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Dollar-stores overcharge customers while promising low prices

theguardian.com

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Re: Dollar-stores overcharge customers while promising low prices

#341

Post by chongli »

andrew_lettuce wrote: post #331
chongli wrote: post #311

Earlier quoted context omitted.

Just like crows! People hate crows even though they play a valuable role in ecosystems. I would argue that moribund businesses who maintain a competitive moat but are otherwise extremely unproductive and inefficient are the real blight on society. If PE firms can liquidate those businesses and open up the market while freeing up capital for more productive investment then I fully support them. I would love to hear so…

Red Lobster?

Weren't they losing money for years on all-you-can-eat seafood specials [1]?

It's not uncommon in the fast food business to be breaking even or losing money on all aspects of the business while the true value of the company, its real estate portfolio, steadily grows. The fact that investors decided they wanted to cash out should be a surprise to no one.

[1] https://www.fastcompany.com/91129776/what-really-killed-red-...

Re: Dollar-stores overcharge customers while promising low prices

#342

Post by JumpCrisscross »

andrew_lettuce wrote: post #321
gruez wrote: post #237

Earlier quoted context omitted.

>Public companies cannot and will not just fire all staff, fleece customers to the point they won’t return and take on debt that they have no intention of paying back. Why? Is there some code of conduct for public companies but not private ones?

Because a PE fund is at most a seven year timeline, and everybody knows it. There is absolutely no incentive to add value beyond the next sale, and often you only need to add the perception of value. To quote my CTO of a PE owned company: "we want to make it look like we're on the road to ", not actually accomplish it

> Because a PE fund is at most a seven year timeline

Berkshire Hathaway is a PE fund with permanent capital.

Broadly speaking, making generalisatios about PE is almost impossible because it's an asset class which is, essentially, all non-public business. Instead, it's more useful to think about which element private equity touches you're specifically complaining about: capitalism in general, financial transparency, leverage and liability.

Re: Dollar-stores overcharge customers while promising low prices

#343

Post by degamad »

chongli wrote: post #270
darth_avocado wrote: post #210

Earlier quoted context omitted.

As far as I’ve seen that’s as far from the truth as it can be. They in fact consolidate terrible businesses, undercut the good ones and drive them out of the market until only they are left, after which point, they get even worse.

From what I've seen, they take a terrible business and liquify its valuable assets for their investors, freeing up capital to be invested more productively elsewhere in the economy. Of course those investors could take the money and commission a bunch of statues of themselves, but frequently they do something more productive than that. A lot of the negative reaction to them seems to me to be mostly emotional. They'll…

What you are describing the best-case scenario. They happen.

What also happens is, they take operating businesses with reasonable returns, buy up all it's supply chain or it's competitors to reduce costs or enable monopoly pricing, then load the company up with debt, squeezing it into a terrible company. That is the bad scenario which people object to.

An example: https://pluralistic.net/2024/02/28/5000-bats/#charnel-house

Re: Dollar-stores overcharge customers while promising low prices

#344

Post by JumpCrisscross »

rs186 wrote: post #224
gruez wrote: post #185

Earlier quoted context omitted.

>Private equity is far worse. It’s mean 100% ownership by a group of sociopaths who are executing on a plan to extract as much cash as possible quickly with no other goals at all. ...as opposed to the average public company? An average company might have more "average joe" shareholders (almost by definition, because private equity is typically off limits to non-accredited investors), but outside of meme stocks, there…

Let me explain this with a simple example: * If a company controlled by PE goes bankrupt, shareholders (PE) likely make a profit * But if a publicly listed company goes bankrupt, shareholders lose their money In other words, PEs almost never lose money, so they could extract the last bit of a company, even more short sighted than shareholders of a public company

> If a company controlled by PE goes bankrupt, shareholders (PE) likely make a profit. But if a publicly listed company goes bankrupt, shareholders lose their money

This isn't remotely true. Plenty of private equity investments go bust before they can pay themselves back. And plenty of public company investors milked a company for interest payments or dividends into the ground.

> PEs almost never lose money

Private equity funds regularly lose money. Usually to lenders.

You're complaining about leverage in general. Probably not private equity per se.

Re: Dollar-stores overcharge customers while promising low prices

#345

Post by wkat4242 »

cs702 wrote: post #258

> Red Baron frozen pizzas, listed on the shelf at $5, rang up at $7.65. Bounty paper towels, shelf price $10.99, rang up at $15.50. Kellogg’s Frosted Flakes, Stouffer’s frozen meatloaf, Sprite and Pepsi, ibuprofen, Klondike Minis – shoppers were overpaying for all of them. Pedigree puppy food, listed at $12.25, rang up at $14.75. Surely, now that this made the news, there will be an investigation into the fraudulent…

> Left unsaid is that both Dollar General and Family Dollar would become unprofitable if they stop tricking customers. (Both companies typically earn only 3-4% on sales.)

