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Sainsbury’s and Tesco figures show profit levels aren’t eye-watering, but historically normal
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Scooped by Graham Watson |
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This could easily be a Microeconomic 'scoop', focusing on the role of profit and how we might define supernormal profit, however, I've put it here because Nils Pratley's analysis goes beyond this in looking at a key Business Management concept - Return on Capital Employed (ROCE) that proves a good guide to the extent to which the big supermarkets are profiteering.
He seems to prove that by historic standards, the supermarkets are making about 3% profit, and whilst he doesn't deny that there appear to be parts of the market - notably milk - where something's awry. Profit margins and the Return on Capital Employed suggest that it might be branded food manufacturers, rather than retailers who are profiteering.