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Dashboards Live · v1.0

Grocery Swap Calculator

When a grocery buyer is considering a new SKU, "better margin" isn't the answer — shipped-vs-sold is. This calculator compares an existing product against a proposed replacement after shrink, slotting, transition costs, and cannibalization. It tells you whether to swap, hold, or that the payback's too slow.

Current product

Proposed replacement

Penny profit / unit

— — —
= retail − effective cost

Weekly gross profit

— — —
= penny × units sold × stores

Annual gross profit

— — —
= weekly × 52 (new adjusted for cannibalization)

Break-even shrink (new)

—
shrink above which new stops beating old

Recommendation

—

—

The math worked out

Every number above traces back to your inputs. Here's the derivation.

Current product

Proposed replacement

Sensitivity · Shrink

How wrong can the shrink estimate be?

Annual gross profit for each product as shrink varies from 0% to 20%. The vertical markers show your current shrink assumption for each product.

Methodology

How the verdict is calculated.

The core insight. Grocery buyers at scale don't optimize for margin percent — they optimize for dollars. A 25% margin on a $4 organic item beats a 40% margin on a $1 store-brand item on every unit sold. "Penny profit" is the term of art: the dollars you keep per unit sold, after real-world costs.

The formula chain. For each product:

  1. shrink % = (shipped − sold) / shipped — the gap between what you bought and what you rang up
  2. net cost = unit cost − promo allowance — supplier dollars reduce your landed cost
  3. effective cost = net cost ÷ (1 − shrink%) — spread the shrink loss over the units that actually sold
  4. effective retail = retail × (1 − markdown rate) — average revenue after forced price cuts
  5. penny profit = effective retail − effective cost
  6. weekly gross = penny × units sold × stores (or just × units sold if chain-wide)
  7. annual gross = weekly × 52

Cannibalization adjustment. For the proposed replacement only, we reduce its annual gross by the cannibalization percentage. The logic: if 12% of new sales came at the expense of another SKU you already carry, only 88% is net-new revenue to the store. Simplification: we assume the cannibalized SKU had roughly equivalent profit per unit. In reality you'd model the specific cannibalized product separately — v2 territory.

Switching cost. slotting fee + transition cost. These are one-time year-one expenses. The verdict subtracts them from the year-one delta. After year one they're gone, so if the per-unit math favors new, the multi-year picture favors new even more strongly.

Verdict thresholds.

  • SWITCH — year-one delta is positive after switching costs
  • MARGINAL — year-one is negative but the ongoing annual advantage pays back switching costs within 24 months
  • HOLD — either the new product loses on per-unit math, or payback is slower than 24 months

Break-even shrink. The shrink percentage on the new product above which it stops beating the old product on annual gross (at current inputs otherwise). If your real-world shrink exceeds this, your verdict flips. Useful sanity check against over-optimistic shrink assumptions on an unproven new item.

What "iteration of the page" means. Every time any input changes, every number above recalculates and every formula in "The math worked out" rewrites with your new values. The caveats list doesn't change — those are structural limits of the model, not inputs.

See other dashboards Try Build vs. Buy