Category: Retailing

Don’t Care

Corporate Fuckery, Retailing

Of course we saw this coming:

Walmart is warning it plans to raise prices due to tariffs, despite the fact April’s Consumer Price Index (CPI) showing President Donald Trump’s tariffs did not affect consumer prices.

Walmart CEO Doug McMillon issued the update during an earnings call on Thursday, stating that they will try to keep prices “low as possible,” but the reality is, they are unable to absorb all of the costs due to tariffs.

“But given the magnitude of the tariffs, even at the reduced levels announced this week, we aren’t able to absorb all the pressure given the reality of narrow retail margins,” McMillon stated, adding, “The higher tariffs will result in higher prices.” 

Utter bullshit.  As far as I can see, the tariffs may have affected the price of Chinese goods, but if anything, the goods made in places like Thailand, Taiwan and Pakistan should be reduced with all those other countries getting lower or non-existent tariffs.  So yeah, some of Walmart’s prices on Chinese merchandise should go up, but what they’ll do is raise all their prices to minimize the much-higher Chinese prices.  It’s called “spreading the load” in retail-speak.

Don’t care, because I’ll just stop buying non-foods at Walmart until things quieten down, and buy only the foodstuffs there that I absolutely cannot get anywhere else.  Last time I looked, that’s only one product, and amazingly, it’s made in the U.S.A. anyway.

Besides, if Walmart were truly committed to keeping prices lower, they’d improve their efficiency by ditching their fucking ultra-woke DEI practices — which would never have been instituted in the first place had Sam Walton still been around.  But they’re not going to do that, are they?

Feel free to do what you think is proper in your own circumstances.

But for me?  Toodle-oo, WallyWorld.

BFD

Marketing / Advertising, Retailing

The above title does not stand for “Big Fucking Deal”, although given the average tenor of this website, you may be forgiven for thinking so.

In the grocery retailing business, BFD stands for “Best Food Day”;  that day of the week when grocery stores launch their weekly price discounts on selected items.

The actual day varies from chain to chain, or from one area to another.  Back when I was in the business, one chain’s BFD was on Thursdays, when they dropped their weekly flyer (called a “roto” because of the printing process);  their competitor’s might be on a Friday to capitalize on the weekend’s expected sales uptick, and yet another competitor — whose typical shopper might trend towards an elder demographic — might have their BFD the day after Social Security payments were made… and so on.

Nowadays, I think the BFD concept might have disappeared to a greater or lesser degree because of changes in shopping habits by customers, whether online, delivery, at-store pickup and Internet deals.

I’ve certainly noticed this at Kroger — where I do perhaps 90% of my shopping — because not only have they de-emphasized the roto (the price deals aren’t as aggressive as they once were), there also seems to be a large number of Internet-delivered promotions that you have to visit their website to activate.  And of course, there are the “loyalty card-only” deals which are their way of tracking customer shopping habits (I think;  I haven’t seen much in the way of targeted deals the way I used to deliver them — a topic for another time).

In case anyone’s interested about the other 10% of my grocery shopping, it’s split between Market Street (a Texas chain, owned by Albertson’s) and Wal-Mart, both only for very specific items (e.g. Market Street’s French baguettes and rolls, which are superb and rival the baguettes I tasted in Paris).

Side note:  when I still lived in Plano, I shopped a lot at Central Market (H.E.B.’s upscale outlet), but they saw fit to discontinue several of my favorite products which they carried exclusively — e.g. Old Forest Salami and Jambon de Paris  sliced ham — so there’s no need to go there anymore.  And in any event, their prices were stratospheric before, but since Bidenflation have become frankly unreachable to One Of Fixed Income Like Me.  Also, their South Plano store is now too far from my place to justify the long trip, so there ya go.

By the way, I see that eggs are now selling for $3.99/dozen at Kroger — by “eggs” I mean eggs that we peasants generally eat and not the boutique premium stuff hatched in coops run by virgins and laid by hens sprinkled with holy water.  Limit 2 packs per customer, but not enforced if you buy two packs, take your groceries out to the car and then go back into the store and buy another two, etc.  (Once again, I used to enforce limits by putting a stop on the loyalty card daily quantities.)  Although I cannot see who would need more than two dozen eggs per day unless you have four teenage sons and/or are running a commercial home bakery as a sideline.

I forgot where I was going with this post, but I assure you there was a point to all of it — I just can’t remember what it was.  If I do remember (doubtful), I’ll follow up some other time.

Well… Bye

Retailing, Two-Minute Hate

Reader Mike L sent me this little news snippet:

Macy’s bosses are forging ahead with store closures as they look to reinvent the 166-year-old retailer.  The troubled department store chain announced in February that it would shut 150 over the next three years – including 55 by the end of 2024.   It will be left with just 350 stores – a far cry from the peak of around 1,100 in 2008. Since then it has been in steady decline.  Macy’s has yet to announce exactly which stores will be affected, but employees are speculating whether their location could be on the chopping block.

…and I don’t care.

I’ve hated those New York bastards with a passion ever since they bought the exquisite Marshall Field’s* in Chicago and turned it into… well, Macy’s.

I hope they all perish.

