Walmart is leading the charge to replace traditional paper price tags with electronic shelf labels (ESLs) by 2026. The retailer aims to introduce the technology in 2,300...
Slim profit margins my ass. Walmarts gross profit for the twelve months ending July 31, 2024 was $163.786B,
Not to sound flippant, but do you know what gross profit means? They aren’t pocketing all of that. Walmart’s net profit margin is 2.66%, which is minuscule. They make up for that by having enormous volume.
That’s an expected tradeoff of operating an essential service is the point. It’s not as though their margin is that slim by mistake, or out of goodwill, or bad business sense. It’s meant to lead to the situation where we shop at Walmart not by choice, but in lieu of other options.
Not really — it’s because nearly everything they sell is highly fungible, and they compete on price. Nobody is willing to pay a premium to shop at Walmart. Twenty years ago you’d have been correct, but they’ve pretty much saturated the market at this point. They’re trying to find profitability in automation rather than adding tons of new stores.
I’m really meaning the lack of option not to consume fast-moving consumer goods, rather than the option to pay a premium for them elsewhere. When their market position is similar to like an outlet for government rations except for private profit, their net is essentially what was skimmed off the top of free enterprise. 2.66% is just the current maximum amount that is justifiably worth without doing societal harm
That’s true, but what you describe is pretty much the end state of big-box retail. Amazon is essentially the same, if we exclude AWS. It’s all a race to the bottom. The solution, as always, is to buy direct from smaller producers if possible.
Gross profit can be defined as the profit a company makes after deducting the variable costs directly associated with making and selling its products or providing its services.
Yes, but there are many more expenses associated with running their business beyond simply COGS. Their net income last year was 11B, which is pretty average for a company that size.
I’ll be completely honest. I don’t care anywhere near enough about the actual number that you do. I looked it up, and that was that. I didn’t write a financial report.
I dislike that you’ve put me in the position of defending Walmart, but don’t you find it rather misleading to imply that they made 163 billion dollars in profit when the real number is less than 10% of that?
You made a good point and I immediately thought that reporting a gross profit dollar amount as an example of how profit margins are not slim as simply inappropriate. And I would have responded myself if you hadn’t. There’s no single dollar figure that can inform anyone about anything useful about the profit margin of a business. A number without context is useless.
“Gross profit” is a meaningless number in this context. Their net income was $15.5B. If you do the same math to try to determine profit per location, ($15.5B/10500) it’s about $1.48M. Not bad, but still about 90% lower than your estimate.
Since I was already estimating seemingly random profit ratios, I also looked at their profit per employee, which came out to $7380/person ($15.5B/2.1M employees).
Unfortunately these numbers are also inclusive of, for example, Walmart’s e-commerce program, so calculating the profit per location doesn’t indicate anything meaningful to me, though I’m morbidly curious about what insights you are hoping to get from it?
isn’t it pretty much what amazon’s been doing since the beginning? the difference being there’s no “app” like camel yet to track prices over time at a single store
but yea, still another reason not to go to walmart. how do they mitigate the problem of something being $X when you put it in your cart, and the price being X+whatever by the time you get through the 2 mile long line at one of the 2 open registers?
So, if I grab an item off the shelf and browse around the store for a while, is the price going to be the price currently displayed or the price when I grabbed it?
If it’s the current price, what’s the point of a price tag? If I can’t actually know the price until checkout, then showing me the price is kind of a useless bit of data. I also suspect that the “speak to a manager” types would make that a major headache for stores.
If it’s the price when I grabbed it, how are they keeping track of that? I see two ways of handling that: one requires that you use their app to shop, and the other requires cameras and “machine vision” that are still unreliable, at best. The former seems more likely, but I doubt either is going to sit well with customers.
Edit: someone pointed out that it might not actually display a price, and you’d have to scan it to get your price. Kind of like the first option, but I think it’s going to turn off less tech savvy customers.
I haven’t seen that aspect addressed in any articles about the “feature”.
Take a photo of it, I work with paper but we change our tags frequently. We often have prices changed when a customer reaches checkout. I’ve also had times where a customer came back to check a shelf tag after I just updated it. I honored the previous price those times as I was still holding the tickets but its not a guarantee even in paper stores.
We often have prices changed when a customer reaches checkout.
I know this isn’t your fault or anything but damn, that seems lightly customer hostile at best, and deeply unethical at worst. It sounds like it should be illegal.
That sounds very illegal, yeah. You can’t advertise a price and then charge something different. It doesn’t matter that the person didn’t notice it. At that point you might not have price tags at all (which is also illegal, just FYI).
I can’t speak internationally or legally but from what I know from friends in similar jobs daily prices changes aren’t uncommon. The reason and when it happens often is normally the start of the day when there is a new batch of tickets. They don’t go up instantly and multiple 100s of tickets normally take a couple hours to get placed depending on how many/busy staff are.
