The supermarket business model is too fragile to shield customers from rising food prices.

Food prices, like almost everything else, are rising fast. There have recently been warnings of ‘apocalyptic’ costs and a declaration that the ‘era of cheap food’ is over.

Such announcements have been linked to creaking economies trying to recover from the pandemic and the effects of war in Ukraine, one of the world’s largest exporters of food.

But to fully understand why food prices cannot be kept down, and what could be done to help struggling households, we need to look at how our supermarkets actually make money. My research shows that the current system has been balanced on a knife edge for some time.

The fact is that most of the income from selling food with very low margins at very high volumes is swallowed up in overheads, such as payroll and the costs of running stores and distribution centres. This has three effects on supermarket economics worth considering the next time you stock up on groceries.

First, supermarkets only make a decent profit if people buy convenience food, treats and non-food items (everything from toilet paper to fuel and clothing). Seven out of the top 10 items that bring in the most money for supermarkets fall into the categories of alcohol, snacks and confectionery.

One influential book on the subject argues supermarkets need to ensure – through shop design and promotion – that customers buy at least some higher margin items (regardless of their intention when they enter the store).