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Analysis reveals average gross margin rates in retail food sector in Serbia

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The research on revenue from the sale of food products in domestic trade revealed that the average gross margin rate in retail food stores stood at 14.9 percent. Particularly, the top 20 participants in retail trade exhibited varying margin rates across different food items, with ground coffee at 20.8 percent, sour milk at 26.9 percent, sterilized milk at 12.9 percent, and butter at 34.8 percent. However, concerning fresh pork and chicken meat (whole chicken), the “top 20” group incurred negative margin rates of -5.1 percent and -0.5 percent, respectively.

The Statistical Office of the Republic of Serbia (SORS) conducted the research for the Serbian Government to understand the dynamics of food product revenue in domestic trade. The surveyed entities were categorized into “Top 20” and “Others,” with the top 20 participants holding a significant share of around 83 percent in the total turnover of food products.

The analysis indicated that the “Top 20” group achieved an average gross margin rate of 14.6 percent, while the “Others” group slightly surpassed it with 16.9 percent. The difference in margin rates between the two groups was most pronounced in categories like fresh meat and fish, with the “Others” group recording higher margins. This phenomenon can be attributed to the presence of large retail chains in the “Top 20” group, which adjust their sales policies to operate with lower margins on perishable products due to their sensitive nature.

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Furthermore, the research highlighted variations in margin rates across different food items. For instance, butter exhibited the largest range in gross margin movement, ranging from 9 percent to 76.4 percent, while sugar showed the smallest range, from 1.9 percent to 17.7 percent.

Overall, the findings underscore the complexities of gross margin dynamics in the retail food sector, influenced by factors such as product perishability, market competition, and procurement strategies.

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