Small stores, conveniently located, open all hours, charge more than vast sheds operating at peak efficiency. This shouldn’t be a surprise to anyone, that this happens. We do all, after all, do the bulk shopping in the sheds and top up with what we’ve forgotten at the corner shop. We know it well enough that our habits accord to it.
However, we do need to be clear about why this happens:
Express supermarkets are charging customers up to three times more for their groceries than superstores from the same chain, an investigation has found.
Some fruit and vegetables have a mark up of up to 177 per cent as smaller shops charge more for the same product.
Branded items do not have consistent prices across stores from the same chain either, according to the investigation by the BBC.
The analysis found that a Tesco Express store sold a banana for 25p, while the local superstore sold it at a fraction of the price for 9p.
Similarly at Marks and Spencer, a banana costs 40p in the convenience store and 18p in the big shop.
Only the complete dullards among us don’t know that this is true. But why?
The shops all said the mark-ups were due to smaller shops facing higher operating costs, including higher rents and increased rates for longer opening hours.
No, that’s not it. Costs don’t determine prices - they only determine whether you stay in business given the prices you can charge. Higher prices are charged because people can charge higher prices. Which is a function of competition, nothing else.
Yes, this is an important distinction. It is markets which solve our problems.