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Comment by midasuni | Hacker News Reader

Supermarkets are colluding to increase prices as all companies are wont to do. There isn’t enough competition to act as downward pressure on prices.

This isn’t a monetary thing that YouTube says - the goods a few miles away in Germany aren’t seeing this, despite being in the same currency and no difficulty transporting them. In a free market a competitor would buy from the same supplier the german supermarket does, undercut the competition and force all prices for.

However that doesn’t work because consumers in Austria don’t realise how they are being ripped off, because while the large corporation has all the data to manipulate and extract maximum revenue from each consumers the consumer lacks the data to do the opposite.

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>However that doesn’t work because consumers in Austria don’t realise how they are being ripped off

Oh, they have known for a long time they were being ripped off but didn't have the proof. There's nothing they can do about it because the corrupt politicians claim it's just the free market and can't intervine with the market pricing otherwise it would be communism, and Austrian consumers who don't live close to Germany have no other options for shopping than the local monopoly.

Is there any evidence that Austrian supermarket owners have long reaped outsize profit margins?

There is evidence that the prices they charge in Austria are often significantly higher than in Germany, meaning higher profits per sale, at the expense of the consumer who's wages are lower than those in Germany, so it's a double whammy.

In the US, many times you cannot compare prices between cities much less states due to differences in land price and costs of city and state taxes/regulations such as minimum wages.

Surely, Austria and Germany, as two different countries, have at least a few big differences in tax systems/labor laws/local laws/etc that can affect cost of goods sold?

The retailers have been questioned regularly why they overcharge in Austria compared to Germany, and they never cited extra wages(lower than Germany FYI), business or tax overhead as the reason, but rather beat it around the bush saying "we're only charging what the market will bare and this is what the Austrian market bares", basically admitting they're screwing you and getting away with it, especially that they often sell stuff made in Austria cheaper in Germany.

I guess that is technically the truth. As a business owner, I also charge the most I think my customer’s were able and willing to pay.

But in all cases I am familiar with (US/Canada/UK/Germany), there are sufficient competing grocery retailers that the price most customers are willing to pay is only a couple percentage points higher than the cost of goods sold.

That does not reflect actual reality. Retailers have answered plenty times why they are charging higher prices in Austria compared to Germany and the arguments are hard to ignore (higher cost of doing business, higher taxes, higher density of super markets, more rural delivery requirements etc.).

Specifically on that point:

> extra wages(lower than Germany FYI)

That is incorrect, the cost of an employee in the grocery space per hours worked is still higher in Austria than Germany, quite meaningfully so.

Which higher taxes? Which is higher cost of doing business?

Please be specific, otherwise it's just parroting the fake corporate propaganda of the supermarket chains.

See https://news.ycombinator.com/item?id=37536203

> There is evidence that the prices they charge in Austria are often significantly higher than in Germany

The cost of doing business in Austria is significantly higher for supermarkets. On the one hand because Austria has many more supermarkets to begin with per chain, secondly because of the high cost of labor in the country. Comparing countries that way is not trivial.

Where exactly is this extra higher cost you're talking about?

See https://news.ycombinator.com/item?id=37536203

so naturally the stock prices for these grocery chains should be skyrocketing. please show the stock prices for these companies or I will know fairly definitively that you are just doing stream of consciousness outsider art

REWE seems like the only publicly listed grocery retailer in Austria:

https://en.wikipedia.org/wiki/REWE_Group

2022 numbers:

https://www.rewe-group.com/en/press-and-media/newsroom/press...

> combined net profit fell by 33.4 per cent, from 755.6 million euros to 503.5 million euros.

> Total revenue up 10.4 per cent, or 8 billion euros, to 84.8 billion euros

So 2022 profit margin of 0.5B/84.8B = 0.5%.

2021 profit margin was 0.75B/76.5B = 1%

That is spectacularly low, even Walmart manages > 1%.

Everyone else seems private so their financials are probably not available:

https://en.wikipedia.org/wiki/List_of_supermarket_chains_in_...

wow, Metro AG's stock is doing horribly this year. but they're supposedly raking in tons of cash from Austria?

EDIT: SPAR Group, Inc. is doing very badly as well. I think this theory is highly suspect

If they're doing so poorly, why are they giving such steep discounts in Germany and not charging Austrian prices to bump up their margins? Are they stupid to leave so much money on the table?

There is significantly higher competition in Germany than in Austria when it comes to supermarkets. Grocery chains might very well want to push up the prices more to restore margins but might find it hard to do so.

The obvious answer is that they are not giving steep discounts in any country. Almost certainly their gross margins are between zero and three percent in both countries.

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