Main thing is e-ink’s don’t really make this significantly better or worse. I personally think they are neat for the end worker. The problem is that this is allowed or not enforced well.
Even at stores that have this feature, I rarely see people use it. It’s clearly not an experience that people flock to.
OTOH, on the rare occasion I’ve visited a Walmart in the past 10 years, I have a 100% rate of checkout taking an absurdly long time. Everyone there just seems to accept it like they have no choice.
As long as it’s advertised openly, I don’t see a big problem with it. It would probably be sold as a discount for shopping at slower times, though. It’s a tried-and-true method of smoothing congestion.
Assuming a store with 9a-9p hours (every day), a 9-5 worker can shop 44 hours in a week, vs 40 they cannot. But that doesn’t particularly line up with the busy hours. Around here, after 7 on weekdays and 5 on weekends tend to get pretty slow.
Assuming a store with 9a-9p hours (every day), a 9-5 worker can shop 44 hours in a week, vs 40 they cannot.
You can’t just logic this kind of thing out mathematically because during those 44 hours people have lives to live and obligations to fulfill. Families to manage, food to prepare, appointments to attend, plus they need to sleep. Busy shopping hours are busy for a reason. Nobody wants to be stuck in a busy shopping center. They just do because that’s the time they have to do it.
Since you are arguing from a perspective of what benefits society, I can only assume you must be a socialist.
One of the foundational principals of capitalism is that capitalists have every moral and legal right to extract as much value from society as they can and the market will regulate itself. As long as we have a capitalist system this will always be the default position of the general public and our politicians.
If capitalists valued the public good instead of profit min-maxing then they wouldn’t be capitalists. They’d be some kind of socialist, probably market socialist (co-ops owned by workers or the public.)
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It’s bound to happen. Why waste hours replacing tags when you can just change what the shelf says when the prices change.
But this article is so pro Walmart it’s crazy.
Slim profit margins my ass. Walmarts gross profit for the twelve months ending July 31, 2024 was $163.786B,
Not to sound flippant, but do you know what gross profit means? They aren’t pocketing all of that. Walmart’s net profit margin is 2.66%, which is minuscule. They make up for that by having enormous volume.
That’s an expected tradeoff of operating an essential service is the point. It’s not as though their margin is that slim by mistake, or out of goodwill, or bad business sense. It’s meant to lead to the situation where we shop at Walmart not by choice, but in lieu of other options.
Not really — it’s because nearly everything they sell is highly fungible, and they compete on price. Nobody is willing to pay a premium to shop at Walmart. Twenty years ago you’d have been correct, but they’ve pretty much saturated the market at this point. They’re trying to find profitability in automation rather than adding tons of new stores.
I’m really meaning the lack of option not to consume fast-moving consumer goods, rather than the option to pay a premium for them elsewhere. When their market position is similar to like an outlet for government rations except for private profit, their net is essentially what was skimmed off the top of free enterprise. 2.66% is just the current maximum amount that is justifiably worth without doing societal harm
That’s true, but what you describe is pretty much the end state of big-box retail. Amazon is essentially the same, if we exclude AWS. It’s all a race to the bottom. The solution, as always, is to buy direct from smaller producers if possible.
Gross profit can be defined as the profit a company makes after deducting the variable costs directly associated with making and selling its products or providing its services.
Flippant away
Yes, but there are many more expenses associated with running their business beyond simply COGS. Their net income last year was 11B, which is pretty average for a company that size.
I’ll be completely honest. I don’t care anywhere near enough about the actual number that you do. I looked it up, and that was that. I didn’t write a financial report.
I dislike that you’ve put me in the position of defending Walmart, but don’t you find it rather misleading to imply that they made 163 billion dollars in profit when the real number is less than 10% of that?
Have a good one
A measly $3.2b. Can hardly afford a new yacht with that!
You made a good point and I immediately thought that reporting a gross profit dollar amount as an example of how profit margins are not slim as simply inappropriate. And I would have responded myself if you hadn’t. There’s no single dollar figure that can inform anyone about anything useful about the profit margin of a business. A number without context is useless.
Walmart has 10.5k locations. 163B divided by 10.5K is about $15.6M per location.
Jesus, in what world is $15M profits per store location considered a “slim margin”?
“Gross profit” is a meaningless number in this context. Their net income was $15.5B. If you do the same math to try to determine profit per location, ($15.5B/10500) it’s about $1.48M. Not bad, but still about 90% lower than your estimate.
Since I was already estimating seemingly random profit ratios, I also looked at their profit per employee, which came out to $7380/person ($15.5B/2.1M employees).
