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Comment by sharkweek | Hacker News Reader

Used to be a buyer for a grocery chain, which has very little to do with video game consoles, sure, but I can assure you that certain big ticket items are sold at a loss under the expectation that the margins are there under peripherals and games. Sony is definitely eating it on the sale of each console --

For a fun personal example -- rotisserie chickens are always sold at a loss, but it's normally the center piece of a dinner, meaning you also sell mashed potatoes, cole slaw, bread, etc at a high margin.

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Are they really? How much does that cost a store?

The idea of grocery stores having permanent loss-leading items never occurred to me.

If memory serves we'd eat (har har) between 1-4 bucks on each chicken depending on it's price (those went on sale a lot).

Grocery functions successfully on average product margin of around 40-45% --

So when you calculate that pre-made mashed potatoes and coleslaw are massively overpriced, it balances out. There's a good chunk of psychology here as well. The person who is buying a pre-cooked chicken is the same person who isn't going to mash their own potatoes or make their own slaw. Get them hooked with cheap chicken, everything else seems like a fair price too.

It's really a fun job, thinking back on it.

In the Midwest where pork is cheap to begin with (and people seem to have an insatiable appetite for it) you'll often see pork chops and loin sold as a loss-leader to get people into the store. For example, last week my local grocer had chops on sale for <$1/chop (works out to $3/lb) when the actual cost is closer to $7-8/lb.

Is that a loss leader?

I shop at WinCo in the PacNW and $3/lb would be pretty standard for pork chops when buying a ~2-3 lb package.

I see that you're talking local grocer, but I assume their pricing wouldn't be that drastically different to a major chain.

Alcohol is a staple loss-leader in UK supermarkets.

Lose money on the alcohol, recoup it on everything people end up buying along with it.

Is it really? I've noticed that wine and beer are more expensive than in continental Europe, but maybe it's unfair to compare against wine in France/Italy/Spain and beer in Belgium/Netherlands/Germany...

The taxman takes his cut:

http://www.hmrc.gov.uk/rates/alcohol-duty.htm

Plus there is "VAT" - 'value added tax', not that I have ever worked out what value gets added by the tax.

Our friends in continental Europe have lower tax rates. Hence the discrepancy you see.

The problem in the UK over recent years has been with pubs. Unless they can get some deluxe food options together then they have a tough time making a profit. The supermarkets sell alcohol far cheaper than they can, furthermore there has been a smoking ban. Consequently your dedicated alcoholic has stayed at home, with his widescreen TV and supermarket alcohol.

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