Supermarket mark up percentage

Discussion in 'General Business Forum' started by Delahaye, Oct 26, 2012.

  1. Delahaye

    Delahaye UKBF Newcomer Free Member

    Posts: 25 Likes: 3
    Hi folks,

    We are about to approach the big supermarkets in the UK to retail our product, but would like to know the average mark up percentage that they work to.

    We have projected 50%, but is it more like 100%?

    Thanks in advance.
    Posted: Oct 26, 2012 By: Delahaye Member since: Oct 17, 2011
    #1
  2. roydmoorian

    roydmoorian UKBF Ace Full Member - Verified Business

    Posts: 1,511 Likes: 279
    If you base your calculations on a 500% mark up and 90 to 120 days credit terms after the end of the month of delivery for the supermarkets you will not be too far out.
    Posted: Oct 26, 2012 By: roydmoorian Member since: Nov 6, 2009
    #2
  3. businessfunding

    businessfunding UKBF Big Shot Free Member

    Posts: 3,789 Likes: 1,004
    I've always been informed a good average was 300%, though it can vary greatly from product to product.

    As above, you really need to look very closely at terms as well as price.
    Posted: Oct 26, 2012 By: businessfunding Member since: May 11, 2011
    #3
  4. NickJ

    NickJ UKBF Newcomer Free Member

    Posts: 976 Likes: 211
    Be prepared to be walked over and to either accept their terms in a once only offer or shut the door on your way out!

    But........, if you act very nonchalantly and keep a calm exterior and act cool, showing like you know how these things go on, you may just be able to broker a deal that favours you more slightly.....I am assuming of course that you've never doe this sort of thing before....
    Posted: Oct 26, 2012 By: NickJ Member since: Mar 29, 2012
    #4
  5. Stretchy

    Stretchy UKBF Newcomer Full Member

    Posts: 4,455 Likes: 1,401
    This isn't my area of expertise but I would have thought 50 -100% is the sort of figure small independents with limited buying power are looking for. I would have thought the big boys would leverage their advantage to get a much better markup than that.
    Posted: Oct 26, 2012 By: Stretchy Member since: Jun 11, 2010
    #5
  6. lww

    lww UKBF Regular Free Member

    Posts: 348 Likes: 65
    The areas I know are gift and toys - independents will generally be looking for 2.4x, ie. if your item should retail at £10 (inc VAT) then they will expect to buy that at £4 net. The multiples such as supermarkets will often be looking for 2.5 or 2.6x (the buyers often have purchasing targets to meet in this regard!) and then of course you get all their lovely little "extras" like end-of-month plus 90 for settlement, 2% settlement discount (ie. they want a discounting for actually paying) and some also try to work in retrospective volume discounts, ie. if they sell 5,000 units in a year they will want another 5% discount.

    Translating that to markups, I'd say 100% is the bare minimum before VAT.

    If you want a clearer answer maybe you could give us an idea of the product and the RRP?
    Posted: Oct 29, 2012 By: lww Member since: Jan 20, 2010
    #6
  7. Moneyman

    Moneyman UKBF Big Shot Full Member

    Posts: 2,716 Likes: 772
    Check very carefully the terms for "help with marketing and promotions"
    thats when they say we want to do a two for one and so we want it half price.
    Always be prepared to walk. There is no point in just upping your turnover for the sake of it. maybe a perfect chance but huge risks.
    Posted: Oct 29, 2012 By: Moneyman Member since: May 3, 2008
    #7
  8. stealthtranslations

    stealthtranslations UKBF Newcomer Free Member

    Posts: 25 Likes: 0
    When they can discount food getting near it's sell by date by 75% and still make a profit then you can be assured the markups are more than 100%.
    Posted: Oct 29, 2012 By: stealthtranslations Member since: Apr 20, 2011
    #8
  9. 10032012

    10032012 UKBF Newcomer Free Member

    Posts: 1,969 Likes: 321
    I do really wish I was Tesco... getting money in the till a quarter before you need to pay out for the items you have already sold. Of course, if the Government gave a damn about our businesses they would have created restrictions on the big supermarkets... not by being a supermarket but by market share, preventing them from these long credit periods, discounts and margin squeezing.

    One could argue these lack of restrictions have helped the economy indirectly...
    Posted: Oct 29, 2012 By: 10032012 Member since: Mar 10, 2012
    #9
    • Thanks Thanks x 1
  10. sirearl

    sirearl UKBF Legend Free Member

    Posts: 28,335 Likes: 6,292
    No wonder the country is going to the dogs with those supermarket markup.

    I take it they are not part of Dave's big society.:eek::)

    I know M&S have markups of over 1,000% on some items.

    Strewth what a lovely war.;)
    Posted: Oct 29, 2012 By: sirearl Member since: Apr 23, 2007
    #10
  11. Talay

    Talay UKBF Big Shot Free Member

    Posts: 3,036 Likes: 657
    Proof ?

    Or is it just the fact that getting any income from produce which will be worthless tomorrow is better than nothing. A small loss being better than a large one.
    Posted: Oct 29, 2012 By: Talay Member since: Mar 12, 2012
    #11
  12. roydmoorian

    roydmoorian UKBF Ace Full Member - Verified Business

    Posts: 1,511 Likes: 279
    T
    Don't forget the practise of chargeing for "shelf space".
    Posted: Oct 30, 2012 By: roydmoorian Member since: Nov 6, 2009
    #12
  13. roydmoorian

    roydmoorian UKBF Ace Full Member - Verified Business

    Posts: 1,511 Likes: 279
    But out of date food Is normally charged back to the supplier !
    Posted: Oct 30, 2012 By: roydmoorian Member since: Nov 6, 2009
    #13
  14. roydmoorian

    roydmoorian UKBF Ace Full Member - Verified Business

    Posts: 1,511 Likes: 279
    But out of date food Is normally charged back to the supplier !
    Posted: Oct 30, 2012 By: roydmoorian Member since: Nov 6, 2009
    #14
  15. Guest

    Posts: 0 Likes: 0
    How do you know they are still making a profit?
    Posted: Oct 31, 2012 By: Member since: Jan 1, 1970
    #15
  16. Talay

    Talay UKBF Big Shot Free Member

    Posts: 3,036 Likes: 657
    Is it ? I don't know. It would seem ridiculous.
    Posted: Oct 31, 2012 By: Talay Member since: Mar 12, 2012
    #16
  17. Faevilangel

    Faevilangel Website Critic Moderator

    Posts: 6,911 Likes: 2,163
    Tesco and other supermarkets give each store a daily budget for wastage, which is out of date food and damaged stock. The only foods which are recorded to the supplier is bread and milk but out of date doesn't qualify, only inherently damaged e.g. wrong labels, faulty product etc.

    Food is reduced to 75% to stop it being added to the daily waste reports ( which are done the same evening ), hence why stock is reduced from around 4pm (25% off), 6pm (50% off) and 7.30 (75% off).

    The stores would rather lose money on products than use the days waste budget ( as they will get audited on it).

    I worked in a busy supermarket for years so know the process inside out.

    Sent from my HTC Desire using UK Business Forums
    Posted: Oct 31, 2012 By: Faevilangel Member since: Jun 29, 2009
    #17
    • Thanks Thanks x 2
  18. stealthtranslations

    stealthtranslations UKBF Newcomer Free Member

    Posts: 25 Likes: 0
    This is an insider story from a friend of mine who used to work at Sainsbury's.

    Posted: Nov 2, 2012 By: stealthtranslations Member since: Apr 20, 2011
    #18