Not necessarily, they could potentially reduce profit margin instead.
Edit: Or reduce employee count. Give more money to less people.
Edit: Or reduce employee count. Give more money to less people.
What do you expect them to reduce that to?
With margins that low, don't you think they are already very focused on operating with the absolute minimum number of employees they need?
A friend of mine managed a very busy grocery store for years. It's an extraordinarily difficult business.
Many grocery store chains treat their employees very well, they provide good salaries and training programs. It's one of the few businesses left where you can start out as a bagger and work your way up to senior manager, with all costs paid by the store.
Other than inventory cost, this is their highest cost.
Would you have them change it?
[1] https://thegrocerystoreguy.com/what-is-the-profit-margin-for...
https://www.ncr.com/blogs/retail/supermarkets-turn-to-techno...
So, when a company like BP or Shell raises fuel price by 33%, they're forced to match it or maybe try to get more things sourced locally, cut out middlemen - rather hard.
Usually they'll raise the price a bit more further.
"For the general retail sector, the average profit margin is only 2.3% and for the grocery and food retail industry, it’s even lower at only 1.6%."
They will only raise wages and prices if that is the only way to have enough labor to handle their business. Even then, higher prices means lower demand. No free lunch.
https://en.wikipedia.org/wiki/Rainbow_Grocery_Cooperative
Rainbow Grocery Cooperative is a worker-owned and run food cooperative located in San Francisco, California. Founded in 1975
The point is that without investors expecting a return there's no ROI. Grocery stores can pay a living wage without gouging customers and without investors. It seemed to me that you might have been implying that without investors there couldn't be grocery stores.
Another factor to consider is that wages and profit returned to the workers will tend to stay in the local economy longer, contrasted with ROI which typically would be stored in other investments?
Once somebody earns somewhat more than their subsistence wage, they want to invest it into something that brings a return. That won't be these worker-owned businesses. And the market capacity for such companies seems to be quite small.
Like what? You'll have to forgive me but I'm not very sophisticated when it comes to economics.
> ... that is earning at best a modest return
So what? Rainbow Grocery isn't an investment vehicle, it's just people coming together to make a grocery store. That's my point: not everything has to be an investment. We can have grocery stores w/o ROI, that charge reasonable prices and pay a living wage.
> Once somebody earns somewhat more than their subsistence wage, they want to invest it into something that brings a return.
Sure! That's the beauty of the capitalist system (I'm pro-capitalist FWIW, I just don't think it is necessarily the best economic modality for every business. The way I put it is, "Capitalism as a tool, an economic API, not an ideology.")
> That won't be these worker-owned businesses.
Exactly!
> And the market capacity for such companies seems to be quite small.
Again, so what? These kinds of businesses generally are not trying to aggressively expand (although some do, like REI, the outdoor equipment stores.)
Just to reiterate, it sounded to me like you were saying that without ROI we wouldn't have grocery stores, and I just wanted to point out that we can have grocery stores with good prices and good wages and no investors or appreciable ROI.
In any case, joining a coop usually means you have to buy some shares in the "company". This may be disguised in some form or another, maybe through withholding some wage initially. But in order to get a share of the profit you need to own a share in the coop. This is what "employee-owned" means. So the employees do have their own capital involved in the company with all the implications: A risk of the shares devaluing and loss of opportunity to do something else with that capital. And if the wages are higher than somewhere else, than they are part of the return on investment. If none of that is the case, it's not a coop but rather a not-for-profit.
https://www.theglobeandmail.com/business/article-loblaw-prof...