What is your real margin in large retail?
Estimate your real gross margin (front margin, back margins, shrinkage) and the recoverable EBITDA, by store format, in seconds.
Your current figures
Indicative simulation based on GMS sector benchmarks. Calculations run in your browser: no data is sent. For a precise figure and an action plan, the next step is a margin audit.
Your diagnosis
by bringing unknown shrinkage back to the format target. Theoretical maximum: in practice aim for 50 to 80 % of it with a monthly per-department plan.
Quick answer
How do you calculate your real margin in French large retail (front margin, back margin, triple net price)?
Real margin is calculated on the triple net price: list price − on-invoice discounts (net) − conditional rebates (double net) − payments for commercial cooperation services (triple net). For the retailer, real margin = front margin + back margin − shrinkage. Example: a product listed at €4.00 excl. VAT, invoiced at €3.90, with €0.40 of off-invoice benefits, costs €3.50; resold at €5.00 excl. VAT, the front margin is 22%, the back margin 8%, total margin 30%.
- Triple net price (prix 3x net)
- Invoiced net − all off-invoice benefits
- Raised loss-leader floor (EGalim)
- Effective purchase price × 1.10, until 15 April 2028
- Food promotions cap
- 34% in value, 25% in volume
Reviewed by Samuel Hayot, chartered accountant (Ordre des experts-comptables), last updated
List price, triple net, front and back margin: definitions
In the annual negotiation between a supplier and a French retail chain (GMS, grandes et moyennes surfaces), the list price (prix tarif) is never the price actually collected. The invoiced net price deducts on-invoice discounts. The double net also deducts conditional rebates (year-end, volume-linked). The triple net (“3x net”) finally deducts the fee for commercial cooperation services (coopération commerciale) bought by the supplier: promotions, end-of-aisle displays, catalogues.
The front margin (marge avant) is the gap between the consumer price excl. VAT and the invoiced net price. The back margin (marge arrière, or NIP, négociations hors facture) covers benefits obtained off-invoice: rebates and commercial cooperation. The retailer’s real margin adds both, then deducts shrinkage (breakage, theft, errors, expired products), which only shows up at stock count.
For the supplier the logic is symmetrical: what matters is triple net revenue and the margin on that price, after logistics costs and promotion funding. The simulator above is built from the store’s point of view (front margin, back margin, shrinkage by format); the example below links both readings on the same product.
Large-retail margin formulas
- Invoiced net price
- List price − on-invoice discounts
- Triple net price (effective purchase price excl. taxes and transport)
- Invoiced net − conditional rebates − commercial cooperation fees
- Loss-leader threshold (SRP, seuil de revente à perte)
- Triple net + turnover taxes + specific taxes + transport
- Raised threshold (SRP+10, food resold as is)
- Effective purchase price × 1.10
- Front and back margin (% of selling price excl. VAT)
- Front = (SP excl. VAT − invoiced net) ÷ SP ; back = off-invoice benefits ÷ SP
- Store real gross margin (simulator logic)
- Front margin % + back margin % − unknown shrinkage %
- Markup on price vs markup on cost
- Margin rate on price (taux de marque) = margin ÷ SP ; markup on cost (taux de marge) = margin ÷ purchase cost
- Price multiplier (coefficient multiplicateur)
- SP incl. VAT ÷ purchase price excl. VAT (or excl. ÷ excl. for the net multiplier)
The effective purchase price is defined in article L. 442-5 of the French Commercial Code; the 10% uplift comes from the ordinance of 12 December 2018, extended until 15 April 2028 by Law no. 2025-337 of 14 April 2025. In the simulator, front margin, back margin and shrinkage are entered directly as a percentage of revenue: it does not rebuild the triple net product by product.
Calculate your real margin in 5 steps
The method works for a supplier who wants to know its true selling price and for a store that wants to know its true margin. Do it per product first, then consolidate.
- 1
Start from the signed annual agreement
The annual agreement (convention unique) or multi-year contract sets the list price, on-invoice discounts, conditional rebates and the priced list of commercial cooperation services. It is the only reliable base: anything negotiated verbally or mid-year must be added by amendment.
- 2
Work down from list price to triple net, product by product
Apply on-invoice discounts, then year-end rebates at the rate you will actually reach (not the top tier), then commercial cooperation per unit sold. For a supplier this is the price really collected.
- 3
Compute the SRP and the raised SRP
For food resold as is, the consumer price may not fall below the effective purchase price plus 10%. Run it including taxes and transport, then check that planned promotional prices stay above it.
- 4
Measure front and back margin on the selling price
Express every component as a percentage of the selling price excl. VAT so they can be added. For the retailer, then deduct shrinkage; for the supplier, deduct logistics costs, penalties and promotion funding.
