Topic: | Re:Re:Go to Sainsbury local if you wish to pay 32% more | |
Posted by: | Dan Murphy | |
Date/Time: | 17/08/15 15:32:00 |
The operating costs (rents, utilities, staffing...) of running a high street / small convenience store like a Sainsbury's Local or Tesco Metro are much, much higher than running a large scale "big box" supermarket, on a per square foot basis. The idea is that customers will be happy to pay higher prices because they save on the time and costs of driving to the supermarket, for this mid week fill-in shopping trips. It's the "Convenience" concept. But some supermarkets are finding that customers are not always willing to pay higher prices, and they are struggling to generate enough income and profits to make these very expensive small stores pay. They also take up way more effort in terms of ranging and layout, as there is so much less space - working out how to fill it in the most efficient way is hugely complicated, as every local location has a widely different customer and demand profile and every store has to have an almost unique assortment of products to match its catchment area. This sort of planning is very time consuming and expensive. To pay for it all, supermarkets have to charge higher prices. But if customers won't pay them, it doesn't work. This is why we have Morrisons announcing that they are closing their 150 convenience stores. They have tried, and worked out they can't make them profitable. |