Currently browsing posts about: Supermarkets

Recall that the large grocery chain, Kroger, proposed a couple of years ago to acquire another large grocer, Albertsons, for about $25 billion.

The FTC did not think this was a good idea.  It FTC filed a suit to prevent the proposed merger on the grounds that it would make the US supermarket landscape even less competitive than it already is.  It would be likely to raise prices for consumers, reduce wages for employees, and (as I’ve written previously) lead to the closure of many stores.

Kroger is fighting back.  It filed an injunction arguing that blocking the merger violates the constitution. 

In its news release, Kroger said

“The merger between Kroger and Albertson’s is squarely focused on ensuring we bring customers lower prices starting day one while securing the future of good-paying union jobs,” said Rodney McMullen, Kroger Chairman and CEO. “We stand prepared to defend this merger in the upcoming trial in federal court – the appropriate venue for this matter to be heard – and we are asking the Court to halt what amounts to an unlawful proceeding before the FTC’s own in-house tribunal.”

In the meantime, BIG, a newsletter on the politics of monopoly power, reports

After two years of investigations and negotiations over court logistics, next week, the Federal trial for the $24 billion Kroger-Albertsons supermarket merger begins. And this one’s really bitter, with new revelations emerging a few days ago from the Federal Trade Commission that a group of Albertsons executives, including CEO Vivek Sankaran, have been deleting text messages relevant to the trial that the court ordered them to preserve. That’s a big legal no-no.

A big legal no-no indeed. This from the FTC’s complaint (references omitted)

On January 17, 2024, the FTC requested a detailed accounting from Albertsons about how responsive documents were lost and what efforts had been taken to recover lost documents. Albertsons did not respond for nearly four months. When they finally responded, they detailed efforts to recover deleted messages from Mr. Broderick’s and Vivek Sankaran’s phones. . Although Albertsons was able to recover approximately 70 text messages from Mr. Sankaran’s phone, further efforts proved unsuccessful…For months, Plaintiffs have tried to seek information about the extent to which Albertsons’ text messages were deleted, obtaining a court order in the Administrative Adjudication requiring production of texts from potential trial witnesses,  and raising repeated inquiries about inexplicably missing documents.

This is what the USDA says consolidation in the grocery industry looks like now.  The proposed merger will only add to monopoly power int he grocery industry.  For the record, Walmart accounts for about 25% of grocery sales int he US.

Is the Kroger-Albertson’s merger likely to be good for the public?  The FTC does not think so and neither do I.

I subscribe to The Hagstrom Report, not least because Jerry Hagstrom reports on items I might not see otherwise.  Here’s one:

Kroger, Albertsons release list of stores to be sold: The Kroger Co. and Albertsons Companies have released the list of stores they intend to sell if their acquisition plan is approved.

He conveniently provided links to Kroger-Albertsons’ list of stores to be divested, and also to an article about the divestments with a handy map.

From the map, you can see that most stores will be divested in the West: Washington (124 store), Arizona (101), Colorado (91), California (63), and Oregon (62).

One reason why the Federal Trade Commission sued to block the merger is evident: there will be fewer grocery stores available.  Other reasons: less competition between the chains, and more power over employee wages, benefits, and working conditions.

The proposal says 579 stores will be sold to a new owner, C&S Wholesale Grocers.

Kroger’s says: “You’ll see that the 579 stores and other assets to be divested were thoughtfully chosen to allow C&S to succeed in the geographies and maintain – if not increase – the level of competition that consumers benefit from.”

The FTC’s oroginal press release explained why the merger is not a good idea:

The FTC charges that the proposed deal will eliminate fierce competition between Kroger and Albertsons, leading to higher prices for groceries and other essential household items for millions of Americans…lower quality products and services, while also narrowing consumers’ choices for where to shop for groceries. For thousands of grocery store workers…[the merger] would immediately erase aggressive competition for workers, threatening the ability of employees to secure higher wages, better benefits, and improved working conditions…executives for both supermarket chains have conceded that Kroger’s acquisition of Albertsons is anticompetitive, with one executive reacting candidly to the proposed deal: “you are basically creating a monopoly in grocery with the merger.”

Monopolies are never good for consumers.  Let’s hope the FTC holds firm on denying this merger.

A reader from Phoenix, AZ, Maria Zafonte, sends this from a local Safeway:

From her standpoint—and mine—this is a great way to encourage overeating.

As she explained, if she bought just one bag of chips, each would cost $5.99.

But if she bought four, the unit cost was only $1.97 each.

As she put it:

The problem is what am I going to do with four bags of Doritos?? The healthier choice is financially penalized. It is very frustrating!

Indeed, it is.

