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[Jingthing]

Surely we have some people with retail grocery store experience who can explain this.

Case in point: Shiitake mushrooms

Yesterday at my local Big C I was hoping to buy a bulk bag of imported Chinese Shiitake mushrooms.

They had them of course, a huge stock of them, and every single bag was mostly rotten.

Perhaps some blind or ignorant people might still buy a bag in that condition. But not me. I didn't get my mushrooms there.

So this question is about economics.

I notice on some products Thai groceries can't seem to manage spoilage well.

Coming from the USA, of course food spoils there too but you hardly ever see the spoiled food on display at all!

As spoilage approaches, sometimes the food is put on super special price (that happens here too but never on mushrooms) and the rest of it is either thrown out before the spoilage appears or donated to food charities while it is in between good and spoiled.

Seeing that Thailand groceries don't handle this as well, how does this impact on the prices we pay at the markets?

For example those rotten mushrooms, I assume that is all a cash loss for the market.

Over the years I have noticed this happens all the time and that the mushrooms are always rather expensive.

Is the main reason the mushrooms are so expensive is that their massive spoilage rate and costs is factored in?

Another product with this chronic problem is: Avocados.

Avocados are quite a difficult product to store. I have seen entire trays of expensive imported Australian avocados here, all totally spoiled.

I think many Thais don't understand this product because they don't eat it, but sometimes I see the SAME tray of rotten cados sitting there a week later! By that time they have been fingered by many people and the green stuff is oozing out ... you get the picture.

There is another more serious problem with Thai storage of cados as far as consumers are concerned. They are often stored very cold which is totally incorrect. If they do that, you'll buy a hard unripe one assuming it's going to ripen at home.

But if stored wrong, it will never be ripe, just go from hard to rotten. Well, the stores don't lose from that though! BTW, this is very common in Thailand (sadly). You don't even know it happened sometimes because the cold storage could have happened BEFORE you see it on display.

Again are we paying these super high prices on certain products because the Thai retailers can't manage this well?

Edited May 12, 2013 by Jingthing

[Jingthing]

A more specific economics question about this.

OK, assuming shiitake mushrooms are a product with a high spoilage rate compared to say paper towels.

Big stores sell a huge range of products and of course they are seeking a PROFIT MARGIN based on their overall sales and overall costs.

So assuming special problems with some products like these mushrooms, the store must compensate for those costs. Do they do that by prices rises for the SPECIFIC problem products or are those costs rolled into the entire cost structure of the store (or a combo)?

In other words are customers buying some paper towels also paying a little extra for spoiled mushrooms?

Edited May 12, 2013 by Jingthing

[aussiebebe]

I don't have any retail experience but I have read in newspapers that prices do include a margin to accommodate what the industry calls 'shrinkage'. This may be through damage, loss, theft etc. All industries operate the same way; your car insurance premium would be much less if no-one drove uninsured and razor blades would be reasonably priced if no-one stole them.

It sounds like the particular store you shop at has a management issue because my local Tesco supermarket handles best-before dates quite well. It has clearly-marked areas for products going out of date soon and they are all reduced. I live in Samut Prakarn where there aren't many foreigners so I get amazing discounts on food and drinks that haven't passed their sell-by dates. Thais don't seem to like Florida's Natural Lemonade, mixed leaf salad or Balsamic salad dressing so I'm happy to always get things like this for half price.
As for whether profit of all products is used to subsidize loss-making items, yes I think it is. I saw this at Tesco; they introduced a huge range of imported products about two years ago to make a 'foreign-food' section and very quickly the less popular items that didn't sell were discontinued so the store obviously operates a policy of only stacking popular items.

[koo]

I've worked in a grocery store and also in the fruit & veggies section. As pointed above, there always is a markup in the price for both shrinkage and rot for all produce.

But there is also something called "deliverance guarantee" whereby your supplier/wholesaler is responsible for the product as well. If the veggies are not up to par, you can either return the whole shipment, parts of it or ask for writeoff for the lot in the invoice. When you are used to daily deliveries and the relationship with your supplier is in order, a phone reclamation is normally enough and you get to dump the produce to organic waste right away.