Unfortunately these numbers are also inclusive of, for example, Walmart’s e-commerce program, so calculating the profit per location doesn’t indicate anything meaningful to me, though I’m morbidly curious about what insights you are hoping to get from it?
I think the main concern is that this is a step towards normalizing extremely frequent price changes, a la Uber surge pricing.
I edited in another thought. I agree with that fear, that’s obviously the concern. I didn’t feel the need to repeat it.
That’s exactly what this is. All stores will eventually do this and prices will fluctuate throughout the day.
Paper ticket stores already do this, its just a more work for the workers than e-ink.
isn’t it pretty much what amazon’s been doing since the beginning? the difference being there’s no “app” like camel yet to track prices over time at a single store
but yea, still another reason not to go to walmart. how do they mitigate the problem of something being $X when you put it in your cart, and the price being X+whatever by the time you get through the 2 mile long line at one of the 2 open registers?
seems like great time to cap how often prices can be changed and force them to show price history
So, if I grab an item off the shelf and browse around the store for a while, is the price going to be the price currently displayed or the price when I grabbed it?
If it’s the current price, what’s the point of a price tag? If I can’t actually know the price until checkout, then showing me the price is kind of a useless bit of data. I also suspect that the “speak to a manager” types would make that a major headache for stores.
If it’s the price when I grabbed it, how are they keeping track of that? I see two ways of handling that: one requires that you use their app to shop, and the other requires cameras and “machine vision” that are still unreliable, at best. The former seems more likely, but I doubt either is going to sit well with customers.
Edit: someone pointed out that it might not actually display a price, and you’d have to scan it to get your price. Kind of like the first option, but I think it’s going to turn off less tech savvy customers.
I haven’t seen that aspect addressed in any articles about the “feature”.
Take a photo of it, I work with paper but we change our tags frequently. We often have prices changed when a customer reaches checkout. I’ve also had times where a customer came back to check a shelf tag after I just updated it. I honored the previous price those times as I was still holding the tickets but its not a guarantee even in paper stores.
Its not that it can’t happen now. Its that it will happen all the time with digital tags.
I know this isn’t your fault or anything but damn, that seems lightly customer hostile at best, and deeply unethical at worst. It sounds like it should be illegal.
That sounds very illegal, yeah. You can’t advertise a price and then charge something different. It doesn’t matter that the person didn’t notice it. At that point you might not have price tags at all (which is also illegal, just FYI).
I can’t speak internationally or legally but from what I know from friends in similar jobs daily prices changes aren’t uncommon. The reason and when it happens often is normally the start of the day when there is a new batch of tickets. They don’t go up instantly and multiple 100s of tickets normally take a couple hours to get placed depending on how many/busy staff are.
Main thing is e-ink’s don’t really make this significantly better or worse. I personally think they are neat for the end worker. The problem is that this is allowed or not enforced well.
Even at stores that have this feature, I rarely see people use it. It’s clearly not an experience that people flock to.
OTOH, on the rare occasion I’ve visited a Walmart in the past 10 years, I have a 100% rate of checkout taking an absurdly long time. Everyone there just seems to accept it like they have no choice.
It will become an Olympic event where you have to get from the shelf to the till before the price changes!
It’ll be exciting to see prices temporarily jump during the few hours the majority of working class folk have to do their shopping.
As long as it’s advertised openly, I don’t see a big problem with it. It would probably be sold as a discount for shopping at slower times, though. It’s a tried-and-true method of smoothing congestion.
Assuming a store with 9a-9p hours (every day), a 9-5 worker can shop 44 hours in a week, vs 40 they cannot. But that doesn’t particularly line up with the busy hours. Around here, after 7 on weekdays and 5 on weekends tend to get pretty slow.
It’s price gouging, pure and simple. There’s no positive to it whatsoever
You can’t just logic this kind of thing out mathematically because during those 44 hours people have lives to live and obligations to fulfill. Families to manage, food to prepare, appointments to attend, plus they need to sleep. Busy shopping hours are busy for a reason. Nobody wants to be stuck in a busy shopping center. They just do because that’s the time they have to do it.
Since you are arguing from a perspective of what benefits society, I can only assume you must be a socialist. One of the foundational principals of capitalism is that capitalists have every moral and legal right to extract as much value from society as they can and the market will regulate itself. As long as we have a capitalist system this will always be the default position of the general public and our politicians.
Huh. TIL only socialists argue from a perspective of what benefits society…
You’re thinking logically and with the desire for good service. I assure you they are not.
If capitalists valued the public good instead of profit min-maxing then they wouldn’t be capitalists. They’d be some kind of socialist, probably market socialist (co-ops owned by workers or the public.)
And personalized pricing, based on your profile and what they think they can get you to pay.
Well, that’s what coupons are for.
I can’t wait for them to get sued into the ground because their AI is changing prices based on skin color.