One of the hallmarks of ultra-processed food products is their enormous profitability.  You can bet that Safeway is not losing money on 4 bags at $1.97 each.

Even if this is a loss leader (a gimmick to get you into the store), it’s an incentive to overeat.

Caveat emptor.

The headline says it all: Kroger to acquire Albertsons for $24.6bn solidifying its position as #2 grocery retailer with 11.8% market share.

This will make Kroger second only to Walmart’s 17.1% share.

Take a look at what this means.

The Kroger Co. Family of Stores

• Baker’s
• City Market
• Dillons
• Food 4 Less
• Foods Co
• Fred Meyer
• Fry’s
• Gerbes
• Jay C Food Store
• King Soopers
• Kroger
• Mariano’s
• Metro Market
• Pay-Less Super Markets
• Pick’n Save
• QFC
• Ralphs
• Ruler
• Smith’s Food and Drug

Now add in the Albertsons Companies’ Family of Stores

• Albertsons
• Safeway
• Vons
• Jewel-Osco
• Shaw’s
• Acme
• Tom Thumb
• Randalls,
• United Supermarkets
• Pavilions
• Star Market
• Haggen, Carrs
• Kings Food Markets
• Balducci’s Food Lovers Market

All of these will now be Kroger’s.  Monopoly capitalism, anyone?

Kroger’s press release says:

Kroger has a long track record of lowering prices, improving the customer experience and investing in its associates and communities. Consistent with prior transactions, Kroger plans to invest in lowering prices for customers and expects to reinvest approximately half a billion dollars of cost savings from synergies to reduce prices for customers. An incremental $1.3 billion will also be invested into Albertsons Cos. stores to enhance the customer experience. Kroger will also build on its recent investments in associate wages, training and benefits. Kroger has invested an incremental $1.2 billion in associate compensation and benefits since 2018. The combined company expects to invest $1 billion to continue raising associate wages and comprehensive benefits after close.

Who will hold Kroger accountable for these promises?

It needs to be held accountable.

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JAMA Internal Medicine has just published an editorial I wrote: Preventing Obesity—It Is Time for Multiple Policy Strategies

As it explains, it is a commentary on a research article by Joshua Petimar, et al, Assessment of Calories Purchased After Calorie Labeling of Prepared Foods in a Large Supermarket Chain  

Both papers are behind paywalls, but here are the key points of the supermarket article:

Question  Was calorie labeling of prepared foods in supermarkets associated with changes in calories purchased from prepared foods and potential packaged substitutes?

Findings  In this longitudinal study of 173 supermarkets followed from 2015 to 2017, calories purchased from prepared bakery items declined by 5.1% after labeling, and calories purchased from prepared deli items declined by 11.0% after labeling, adjusted for prelabeling trends and changes in control foods; no changes were observed among prepared entrées and sides. Calories purchased from similar packaged items did not increase after labeling.

Meaning  Calorie labeling of prepared supermarket foods was associated with overall small declines in calorie content of prepared foods without substitution to similar packaged foods.

I was really interested in this study because the “large supermarket chain” that supplied reams of data was so obviously Hannaford, which has long been ahead of the curve in trying to encourage customers to make healthier food choices.

In 2005, Hannaford initiated a Guiding Stars program that ranked–and still ranks–products by giving them zero to three stars depending on what they contain.

I wrote about the first-year evaluation of this program way back in 2006.  It did help customers to make better choices.

Now, all these years later, the FDA is contemplating doing some kind of front-of-package label.  As I said, Hannaford is way ahead.

But the point of my editorial is that single interventions rarely do better than what this study found.

I argue here for trying multiple strategies at once:

My interpretation of the current status of obesity prevention research is that any single policy intervention is unlikely to show anything but small improvements.

Pessimists will say such interventions are futile and should no longer be attempted.

Optimist that I am, I disagree.  We cannot expect single interventions to prevent population-basedweight gain ontheirown,but they might help some people—and might help even more people if combined simultaneously with other interventions.

….Widespread policy efforts to reduce intake of ultraprocessed foods through a combination of taxes, warning labels, marketing and portion-size restrictions, dietary guidelines, and media education campaigns, along with policies for subsidizing healthier foods and promoting greater physical activity, should be tried; they may produce meaningful effects.

Politically difficult? Of course. Politically impossible? I do not think so.

Unless we keep trying to intervene—and continue to examine the results of our attempts—we will be settling for the normalization of overweight and the personal and societal costs of its health consequences.

Here’s Ted Kyle’s commentary on my commentary on ConscienHealth.

Paco Underhill.  How We Eat: The Brave New World of Food and Drink.  Simon & Schuster, 2022.

What to say about this book.

