[Semaphor]

Pretty much it seems:

> "The average profit margin for grocery stores is 1.3 percent" says Jeff Cohen, a grocery industry analyst with IBIS World.

-- http://www.marketplace.org/topics/business/groceries-low-mar...

[coryrc]

That's net, not gross. They can afford to cut the item price if they have lower marginal costs (stocking?).