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Summerbuzz
Guest
People are their own worst enemy. Rushing out to stockpile meaning deals have had to be removed to stop people doing it, production has had to ramped up so costs are going up and that adds to the cost, Tesco’s are paying their staff an extra 10% (deservedly I should add) whilst this is going on but that will get passed on to the consumer.
Its the general public that’s caused this not the supermarkets or producers.
Increased demand does not increase baseline costs for the supermarkets. The big expenses haven't changed - the rent on the building, rates, upkeep, and the normal complement of staff. Having said that they've definitely incurred some with the screens for cashiers, and most are running one extra security guard. £10 for staff is a big increase but it's nothing compared to the turnover of these places, they're doing it to meet the increased demand, which is what they want, all the time, because those baseline costs stay the same, margins are at least as good as before, and the number of sales go up.
Production works the same, you have fixed costs, always the same, and from there, increasing production involves buying more materials, and paying for the extra energy used. Energy not only doesn't go up, it often gets cheaper the more you buy. Working through the night means more discount on the unit price per k/w. The other increase is labour, and yes, there will be some overtime premiums, but I'd always expect any increase in the cost of labour per item to be easily offset because those fixed costs were paid off ages ago. They could up ALL wages 30%, not just overtime, and the increase cost to produce each item would be nowhere near %30.
Look at any break even chart and you can see that the more you make and sell, the more profit you make per item (economy of scale). Every business would want increased demand, running 24/7 and pay overtime is not done out of the kindness of their hearts, it's because it's very profitable. Historically, unless it's policed, such situations usually end up with companies strategically withholding goods to keep the price inflated.
Personally, I strongly suspect that Loo Roll was off the shelves for so long is that massive amounts of room in the lorries which they would rather use for expensive high margin stuff. 18 Loo Rolls @ £6 takes up the same space as £30 of soup, £60 of fresh meat... and there are much more expensive products than that.
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