They could of course show the actual prices instead of tricking customers?

If the margins are so low nobody else will be significantly cheaper anyway.

Re: Dollar-stores overcharge customers while promising low prices

#346

Post by LanceH »

Lots and lots of articles written about 23% of 300 items -- at one store? Every store?

What's the actual extent of the problem?

There have been way too many articles and videos at this point to keep pointing at the same small data set.

I've personally never experienced an overcharge, and at 1 in 5, it should have happened by now.

Is this a one store thing, or a regional thing, or should I just put those thoughts on hold and rage blindly?

Re: Dollar-stores overcharge customers while promising low prices

#347

Post by CPLX »

youarentrightjr wrote: post #251
gruez wrote: post #185

Earlier quoted context omitted.

>Private equity is far worse. It’s mean 100% ownership by a group of sociopaths who are executing on a plan to extract as much cash as possible quickly with no other goals at all. ...as opposed to the average public company? An average company might have more "average joe" shareholders (almost by definition, because private equity is typically off limits to non-accredited investors), but outside of meme stocks, there…

I see these private equity takes on HN frequently and am really baffled by the ignorance. There's a very clear difference between a public and private company - the fiduciary duty to shareholders. There is a legal requirement for directors of public companies to act in the financial interests of all shareholders. In practice, and according to precedent, this means long term viability of the company, in other words, a…

> I see these private equity takes on HN frequently and am really baffled by the ignorance.

Probably a good time to note that you’re posting this comment on a website created by a private equity firm for promotional purposes.

Re: Dollar-stores overcharge customers while promising low prices

#348

Post by [deleted] »

xingped wrote: post #163
gruez wrote: post #149

Earlier quoted context omitted.

>While other retailers try to get me to buy more stuffs, Costco try to make sure I'm satisfied enough that I'll renew my yearly membership (their main profit source). The incentive structure aligns very well. This doesn't make any sense. Costco makes a profit on the goods sold as well. They have every incentive to sell you as much stuff as possible. That's why they also engage in the usual retail tactics to increase…

I see you're not terribly familiar with Costco. Membership fees account for the vast majority of net operating income for Costco and they keep markups on items at no more than 14% over cost (15% for Kirkland brand). So yes, Costco does make most of its profit by ensuring customers are happy and continue to renew their memberships every year.

[deleted]

Re: Dollar-stores overcharge customers while promising low prices

#349

Post by phil21 »

mystraline wrote: post #90
JSR_FDED wrote: post #2

23% of items are rung up at a higher amount at the register than what it says on the shelf, yet North Carolina law caps penalties at $5,000 per inspection, offering retailers little incentive to fix the problem. In other words, regulatory capture at its finest, over the backs of the poorest in the country.

> yet North Carolina law caps penalties at $5,000 per inspection So, have every agent in the state inspect them. Fine 5k. Immediately inspect again, different goods. Fine another 5k. Keep doing it opening hours. Treat them like an inspection money piñata until they fix their ways. State gets a big pile of money to do better, and massive fines at 5k a pop for a few weeks punish the company and their bottom line.

Why are we taking this whole “the $5k fine is nothing” thing at face value?

A long time ago I used to help manage a couple retail stores. A $5k random expense would have put that location into the red for the month. Perhaps not the volume of a dollar store chain, but certainly not small either.

I have a feeling that if the $5k fines were basically guaranteed to happen with some regularity you’d see this cleaned up pretty quickly with local management replaced ASAP if not.

Enforcement doesn’t have to be over the top abusive with the goal to put a location out of business overnight. Especially in already underserved communities. Like everything to do with humans there simply needs to be consistent, reliable, and timely consequences to form a reliable and immediate feedback loop for behavior.

If a store makes it an actual policy to eat these fines then the fine amount needs adjusting. From everything in this article though the problem is simply it’s worth the gamble they don’t happen at all.

Re: Dollar-stores overcharge customers while promising low prices

#350

Post by anomaly_ »

pixl97 wrote: post #294
cm2012 wrote: post #204

Earlier quoted context omitted.

Do you think large dollar stores are faking or cheating their profit margin numbers?

I mean, they are cheating customers on the item price, so it goes to show they'll do illegal stuff without care, so yea, why not.

how happy do you think the shareholders would be about that?
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