Comments 3

  1. Post
    Author

    Hi @Wholesale picture frames.

    I disagree with your theory. Profit maximization only works in an environment of scarcity, when you sell a product that is largely undifferentiated you will have to focus on profit rationalization.

    I think grocery shoppers shop in a characteristic way, most individuals have a fixed budget, let’s assume $100.00 a week. So they essentially go to the store and spend that whole amount. Now if the store helped me save 10-12% then I would use that saving to buy other essential items I was previously ignoring + now the store has given me a memorable experience, one which I’ll recall before considering taking my business anywhere else.

  2. @Wholesale picture frames- I think you are disregarding the customer’s lifetime value. That’s especially relevant in a grocery/commodity business. If you can continue to bring the same customer back time and again, you have a better chance of “earning” more of their dollars over the long haul. Repeat that with a few thousand customers and pretty soon you’re slim grocery margins are amazingly profitable.

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