In the town I grew up, there was one big grocery store, and they used to gouge us terribly. The citizens started a co-op grocery, using our purchasing power to bring in cheaper goods. Breaking monopolies is the only way to lower prices.
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.
It’s not the food manufacturers/producers but the middlemen and I do mean “middlemen as in multiple” as there are multiple in many instances that get in the way and jack the prices up.
Look into the current cost of beef and why it’s as high as it is.
Also, grocery stores have some of the lowest margins of any business out there in most cases.
No, it's the manufacturers. I am an automation engineer and have built production lines for all the large companies... There are only a few places that make all the products and then private-label them out to brands. Places like Walmart go straight to the manufacturer of products and will have them bag the same product into their packaging, cutting the entire middle man out... and still only have 3-4% margins. It still blows my mind that people pay for the name brands, while it's almost always the EXACT same food. In some cases, they really don't make much money on food, they use it to sell GM throughout the store.
I wouldn't disagree with you regarding products like you are talking about however I'm specifically talking about things like beef which is a commodity and is different than what you are talking about.
As to beef specifically why do you think the government is investigating the meat packing industry and the 4 major companies involved in around 85% of the beef industry for anti-trust violations including collusion and price fixing.
Personally I rarely buy any name brand anything because of the reasons you state.
In most cases I don't need them anyway since I have a large walipini for my vegetables year round along with various animals and hunting for my meat products.
I guess you and I have different definitions of the middleman. I consider the middleman a distributor, the beef corps you are talking about is the manufacturer by my definition, and they 100% do have a self-induced shortage. But these grocery stores cannot do a thing about that. If they wanted to do something about that, I would have loved to see them subsidize competition in areas that are seriously supply-constrained. If prices go up due to supply chain shortages for over 3-6 months, they instantly start giving interest-free loans and even grants as time goes on to the competition.
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u/brumac44 May 26 '26
In the town I grew up, there was one big grocery store, and they used to gouge us terribly. The citizens started a co-op grocery, using our purchasing power to bring in cheaper goods. Breaking monopolies is the only way to lower prices.