Supermarket mark up percentage

[Delahaye]

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.

 

[roydmoorian]

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.

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.

 

[businessfunding]

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.

 

[Deleted member 138423]

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....

 

[S-Marketing]

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.

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.

 

[lww]

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?

 

[Moneyman]

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.

 

[stealthtranslations]

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%.

 

[10032012]

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...

 

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.

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

Strewth what a lovely war.

 

[Talay]

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%.

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.

 

[roydmoorian]

T

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?

Don't forget the practise of chargeing for "shelf space".

 

[roydmoorian]

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.

But out of date food Is normally charged back to the supplier !

 

[roydmoorian]

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.

But out of date food Is normally charged back to the supplier !

 

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%.

How do you know they are still making a profit?

 

[Talay]

But out of date food Is normally charged back to the supplier !

Is it ? I don't know. It would seem ridiculous.

 

[Faevilangel]

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

 

[stealthtranslations]

This is an insider story from a friend of mine who used to work at Sainsbury's.

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.