I know that good suppliers should never deliver the store rotten produce, but with bigger wholesalers they do not have time to inspect every single box of apples they deliver. That is why they generously either discount or write off rows from the invoice.

I once had a 500kg shipment of oranges come in. Noticed about 1 hour after the delivery when putting them on the shelves in the store, that the whole lot was rotting already. I called the wholesaler and told them that "Maybe after going through the delivery very carefully I could shelve 50kg. You sent me 450kg of shit!" The manager (for the first time in my career in the business) did not believe me. Normally in these disputes I only packed the stuff on pallets again and sent it back, but in this case he actually drove over to see the oranges.

There are also other refund policies that exist between retailers and wholesalers. For example unsold magazines are often refunded when a newer issue arrives. Also some perishables can be refundable.

So it is not always only the retailer's markaup that covers these losses, but the wholesale chain is also involved.

Edited May 12, 2013 by koo

[lovetotravel]

I've actually seen stores take off the expiration stickers and put new ones on. When I first moved here, I bought a small cup of sour cream. Didn't look at the expiration date...which was 6 months in the past. Never made that mistake again.

My wife was hired when she was a teenager during a break in school to take off the expiration stickers on medicine and put new ones on.

Lack of consumer protection laws here is a big deal.

[Jingthing]

Thanks for the feedback.

Those mushrooms bags never have expiration dates for some reason. I don't mind. You can SEE the mushrooms and you can see if they're still good. Generally avocados don't have those dates either. A trickier proposition because to have an idea of where a cado is at, you need to feel it, and touching them in the wrong way does damage them. I have definitely seen games with expiration stickers at some stores. At one store in particular which I won't name quite often the items with the newer dates actually appear OLDER. Figure that one out ...

I think the sticker games is a slightly different topic, because that is blatant corruption, but it's surely related to measures the markets take to manage food waste.

[Riley'sLife]

In my experience Big C has the worst management concerning this issue. I rarely buy fresh fruit and veg there as I can find better quality and value at local fresh markets. I recently purchased some oats -three different brands to try them out- at Big C. Later at home I noticed that one had a small hole in the top. (obviously a rat had tried to eat its way in!). I also bought a packet of Dr.Lange Fix fur Gulasch which was on offer at 50% which I had examined meticulously before purchase as I don't trust "offers". The package was intact and the product within manufacturer's "use by" date. When I returned home I saw that the Gulasch pack was punctured and some contents had spilled out onto a white rug when I unpacked the bags badly staining the rug.

Two days later armed with the receipt I returned with the goods. I expected an argument with "Customer non-Service" as the 50% discounted pack of Gulasch had been damaged when the cashier had tried to remove the red discount label (stupid bloody system!) and failed. In her attempt she had pierced the pack with her fingernail exactly where the red label still remained. Even Dr. Watson could have deduced the cause of the damage.

I was not in the mood for a stupid "Thai-moment", but I still received one. The money was refunded without a whimper, then the 16 yr old female Head of Customer non-Service said, through her metal clad teeth, that it was MY fault because I should look at every item carefully before buying it. Not their fault of course for failing to implement a sensible sticker system for reduced goods and failing to train staff to inform the customer that they had just pierced a package with their fingernail, and certainly not their fault for failing to eradicate vermin in their store. I agree it definitely was my fault... for going there!!

Jt to answer your question, most supermarkets will sell the spoiled goods at their cost price rather than throw stuff out, but some badly managed places, like Big C, ......who knows ...they only employ Graduates - with Honors in Incompetence. Most fresh produce departments are operated as a separate entity within the store to enable management to monitor and correct daily variables in demand/supply. In this way any losses can be correctly attributed and consequently addressed. The losses should not be spread across the other departmental accounts. If they are then failings in the system will never be identified. But what a French Company with Thai management actually does is anyone's guess!

Caveat Emptor