wouldn’t turn a profit with the types of products they’re trying to sell.

Shops also factor in loss of stock in their margins. Eg spoiled food, damaged products and theft. This actually comes to less than the cost of personal nor rental costs.

There is still value in anti-theft measures. But that doesn’t mean that the GPs comments were correct when they said:

> it doesn’t take much theft to put the business in the red.

…because if you run a supermarket correctly then it does. Despite what the knee jerk reactions to my initial comment suggest.

[etchalon]

That's just not how the math works.

Let's assume an average marginal loss of 2% of gross sales to theft at a business with a net margin of 4% (typical of retail). Let's also assume wholesale markup of 50%, just to be conservative.

On two million in gross sales, a 2% loss equates to a $40,000. Assuming a 50% markup, the retailer has lost $20,000 in COGs. We'll ignore the other $20,000 for now.

On two million in gross sales, and a 4% net margin, the retailer can expect to make an annualized profit of $80,000.

We deduct the $20,000 in COGs loss, the retailer is now making only $60,000 a year, that's a loss of 25% in profit.

And that's using 50% markup.

In your stated case, with a 30% markup, the retailer would have lost $28,000 dollars in COGs, meaning the retailer is now making only $52,000, a reduction of 35% in net profits.

There is no universe in which this is a non-meaningful amount or to be dismissed as "well, something else has to be going wrong. Theft just isn't that big a deal."

[hnlmorg]

Those figures aren’t accurate (eg shrinkage is estimated at around 1.6% and theft is just one of many factors that contribute to shrinkage, so the actual percentage for theft is going to be even lower) but I’m done arguing with you because you keep taking my comments in bad faith, eg:

> Theft just isn't that big a deal."

That’s absolutely not what I said and if that’s the message you’re taking then you’re looking for an argument instead of discussing the facts.

So I’m done.

[NoMoreNicksLeft]

How many employees does it take to move $2mil in sales? That's not the owner running a mom-and-pop store with only him running the till, is it?

[etchalon]

For a retail location, 2 million might be a lot, or not very much. It's going to be incredibly dependent on what type of retail we're talking.