Pick 'n Pay / Checkers markup

IdlePhaedrus

IdlePhaedrus

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OK, so I was a wee bit gob-smacked today.

I have a favourite Italian pasta (imported obviously), which I have been struggling to get the last month or so in Cape Town which is usually stocked by the aforementioned stores.

So, finally, I looked closely at the packaging and called the importer / distributor and asked, WTF?

They said, yes, there has been a shortage of the product, it just arrived this week, it will be in stores next week, but if I cannot wait they have a factory shop I can come visit. Yay, I love factory shops!

So today I went and got a bunch of my pasta, and two other favourite products they import (also stocked by at least one or other of the aforementioned stores).

Not going to reveal the product names etc, suffice it to say that, after tallying up my bill at the factory shop, and what I would have paid at the two aforementioned stores, mark-up came in at around 57%.

You can be sure that the factory shop is making a bit of a profit too, otherwise it wouldn't exist, so the retail store's mark-up is probably closer to 65% at a guess.

But yes, all I can say is WTF? It might be cross-subsidisation using import goods to make local drought affected goods affordable for the less fortunate, but seems more like gouging to me.

Does anyone know what the average mark-up for Pick 'n Pay and Checkers actually is? Google is not terribly helpful in this regard, all I could find was 25% mark-up for Pick 'n Pay in Oz from 2009:

http://www.bdlive.co.za/articles/2009/04/29/high-prices-do-not-lift-pick-n-pay-returns
 
Only 57% markup?

Thats pretty damn low if you ask me...

Our local markups are probably anything from 60% on the low end to a few hundred percent on the high end...
 
So where is this factory shop?
It would help the rest of us poor folk.
 
Is their net final markup only like 2%-5% or something(according to financial) ,so surely somethings will be high and some things low .All depends on market for diffeent products
 
Brawler said:
I would have thought 25% or so.
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You and I are clearly old fashioned. I would have thought a 25% to 40% mark-up was reasonable depending on source.

Glad there is at least one person out there that thinks similarly.
 
Highly doubt it as they still have to add in transport cost, insurance, holding costs etc.
 
vavyn said:
Highly doubt it as they still have to add in transport cost, insurance, holding costs etc.
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But surely much of that is already covered by the importer / distributor, along with any import taxes?
 
IdlePhaedrus said:
But surely much of that is already covered by the importer / distributor, along with any import taxes?
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I would think it is from the distributor to PnP warehouse where they still have to incur those costs. And from warehouse to outlets will also be costs that pnp will incur( more like trying to pass costs to customer).

Also import taxes are generally included in the costs of the products if they can't be claimed back from SARS. So it would mean that the import duties that can't be claimed back will most likely be incurred by pnp as distributor will also want to pass those costs to them .
 
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vavyn said:
I would think it is from the distributor to PnP warehouse where they still have to incur those costs. And from warehouse to outlets will also be costs that pnp will incur( more like trying to pass costs to customer).

Also import taxes are generally included in the costs of the products if they can't be claimed back from SARS. So it would mean that the import duties that can't be claimed back will most likely be incurred by pnp as distributor will also want to pass those costs to them .
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I can understand this for perishable goods which need to be refrigerated through the whole supply chain, but for non-perishable goods, not so much.

Disagree with your comment on taxes, those would have already been incurred by the importer and included in their wholesale price to the high street store, their only further overhead would be storage and distribution (if not already catered for by the importer).
 
The name of the game in retail is stock turnover. The higher the stock turn rate the lower the margins can be. Speciallity imported items tend to have a low stock turn, hence higher mark-up.
 
My mistake. Was confused there for a moment. But in any event, PnP will still need to incur transport cost as well as insurance costs from the distributor warehouse to their own warehouse, insurance for those goods while transporting from warehouse to outlet and any holding costs at their warehouse, also any franchise fees that is payable to PnP itself by the franchise.
 
IdlePhaedrus said:
OK, so I was a wee bit gob-smacked today.

I have a favourite Italian pasta (imported obviously), which I have been struggling to get the last month or so in Cape Town which is usually stocked by the aforementioned stores.

So, finally, I looked closely at the packaging and called the importer / distributor and asked, WTF?

They said, yes, there has been a shortage of the product, it just arrived this week, it will be in stores next week, but if I cannot wait they have a factory shop I can come visit. Yay, I love factory shops!

So today I went and got a bunch of my pasta, and two other favourite products they import (also stocked by at least one or other of the aforementioned stores).

Not going to reveal the product names etc, suffice it to say that, after tallying up my bill at the factory shop, and what I would have paid at the two aforementioned stores, mark-up came in at around 57%.

You can be sure that the factory shop is making a bit of a profit too, otherwise it wouldn't exist, so the retail store's mark-up is probably closer to 65% at a guess.

But yes, all I can say is WTF? It might be cross-subsidisation using import goods to make local drought affected goods affordable for the less fortunate, but seems more like gouging to me.

Does anyone know what the average mark-up for Pick 'n Pay and Checkers actually is? Google is not terribly helpful in this regard, all I could find was 25% mark-up for Pick 'n Pay in Oz from 2009:

http://www.bdlive.co.za/articles/2009/04/29/high-prices-do-not-lift-pick-n-pay-returns
Click to expand...

How do you think Whitey and Raymond become billionaires?
 
Anyway, for my 999th post since 2005 I have resolved to find more local shops that sell local products at respectable prices, or at least don't mark-up at 60 odd percent for imported ones.

One day I might post a list.

Peace out...
 
ToxicBunny said:
But that will probably be after all costs are catered for?

All holding, transport etc etc etc that the retailer incurs.
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No that is before costs. But the suppliers subsidize part of the distribution costs since centralized distribution is still cheaper for the supplier than to distribute themselves to every store.
 
Coasti said:
No that is before costs. But the suppliers subsidize part of the distribution costs since centralized distribution is still cheaper for the supplier than to distribute themselves to every store.
Click to expand...

That I am a bit skeptical about tbh, I would expect margins to be calculated after costs to a large degree....

Althought it could be possible since PnP and such are very much in the business of holding vast volumes of money, the retail side is in some ways a means to and end on that front.
 
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