Lockback posted:

Basically, if you think the there's a huge margin to be made by your parents grocery store why don't you get a group together and undercut that store? The margins are astronomical, if you cut prices by a third you'd be giving people lower prices and still making tons of money. Maybe there's a reason that hasn't happened yet?

Lockback posted:

Yes, a company prices things so that they make the most money, that's not new. That has literally always been true. But its also not different now, and food prices in particular are very stuck to cost-basis as they are generally elastic

Bar Ran Dun posted:

That was my very first thought actually. I should arbitrage a rail car of turkey, goddamn.

I don’t know that we can assume that profits would even show up. These chains are constantly buying each other, spinning off regionally, being acquired by equity, etc. There is plenty of debt to shed in good times. I think a more detailed dig into actual reports is probably warranted.

quote:

And I very much would push a large portion of it back down to the producers. It’s not like there haven’t been several recent price fixing cases for things like egg and meat.

hypnophant posted:

there's probably more cost in the last mile than in shipping to a regional warehouse anywhere in the conus

hypnophant posted:

but dollar general? no one's in a hurry to acquire dollar general

Bar Ran Dun posted:

It’s not that much of a difference though. A rail car strips in 3.5 X 40’ cans. Drayage to the local frozen warehouse… then last mile to the stores. The difference between Seattle and north Florida for those things isn’t hundreds of thousands of dollars.

hypnophant posted:

https://www.usatoday.com/story/money/2023/06/06/price-of-eggs-dropping/70290647007/

Bar Ran Dun posted:

This part is different now. They are very much using POS data to price set by market independent of cost basis.

And I very much would push a large portion of it back down to the producers. It’s not like there haven’t been several recent price fixing cases for things like egg and meat.

Bar Ran Dun posted:

It’s not that much of a difference though. A rail car strips in 3.5 X 40’ cans. Drayage to the local frozen warehouse… then last mile to the stores. The difference between Seattle and north Florida for those things isn’t hundreds of thousands of dollars.

Lockback posted:

Your parent's grocery store isn't able to sell an entire rail car full of frozen turkeys. You're missing an entire distribution step.

Lockback posted:

Basically, if you think the there's a huge margin to be made by your parents grocery store why don't you get a group together and undercut that store? The margins are astronomical, if you cut prices by a third you'd be giving people lower prices and still making tons of money. Maybe there's a reason that hasn't happened yet?

bob dobbs is dead posted:

staring at the krogers annual reports for 5 mins says the accounting allocates the big delta to merchandising/transportation costs and not the debt service, sg&a or any of that other poo poo

Baddog posted:

Ehhh I thought the discussion was on being able to charge way more in markets where this is little to no competition, not if transportation was the overall driver of increased costs across the entire krogers operation.

Of course they are going to charge what each individual market will bear, right? Not cost+3% across the board. As a shareholder, I'd actually be a little upset if they were doing something as dumb as that. It's the government which is supposed to be ensuring that there isn't a monopoly on food anywhere.

bob dobbs is dead posted:

staring at the krogers annual reports for 5 mins says the accounting allocates the big delta to merchandising/transportation costs and not the debt service, sg&a or any of that other poo poo

Baddog posted:

(and related to this discussion, the FTC shouldn't let the krogers/albertsons merger go through, but they are too distracted by "big tech" to pay attention to a real goddamn problem).

Baddog posted:

Kind of the entire issue

bob dobbs is dead posted:

the accounting allocates the big delta to merchandising/transportation costs

pseudanonymous posted:

GAAP and cost accounting are very different.

Lockback posted:

I just saw Greece fell to 10% unemployment for the first time in a long time. I remember they tried some disastrous cost cutting measures, but then didn't really hear much for a long time. How have they worked this recovery? Just generally benefiting finally from global tailwinds or did they figure something out?

Cyrano4747 posted:

In the 90s my family moved to rural BF Egypt in the north east right in the Canadian border.

mrmcd posted:

Cyrano4747 posted:

When we moved there all three of the grocery stores with about 30 minutes of the house were owned by, two families, who slso had a lock on drug stores and iirc most of the gas stations. My mom was loving flabbergasted when she found out a loaf of generic whole wheat bread cost $2. Keep in mind this is around 1992 or so.

A few years later Walmart came to town, and with them came $.25 loaves of wal mart bread. There was a LOT of complaints about how the local grocers couldn’t keep up, how it was going to put main street out of business etc, but in the end they somehow managed to cut those $2 loaves down to less than $.50 without going out of business. Still not Walmart cheap but holy gently caress price cuts across the board.

It’s no exaggeration to say the standard of living in that area went way up.

Walmart is full of poo poo and causes tons of problems. They absolutely do undercut local business with the intent of becoming a monopoly and abusing that position in the future. But the people they’re loving in those kinds of super rural areas are frequently already fleecing the locals for everything they can, and often have been for generations.

Cyrano4747 posted:

Re: rural grocery stores. I don’t really have a dog in the logistics argument, but something to keep in mind is that not all monopolies and cartels are huge national level things. Mom and pop businesses absolutely do price fixing and it’s endemic in rural places with few options.

In the 90s my family moved to rural BF Egypt in the north east right in the Canadian border. Think the kind of town where you’re a two hour drive to an airport where you fly for two hours to get to the nearest actual decent sized city.

