Margin versus turnover, which is better?
During this Covid pandemic there have been a lot of businesses that unfortunately had no alternative but to close down. There have been around 24,000 retail jobs that have been lost. It made me think about things a little deeper on this subject. Do retailer’s put selling branded products and cutting their prices with the supermarkets so that they are competitive? Should they concentrate on selling own brands as well as they represent better margins for their business. Buying a top brand mobile, iPad etc is understandable, but a loaf of bread!
Customers generally want to buy the most known brands as they trust them and that makes sense completely, but if you are having to work on paper thin margins to look like you are as competitive as the likes of Tesco, Asda etc then you are on a loser. They can sell due to their buying power a lot cheaper than a small convenience store can and that is fact.
A better approach would be to have a 2-tier choice on your shelves for bakery. A smaller volume for the die hards who will only buy their fave brand at any price and an own label brand at a better price with a far better margin that will offers good value.
The supermarkets sell the top brands at £1.05, can your small convenience store sell at that price and make any money. If you compare delivered in prices not cash and carry prices then you can’t make a profit. If you buy in an own label alternative that sells for the same price your margin will be around 28.5%. It is worth thinking about