We were walking through Safeway today when I started thinking about the mark up on products. This is just a thought but I wonder if you could get an accurate understanding of the profit margins on a product by how large their shelf real estate is? Take for instance the case of A1 Steak Sauce Vs. Hallmark Cards.
I only pick A1 because I saw it seconds after having this thought but this particular steak sauce has about 3-4 rows in a small corner of a single shelf. It’s lost within a sea of sauces and a couple out of place bagged products. Hallmark on the other hand has an entire aisle devoted to them. That I find remarkable, are their cards so profitable that they can afford to have that many cards just sitting there.
I almost never see people in that aisle, its hallmark on the right side and some paper products on the left. It’s almost always empty, if you need to burn through the back end of the Safeway to the front you can always count on that aisle (though its much more fun to hit a food aisle and check out the latest rebranding of ketchup.
Ketchup is people!
Liz mentioned the obvious, a card can’t be all that costly to make. It’s a single piece of card paper bent in half, occasionally with detailed drawings or audio (in which case its quite costly) and you end up paying top dollar to have some schmuck write what you were too lazy to.
Convenience is a strange thing, the amount of money people are willing to pay for convenience is staggering and probably the source of our modern services culture in the states. Quick money from suckers, that’s how I heard it phrased in my retail days.
A good example of this before I go is Mandarin oranges. We checked out canned oranges vs. prepackaged “snack packs”. You ended up paying an extra dollar per can’s worth of Mandarin oranges if you wanted someone else to put them in plastic cups for you.
Why? A single Pyrex snack container will last you your entire life, is easy to clean, and much less likely to be crushed or popped in travel. I mean, I see the allure, that sweet sweet convenience. But if you are eating a can of oranges a day (the smaller cans) that’s 7 dollars a week… That’s quite a lot of money to spend on generating more plastic trash waste.
But I digress, I just found it interesting that Hallmark can afford an entire aisle. Campbell’s has a pretty large swath of real estate as well. However I actually see people buying their stuff. [Don’t get me wrong, I understand that Hallmark makes a fortune, its just strange that they do.]