When we moved there all three of the grocery stores with about 30 minutes of the house were owned by, two families, who slso had a lock on drug stores and iirc most of the gas stations. My mom was loving flabbergasted when she found out a loaf of generic whole wheat bread cost $2. Keep in mind this is around 1992 or so.

A few years later Walmart came to town, and with them came $.25 loaves of wal mart bread. There was a LOT of complaints about how the local grocers couldn’t keep up, how it was going to put main street out of business etc, but in the end they somehow managed to cut those $2 loaves down to less than $.50 without going out of business. Still not Walmart cheap but holy gently caress price cuts across the board.

It’s no exaggeration to say the standard of living in that area went way up.

Walmart is full of poo poo and causes tons of problems. They absolutely do undercut local business with the intent of becoming a monopoly and abusing that position in the future. But the people they’re loving in those kinds of super rural areas are frequently already fleecing the locals for everything they can, and often have been for generations.

Edit: a friend’s dad who worked the border later told me that cigarette smuggling from Canada also dropped by orders of magnitude. Just over night not a problem, because people had someone to buy smokes from other than the local grocery/convenience store cartel. Turns out the smuggling wasn’t tax evasion, it was monopoly evasion.

Agronox posted:

Weird coincidence that you say this... After Charlie Munger died a few days ago, somebody sent me a commencement speech he made in 1995. He made exactly the point you make here: don't romanticize the local merchants, on the whole, net-net, Walmart ended up being a big positive for a lot of places.

Lockback posted:

I just saw Greece fell to 10% unemployment for the first time in a long time. I remember they tried some disastrous cost cutting measures, but then didn't really hear much for a long time. How have they worked this recovery? Just generally benefiting finally from global tailwinds or did they figure something out?

bob dobbs is dead posted:

so its stardew valley

bob dobbs is dead posted:

Unironically, part of the appeal of stardew valley is adding in some lovely things about rural living, like the shopkeep being a little poo poo or the drinking

The New York Times posted:

In another blow to China’s economy, the credit ratings agency Moody’s said Tuesday that it had issued a negative outlook for the Chinese government’s financial health.

Moody’s expressed concern at the potential cost to the national government of bailing out debt-burdened regional and local governments and state-owned businesses. Moody’s, which previously viewed China’s finances as stable, warned that the country’s economy is settling into slower growth while its enormous property sector has begun to shrink.

China’s Ministry of Finance immediately pushed back, saying that the Chinese economy is resilient and that local government budgets could withstand their loss of revenue from the country’s real estate downturn.

At the same time, Moody’s reaffirmed its overall A1 credit rating for the Chinese government, which is roughly in the middle of the scale of what’s considered “investment grade” or generally low risk. A negative outlook on a credit rating is not necessarily soon followed by a downgrade, but it serves as a caution that the existing rating may not be sustainable.

[...]

Today China faces increasingly serious budget constraints, triggered mainly by a steep slide in the real estate sector. The construction of apartments, factories, office towers and other projects has been the country’s largest industry, accounting for 25 percent of economic output. Apartments are also the main investment for most households, accounting for three-fifths or more of their savings.

While borrowing by China’s national government has been limited, local and regional governments and state-owned enterprises have borrowed heavily for the last 15 years. The money the local governments pulled in from lenders has generated high economic growth, but many of them are now in serious trouble.

For China, the change in the credit outlook will have little direct effect on its finances. Unlike many countries, China relies very little on overseas borrowing. The national government mainly sells bonds to the country’s state-owned banks. The country’s regional and local governments and state-owned enterprises also sell bonds to them.

Lydia DePillis, for the New York Times posted:

U.S. Job Growth Holds Up as Economy Gradually Cools
Interest rate increases have taken the edge off labor demand, but unemployment dipped in November, and wages rose more than expected.

The U.S. economy continued to pump out jobs in November, suggesting there is still juice left in a labor market that has been slowing almost imperceptibly since last year’s pandemic rebound.

Employers added 199,000 jobs last month, the Labor Department reported Friday, while the unemployment rate dropped to 3.7 percent, from 3.9 percent. The increase in employment includes tens of thousands of autoworkers and actors who returned to their jobs after strikes, and others in related businesses that had been stalled by the walkouts, meaning underlying job growth is slightly weaker.

Even so, the report signals that the economy remains far from recession territory despite a year and a half of interest rate increases that have weighed on consumer spending and business investment. Reinforcing the picture of energetic labor demand, wages jumped 0.4 percent over the month, more than expected, and the workweek lengthened slightly.

Most analysts have been surprised by the durability of the recovery, which owes a lot to the cash that consumers accumulated over the past few years of federal stimulus and forced savings. That has powered service-industry jobs even in the face of rising costs and the resumption of mandatory student debt payments.

“That’s the definition of a soft landing: It’s slowing slowly, which is what you want,” said Martin Holdrich, a senior economist with Woods & Poole Economics. He noted, however, that given strong productivity growth, the enduring tightness of the labor market needn’t prompt the Federal Reserve to continue increasing interest rates.

[...]

November’s crop of jobs was essentially in line with the last few months, accounting for strike activity, though a step down from the 240,000 jobs added per month on average over the year ended in October. During the November survey, there were still about 10,000 workers still on strike at workplaces including casinos and hospitals.