How supermarkets choose where to open and close

http://chicagopolicyreview.org/2015/10/26/if-you-build-it-th...

> For low income and education households, the most publicized reason that people eat poorly is that they do not have access to healthier options. Media coverage of efforts to combat nutritional disparities has focused primarily on efforts by grocers like Whole Foods to open stores in underserved neighborhoods. However, according to the study by Schnell et al., policy initiatives focusing on increasing access to nutritious food will only solve a small portion of these nutritional differences. Controlling for income level, the study finds that differences in access only explain 10 percent of disparities in consumption across education groups.

> Furthermore, the study finds that households do not strongly respond to the entry of new stores into their geographic area, even though they are aware of the addition of new stores. When households change the mix of stores they visit once a new store is introduced, the researchers do not observe a lasting change in the nutritional value of their purchases.

We subsidize all sorts of "unprofitable" services that have a societal ROI (libraries anyone?), no reason we shouldn't do it for grocery stores where a for-profit entity can't make it work.

Here's a couple examples:

Company A sells has total revenue of 1.01 million units, has a cost of revenue of 1.00 million units (1% margin), and a gross profit of 0.01 million units.

Company B sells has total revenue of 1010 million units, has a cost of revenue of 1000 million units (1% margin), and a gross profit of 10 million units.

A & B both have the same margins, but B had a gross profit 1000x more than A.

They often have operating margins of 1-3%. Gross margins (what people usually mean when they say 'margin') are usually over 5%.

Furthermore, neither operating margin nor gross margin are useful when considered in isolation. Supermarket chains are special because:

1) They have negative working capital: they receive payment from their customers before they pay their suppliers.

2) They have fast inventory turnover. Tesco's annual inventory turns are about 18x. So, for a given level of margin, they make twice as much as a normal retailer (e.g. Amazon's annual inventory turns are about 9x).

*England (and Wales) and Northern Ireland

At least as far as English law goes, every time this comes up there's typically enough opposition about people having time with family (and having a day off coincide). I don't remember any discussion about church in decades. Of course, the discourse in Northern Ireland may differ.

But it is based on consumer behaviour, not some nefarious choice reduction agenda.

Large scale weekly shops are in decline. Shoppers have been buying smaller orders more frequently. You can't expect them to stock 10 types of butter for you to choose from and throw the other 9 away.

Even if they had enough storage space to accommodate your choice demands, local residents do not enjoy huge trucks at all times of day and night so they are restricted to certain hours of operation for delivery.

Small frequent order shopping is something retailers would rather not have to cater for at all.

As opposed to Germany and Belgium, where only gas stations are open and everything is overpriced as a result.

Choice vs convenience, car culture vs walking & biking.

True spiritual laws are less like political legislation and more like scientific laws in that they're not arbitrary or coercive. From a secular perspective one could say: being busy 7 days a week is like drinking 7 days a week, or going with little sleep for 7 nights: you're going to make sub-optimal decisions. (Which you will regret and which will give you more work as a result.)

Pretty sure all the supermarkets in my small UK city open 7 days a week??

From the referred Wikipedia article:

Suppose that there are two competing shops located along the length of a street running north and south, with customers spread equally along the street. Each shop owner wants to locate his shop such that he maximises his own market share by drawing the largest number of customers. In this example, the shop itself is the 'product' considered and both products are equal in quality and price. There is no difference in product to the customers. Therefore, each customer will always choose the nearest shop because there is no difference in product or price.

Another example of the law in action or practice is to think of two food pushcarts at a beach. Assume one starts at the south end of the beach and one starts at the north. Again assuming a rational consumer and equal distribution along the beach, each cart will get 50% of the customers, divided along an invisible line equidistant from the carts. But, each cart owner will be tempted to push his cart slightly towards the other, in order to move the invisible line so that it encompasses more than 50% of the beach. Eventually, the pushcart operators end up next to each other in the center of the beach.

The only developments like this really going through that aren't just brand new builds where no store previously existed are for example, the 23rd ave Safeway, and the old Red Apple(which are fraught with their own gentrification issues). Basically, it only really happens in POC or lower income neighborhoods where there isn't super dedicated opposition, or where it will just be ignored.

I do know for a fact that some stores, like the brooklyn ave Safeway, and the two broadway QFCs basically barely make enough money after theft to stay open, which might contribute to this. At least the latter two have retail/other businesses within the structure, and the thomas st store has some apartments as well in the back section...

I recall in Frankfurt Ost there was a Nahkauf (Rewe Group) not 300m away from an actual Rewe, which considering they're the same company I consider kind of silly. After some time they decided to close the Nahkauf, and now the location is empty.

Or in train stations where there are 2 or 3 different Starbucks selling coffee. Maybe they do this so they can capture the rush hour traffic, and the rest of the day they have reduced staff? Never made sense to me to have them so close together.