this post was submitted on 21 Jun 2023
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For real. This "our profit margin hasn't increased" argument is BS. If it's a percentage, it's increased at the rate of YOUR inflation. That's why you can simultaneously make the profit margin argument, while toting record profits at investor's meetings.
If I sell lettuce at $1 and make $0.10 profit, I have a 10% profit margin. Mark every step of the way up to my store and sell the same lettuce for $10 and make $1 profit, I STILL have a 10% profit margin. But now I can also tell my investors I have increased profits 900%
I'm sure there's lots of arms length vertical integration to spread these higher costs around to as well. Example: Rogers stores, service techs, etc are all "technically" subcontractors. Numbered companies with Rogers logos on everything.
I'd be pretty damn surprised if Loblaws et al don't have their hands in the logistics ends of their businesses. ___
They're so vertically integrated that they charge themselves several times along the chain, and apply as many hidden markups as they want. IIRC, eg, they own the property the stores are on, but they hold the real estate under a separate company so they can charge themselves rent. They own or are major investors in the transport and logistics.
I saw McDonald's use this tactic in The Founder. They franchise (No Frills) to remove additional costs for themselves, but it also means they can bully owners with the leasing rates. win-win
Same way Ticketmaster operates.
They use "demand based ticket pricing" and own all the third-party resellers.
So they can release tickets, buy them all themselves through their third party resellers, claim high demand and increase prices.
Corporate landlords are doing the same thing with homes.