Unmasking Shrinkflation: The real reason why your paying more for groceries

Grocerystore Chains are making a lot of money, and they could use that power to negotiate lower costs with their suppliers. They get to decide which suppliers get to sell their products on their shelves. By using their influence, they could make suppliers offer better prices to consumers and stop reducing product sizes while keeping prices the same (shrinkflation).

However, they are not passing these benefits on to consumers. Instead, they are charging more per gram. Historically, profit was around 2%, but now it's closer to 4%. For instance, on a product that used to make you 2 cents (2%) on a one-dollar sale a decade ago, now you're selling it for $1.50 and making almost 4%, which is 6 cents. This means their net profit has tripled.

Historical Profit Margin (Quarterly) Data

The video didn't address this issue or reach the natural conclusion. With fewer competitors and suppliers, and considering the collusion in the bread scandal, it seems like companies are working together to take advantage of consumers. We're questioning if this behavior extends beyond bread to other products, as many grocery chains are reducing sizes and raising prices. It's like a broader version of the bread scandal, and the fact that everyone is making record profits suggests there's not enough competition.

Typically, more competition would lead to lower prices as companies strive to attract customers. If a new grocery company started, it could restore product sizes and reasonable pricing. However, startups lack the influence to negotiate with suppliers that large chains have. So, it seems like big grocery chains are using their power to benefit themselves rather than passing on savings to consumers. However, there also maybe other players in this that are taking advantage, similar to the bread scandal.

And, they are making all this money and still charge us for bags!

The real reason why your paying more for groceries
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