- 5
Consolidate and track over time
Aggregate by department (store side) or by retail customer (supplier side) and compare monthly with the agreement. Rebate tiers not reached and cooperation services not delivered are the most frequent gaps between theoretical and real margin.
Worked example: from supplier list price to store margin
A manufacturer sells a food product at a €4.00 list price excl. VAT with a 2.5% on-invoice discount, and grants off-invoice €0.16 of year-end rebate and €0.24 of commercial cooperation per unit. Its production cost is €2.80. The store resells at €5.00 excl. VAT (5.5% VAT, transport ignored for simplicity). The resulting percentages match the simulator’s “Supermarket” preset.
| Step | Calculation | Result |
|---|---|---|
| Invoiced net price | 4.00 × (1 − 2.5%) | €3.90 excl. VAT |
| Triple net price | 3.90 − 0.16 − 0.24 | €3.50 excl. VAT |
| List to triple net gap for the supplier | (4.00 − 3.50) ÷ 4.00 | 12.5% |
| Supplier margin on triple net | 3.50 − 2.80 | €0.70 (20% of price) |
| Raised SRP (SRP+10), taxes included | 3.50 × 1.055 × 1.10 | ≈ €4.06 incl. VAT (€3.85 excl.) |
| Store front margin | (5.00 − 3.90) ÷ 5.00 | 22% |
| Store back margin | 0.40 ÷ 5.00 | 8% |
| Total margin on price / markup on cost | 1.50 ÷ 5.00 / 1.50 ÷ 3.50 | 30% / 42.9% |
| Price multiplier | 5.275 incl. VAT ÷ 3.50 excl. VAT | ≈ 1.51 |
| Maximum value promotion (34% cap) | 5.00 × (1 − 34%) | €3.30 excl. VAT, below the raised SRP |
| Store with €8M revenue, 1.4% shrinkage (simulator) | 22% + 8% − 1.4% | 28.6%, i.e. €2,288,000 |
| Recoverable EBITDA if shrinkage returns to 1% | (1.4% − 1%) × 8,000,000 | €32,000 |
Supplier reading: the list price shows €1.20 of unit margin, the triple net leaves only €0.70. Negotiating on list price without costing off-invoice benefits overstates margin by more than 70%. Retailer reading: on this product a 34% promotion is legally capped but economically impossible, since €3.30 excl. VAT would fall below the €3.85 raised SRP; the discount actually available is about 23%. Finally, each tenth of a point of shrinkage above target is worth €8,000 a year for an €8M store.
EGalim rules in force in 2026 to build into the calculation
These measures are temporary and regularly extended. Check their status before each annual negotiation round.
| Measure | Rule | Known end date at 26/09/2026 |
|---|---|---|
| Raised SRP (SRP+10) | Food and pet food resold at no less than effective purchase price × 1.10; also applies to private-label products | 15 April 2028 (Law no. 2025-337) |
| Value promotions, food | Consumer promotional benefits capped at 34% of the selling price | 15 April 2028 |
| Volume promotions, food | Promotional operations capped at 25% of the agreed forecast volume or revenue | 15 April 2028 |
| Promotions on DPH (household, perfumery, hygiene) | Cap extended to DPH since 1 March 2024; value cap raised to 40% by the 2025 law (entry-into-force details to be checked) | 15 April 2028 |
| General ban on resale at a loss | Resale below effective purchase price prohibited, save legal exceptions (sales, liquidation, perishable goods at risk...) | Permanent (art. L. 442-5 Commercial Code) |
The 2025 law is sometimes wrongly called “EGalim 3”: that label normally refers to the law of 30 March 2023 on commercial relations. Further reforms of commercial negotiations have been debated since; their adoption and content should be checked at the time of reading.
Best practices to steer a large-retail margin
- Suppliers: build a P&L per retail customer at triple net, not per range at list price.
- Cost every commercial cooperation service per unit sold and check it was actually delivered (photos, catalogues, reports) before paying.
- Accrue year-end rebates at the probable rate, not the top tier: otherwise the gap hits all at once at year-end.
- Test every promotional plan against both caps (34% in value, 25% in volume) and against the raised SRP, especially for low front-margin products.
- Retailers: track shrinkage by department and by month, with a target per store format, rather than a single annual rate.
- Reconcile rebate and cooperation invoices with the signed agreement each quarter: it is the first thing checked in an inspection by the DGCCRF (competition and consumer authority).
Frequent mistakes on large-retail margins
Calculating margin on list price
A supplier reasoning on list price ignores discounts and off-invoice benefits. In the example, the apparent €1.20 margin drops to €0.70 at triple net.
Confusing margin on price and markup on cost
A €1.50 margin is 30% of the selling price (taux de marque) but 42.9% of the purchase cost (taux de marge). Comparing one chain’s margin on price with another’s markup on cost leads to wrong conclusions.