For one thing, Underhill is a supermarket consultant, whose job it is to tell supermarkets how to sell more food.

For another (full disclosure), chapter nine is titled “Shopping with Marion,” and that would be me.

I met Underhill and his collaborator, Bill Tonelli, at the amazing Sunrise Asian supermarket upstairs from the corner of 9^th Street and 3^rd Avenue in Manhattan.  We wandered around the store for a bit, collected another shopper, and went out for coffee.  The result is presented largely in the form of a conversation.  Here’s a sample from page 157 that starts with Underhill explaining why he loves visiting Hollywood (he lives in New York):

“…And going to L.A. is so refreshing.  Partially because I got sick of eating here—I live by eating according to the season, and it’s so easy to do in L.A., but back here I’m like, cabbage and apples and potatoes, again?”

“Carrots,” Marion says.

“Carrots.  ‘Oh look, we have rutabaga.  Yay!’  So yeah, I’m a jerk.  I’m one of those people who want to be completely seasonal and local but can’t hack it everywhere.”

“Ithaca has a rutabaga roll every year just before Christmas,” Marion says.  “It’s a bowling contest at the farmers market.  You bowl with rutabagas.”

This is a chatty book with lots of Underhill’s insights into how supermarkets work, starting with parking lots, and what he thinks stores ought to do to face the retail future.

He also went to farmers’ markets, this time with Nina (Planck) Kaufelt.  That chapter is titled “The citified get countrified (and vice versa.”

It’s a chattier and unreferenced version of my 2006 book, What to Eat—the one I am currently updating—but I did take some notes.

I enjoyed reading it, but I’m not exactly an unbiased critic.

Benjamin Lorr.  The Secret Life of Groceries: the Dark Miracle of the American supermarket.  Avery/Penguin Random House, 2020.

I don’t know how I missed this one when it came out in mid-2020, but I did.*

I saw a reference to it and thought I ought to take a look, largely because I am gearing up to update my book, What to Eat, in a second edition for Picador/Farrar Straus Giroux.

My book, which first appeared in 2006, is about food issues, using supermarkets as an organizing device.

Lorr’s book, which I expected to be a superficial expose of supermarkets, is anything but.

It is a deep, detailed, personal, and utterly powerful indictment of the human rights violations perpetrated on workers in grocery supply chains: truckers, grocery store clerks, Thai workers on shrimp-catching boats.

The personal comes in because Lorr is an experiential immersion journalist.  He embedded himself with a trucker, the fish section of a Whole Foods market, and a Thai fishing boat, as well as spending several years doing interviews.  Using the personal stories, he has plenty to say about truly shameless exploitation of low-wage workers in order to keep food costs low.

If you want to understand what low-wage work—or the Great Resignation—is about, here’s an excellent place to start.

This is an important book about food labor issues, but also about how more general systems of exploitation are maintained.

The “more general” leads me to pick one bone with Lorr’s analysis.

For those of us, he says:

Who want to shake the world aware to the fact that we are literally sustaining ourselves on misery, who want to reform, I very much don’t want to dissuade you so much as I want you to consider that any solution with come from outside our food system, so far outside it that thinking about food is only a distraction from the real work to be done.

His book, I’d say, proves just the opposite.  Food is his entry point into this topic and would not be there without it.

*I shouldn’t have missed it.  It was reviewed in the New York Times.  And Charles Platkin, whose work I follow closely, interviewed Lorr when the book first came out.

As I discussed in my book, What to Eat, the entire purpose of a grocery store or supermarket is to encourage sales, particularly impulse buys of profitable items.  Food and beverage companies pay stores to place their most profitable products where customers can most easily see them.

This makes checkout counters prime grocery real estate.

Mars Wrigley tells you how this works.

Mars Wrigley showcases new impulse shopping solutions and products

Mars Wrigley said its multifaceted merchandising solutions will shape impulse throughout the shopper journey and provide an effective retail experience, be it at curbside pick-up, online or in-store.

The company is set to work alongside retail partners to implement solutions that reimagine impulse at checkout and identify new spaces in aisle and digitally to optimise category presence and drive conversion [i.e., sales].

Spearheading this growth is its new Accelerating Impulse Moments (AIM) insights platform. This four-pillar platform consists of conversion strategies for retailers across all channels in stores and online, with Snacks Aisle Optimization, Secondary Display Growth, Transaction Zone Reinvention and Digital Solutions Execution.

These strategies will help retailers shape impulse throughout the shopper journey to create an effective and engaging omni-channel experience.

Comment: You are the subject of this “effective and engaging omni-channel experience.”  This may look as if it is about helping grocers market products, but it is really about getting you to buy candy and chewing gum.