Definition of Profit Margin
The simple definition of profit margin, also known as gross margin, whether for a supermarket or any other business, is the price they sell an item for, minus how much the store paid to make or buy that item.
Supermarkets are often cited as among the types of businesses with the lowest profit margins. It's true. Grocery store profit margins typically range from 1 percent to 3 percent, depending on the items. Grocery stores make their money on volume. They may not make much on any one item, but it's the rare shopper who only buys one item. That's why the store kindly provides big shopping carts for their customers. With not much additional effort, the grocery store sells you 20 items or more, making much more profit than they would have if you had bought only one item.
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