Research On The Cost And Profit Of Different Retail Terminals

If the price of vegetables is low people will hurt, while raise it the peasant will be wounded. The food basket is always the people’s livelihood. When people complain about the high prices of vegetables almost the same to meat, some husbandman commit suicide owning to the cheap price of it. Recently, the issue of vegetables prices has become the focus of attention. The price of vegetables will have an increase of more than ten times from the farm to the table of common people. The Party Central Committee and the State Council adopted a series of measures to solve the problems in the process of the circulation of agricultural products. The "food basketball project" and "agriculture base supermarket" are the main project to solve the problem of the difficulties in buying and selling of vegetables. While the effect of them is far from satisfactory after26years they have been announced. Many experts and scholars analyze the reasons of that issue which are from different point of view. They get the conclusion that the backward of agricultural infrastructure, the process of transportation costs are too high, the uneconomic of agricultural product circulation in last mile all lead to the result of that the process of China’s vegetable sales price and retail price is dramatic.The last link in vegetables circulation which is from wholesalers to retail was aptly called the "last mile." Vegetable price difference between wholesale and retail is large, which is called the "last mile problem". Currently, scholars analyze the price difference of various aspects from full chain perspective, ignoring "last mile problem", and they focus on prices difference between wholesale and retail, ignoring depth deconstruction about the specific project cost structure and profit situation. This paper analyses costs and profits of main cases in different types of retail outlets, in order to solve the problem of high price of vegetables from the point view of terminal type and business model.Taking advantage of case study, this paper selects rape as the research object, investigate cost and profit situation in different types of retail market, based on depth interviews with different types of retail outlets in Dalian. Firstly, major retail outlets in Dalian include supermarkets, open air vegetable market, farmers markets and community stores. On the basis of survey data in the four different retail outlets, this paper find that vegetable retailer’s operating costs consists of procurement costs, transportation costs, facility costs, and others. In the retail sector, procurement costs accounts for65-80%of the overall cost. Secondly, the transport costs constitute a larger proportion of the overall cost, about15%-20%(except for the community store). Cost situations differ in different terminal types due to tissue caused by differences in business models. By comparison, procurement cost of the traditional retail formats and supermarket is about1.5times as cost of community shop, which results in the higher sales in traditional retail formats and supermarkets, and competitive advantage in the community stores. Finally, the costs of traditional type of transport is6-10times as costs of a community store transportation, and costs of the local supermarket is about five time as costs of a community shop. Uniform distribution, combined transport modes, and interworking of self-purchasing vehicles and renting vehicles are the preferred measures to reduce transport costs.Thus, this paper insists that different business models lead to different cost structure and profit ratio in procurement, transportation and sales process and income profits of various terminal types are within the normal income range, so there is no profiteering behavior in the entire industry. There are less economic behaviors in traditional retail outlets during procurement, transportation and retail links. Logistics outsourcing makes contribution to cost savings of foreign supermarket, whose competitive advantage is not obvious, because of the high purchase cost and sales cost. Cooperating directly with farmers purchasing, centralized distribution, standardized store sales facilities, and best customer experience, which leads directly to the fast development of community stores in Dalian. Development of new efficient community shops will influence retail organization operating mode reform in the future.