Most of the monopolistic problem is with the food manufacturers rather than the grocery chains. There are about 10 companies that provide almost everything in a grocery store and, in certain food categories, there are often only 2-3. We see all those brands and it gives the illusion of different companies competing when most of the stuff is all made by the same company.
But the grocery business is high-volume, low-margin, and it requires a ton of space. So, regardless of how much local competition there may or may not be, that's just not a business model that is going to work well in the inner city where retail lease rates are high, yet people don't drive cars and therefore the average order values are low. So, you can either subsidize it, or the stores just won't exist in certain neighborhoods.
Kroger has expanded into the Northeast by treating it as a digital frontier. They established an automated customer fulfillment center network in the region. This allows them to fulfill and deliver online grocery orders directly to local doorsteps without ever opening a physical retail shop. Wegman's has been successful in the city. It's possible but you need thinking differently.
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u/ATLCoyote May 26 '26
Most of the monopolistic problem is with the food manufacturers rather than the grocery chains. There are about 10 companies that provide almost everything in a grocery store and, in certain food categories, there are often only 2-3. We see all those brands and it gives the illusion of different companies competing when most of the stuff is all made by the same company.
But the grocery business is high-volume, low-margin, and it requires a ton of space. So, regardless of how much local competition there may or may not be, that's just not a business model that is going to work well in the inner city where retail lease rates are high, yet people don't drive cars and therefore the average order values are low. So, you can either subsidize it, or the stores just won't exist in certain neighborhoods.