* probably the best department store in the world during the 1980s and -90s.  Their Rare Books Department alone was worth any four departments in Macy’s.  Unsurprisingly, it was the first department that Macy’s eliminated.

Mighty Falling

Management, Retailing

Back when I were a young (!) data analyst and retail specialist at The Great Big Research Company, one of my minor clients was Walgreens Drug Stores.  (I say “minor” only because I was reporting only on the grocery section of the stores, and not the Rx or even the over-the-counter (OTC) drug or general merchandise products.)

Anyway, I became very friendly with one of the execs, and in one of our conversations she let slip that at that point in time, Walgreens had never — not ever in the history of the company — failed to make a quarterly dividend payment to shareholders.  I checked on that, and she was correct.  So a couple of years later, once I’d left Nielsen and was managing my own 401k account, I purchased a bunch of Walgreens shares and watched the dividend payments roll in, reinvesting them back into the business for several years.

Then one day I was driving to the local mall, and something stuck in my brain on the way there.  I couldn’t figure it out because that’s the nature of such things;  but on the way home I figured out what it was.

On the short five-mile trip between the mall and home, I had passed six Walgreens outlets.  And all my old retailer instincts came to the fore:  Walgreens was, in the industry parlance, over-stored.  Granted, this was in Greater Chicago (Chicagoland), where Walgreens’ head office was located, but still…

A short time later I sold all my WAG shares (at a very handsome profit).

Of course, all that was back when dinosaurs roamed the Earth, but I note this recent development (as shared by Reader Mike L.) with interest:

Walgreens is set to close a substantial number of its roughly 8,600 locations across the United States as the company looks to reset the struggling pharmaceutical chain’s business.

CEO Tim Wentworth said on a call with analysts Thursday that “changes are imminent” for the roughly 25% of stores that aren’t profitable and Walgreens’ strategic review will “include the closure of a significant portion of these underperforming stores.”

“We are at a point where the current pharmacy model is not sustainable and the challenges in our operating environment require we approach the market differently,” he said.

Okay, fine,  This can and does happen to many a business.  But there’s a wrinkle:

Wentworth said the closures would focus on locations that aren’t profitable, too close to each other or stores struggling with theft.

The first two phenomena are common, while the third… well, let’s just say that unless I miss my guess (but I doubt that I do) a whole bunch of inner-city Walgreens outlets are going to be boarded up because of undocumented product movement.  And those areas are going to become not only “food” deserts, but “medication” deserts as well.  (The other kind of “medications” are firmly established there, of course.)

And by the way, Wentworth is a seriously smart cookie — unlike so many other corporate CEOs of recent vintage — so if he can’t get the existing show to work, it’s a safe bet that nobody in the industry can.

Ripoff?

Business, Economics, Retailing

Let’s say you went into a little seaside diner feeling peckish, and saw that they had a menu item that read:  “2 slices of buttered toast”.

Sounds okay, yes?  (I’m going with “normal-person peckish” and not “American peckish” which would apparently require the entire loaf to satisfy that hunger pang.)

Then you see the price:  $5.00 for the two slices of buttered toast.

Ripoff?  Let’s analyze the thing.

I’m going to give the diner the benefit of the doubt here, and allow their claim that this isn’t Wonderbread and store-label butter, but a “premium” offering.  I’m also, for the purpose of the analysis, going to allow that they purchased the ingredients thereof at retail prices (they didn’t).

Our diner, by the way, would be located in the equivalent of coastal Florida, up in the Redneck Riviera.

So using my local gourmet store (Central Market) as a price guide, let’s look at the thing:

Let’s see what the unit cost is.  Assuming you’re doing thick-ish (e.g. “not-quite-Texan”) slice size, you’re going to get about 16 slices out of that loaf, assuming that we discard the ends, of course.  So: $5 / 16 = 31.25 cents ($0.3125) per slice; or 62.5 cents in total for the two.

Now the butter:  even assuming you slather the butter on like I typically do, you’re still going to use about 1/32oz per slice, ergo ending up with (8x 32 = 256;  398 / 256 = about 1.5 cents per slice or 3 cents for the menu item.

Total “cost”:  (31.25 + 1.5) x 2 = 65.5 cents ($0.655) for the two slices of buttered toast.

Now for the tricky bit.

Restaurants, from back when I still managed one, typically have had to mark up “cost” by 600% just to break even.  (Don’t even get me started on whether that’s the case in NYfC or Califuckingfornia:  it isn’t.)  This takes into account fixed overhead like salaries, supplies & equipment, utilities, real estate and so on (i.e. what it costs your diner each day before you get a single customer in the door).

So the extended cost of that 2-slice item works out to (errr carry the six) $3.93, before adding a single penny for gross profit. (And just so we’re clear:  $5 from $3.93 represents about 27% gross profit — I know, don’t make me laugh.)

Is $5, therefore, a total ripoff?

Not from where I stand, and this kind of analysis explains why you have to take your bank manager along to 5 Guys every time you visit them to get you and your wife a burger.

Here’s the article that prompted this post.

And Fuck Joe Biden, because about three years ago that $5 loaf of bread at Central Market used to cost $2.85, and the $4 butter about $2.75 (because I keep track of this kind of thing, even though the Gummint would prefer that I forget that the chocolate ration used to be 5 grams and not three).

[/Orwell]