Adding percentages computed on different bases
A 2.5% discount on list price and a 4% rebate on invoiced net cannot be added as is. Convert everything into euros per unit, then into a percentage of selling price.
Forgetting the raised SRP in promotions
The 34% cap does not allow a promotion that takes the price below effective purchase price plus 10%. For low front-margin products, the SRP sets the real limit.
Leaving shrinkage in the blind spot
Unknown shrinkage only appears at stock count. Without rolling counts by department, a store can discover at year-end a gap of several tenths of a margin point, i.e. tens of thousands of euros.
Frequently asked questions about large-retail margins
What is the triple net price (prix 3x net)?
The triple net is the price the retailer really pays: the invoiced net price less conditional rebates and commercial cooperation fees. Example: €3.90 invoiced, €0.16 rebate and €0.24 cooperation give a triple net of €3.50. It is the basis of the loss-leader threshold.
What is the difference between front margin and back margin?
Front margin is the gap between the selling price excl. VAT and the net price on the purchase invoice. Back margin covers benefits obtained off-invoice: year-end rebates and commercial cooperation. In the example, 22% front margin and 8% back margin give a 30% total margin on selling price.
How do you calculate the loss-leader threshold with SRP+10?
Take the effective purchase price (triple net plus turnover taxes, specific taxes and transport) and multiply it by 1.10. With a €3.50 triple net excl. VAT and 5.5% VAT, the minimum selling price is about €4.06 incl. VAT. The rule targets food and pet food resold as is.
Is SRP+10 still in force in 2026?
Yes. Introduced experimentally in 2019, the 10% uplift of the loss-leader threshold has been extended several times, most recently by Law no. 2025-337 of 14 April 2025, until 15 April 2028. That law also states that the ban on resale at a loss applies to private-label products.
What are the limits on promotions in French large retail?
For food, promotional benefits may not exceed 34% of the consumer selling price, and promotional operations 25% of the agreed forecast volume or revenue. The cap also covers DPH products since March 2024, with the value cap raised to 40% by the 2025 law. These rules are extended until 15 April 2028.
What is the difference between margin on price and markup on cost?
Margin on price (taux de marque) divides the margin by the selling price excl. VAT; markup on cost (taux de marge) divides it by the purchase cost. For a product bought at €3.50 and sold at €5.00 excl. VAT, the €1.50 margin is 30% on price and 42.9% on cost. Retail usually reasons on price.
How do you calculate the price multiplier in large retail?
The multiplier divides selling price by purchase price. In French retail it is often expressed from selling price incl. VAT to purchase price excl. VAT: €5.275 ÷ €3.50 gives about 1.51. The excl./excl. multiplier is 1.43. Always state the convention before comparing two multipliers.
How should a supplier measure profitability per retail chain?
Start from the chain’s triple net revenue, then deduct product cost, customer-specific logistics, any penalties and promotion funding. A high-volume customer can turn out less profitable than a smaller one once all off-invoice benefits are added back.
What if shrinkage exceeds the format target?
First measure known and unknown shrinkage by department with rolling stock counts, then target sensitive departments (high-value items, fresh produce). In the simulator, bringing shrinkage from 1.4% to 1% on €8M of revenue frees €32,000 of theoretical EBITDA; in practice only part of it is recovered.
Sources and references
Reading your real margin
In large retail, the visible front margin is only part of the story. The real gross margin combines the front margin, the back margins (year-end rebates, booked as a reduction of purchase cost in account 609, and commercial cooperation, invoiced to the supplier as a separate service) and, in the other direction, unknown shrinkage (theft, errors), which is only revealed at inventory. Reading these three lines together, by department and by store, is what separates a steered chain from one that only watches consolidated revenue.
The figures that drive your margin
- Real gross margin = front margin + back margins (rebates and commercial cooperation) − unknown shrinkage
- Rebates reduce purchase cost (account 609); commercial cooperation, a separate service invoiced to the supplier, is in principle service income
- Unknown shrinkage is benchmarked around 1 to 1.5 % of revenue, target below 1 %
- One extra point of shrinkage is one point of EBITDA lost
- With several stores, a holding opens tax consolidation (95% ownership) and the parent-subsidiary regime
Why run this simulator?
A clear margin reading lets you:
- See your real gross margin once back margins and shrinkage are taken into account.
- Quantify the EBITDA you could recover by bringing shrinkage back to target.
- Check that rebates reduce purchase cost (account 609) and that commercial cooperation is invoiced as a genuine separate service.
- Decide when a multi-store holding and tax integration become worthwhile.
A chartered accountant specialised in large retail
Hayot Expertise reads your margin by department and by store, secures the accounting of back margins and shrinkage, and structures multi-store groups. We turn the figures into an action plan, not a report.