The article reports how mergers eliminates competition within the grocery industry and staff layoffs. But mergers can actually limit the availability of various goods from other suppliers. This would be especially true for local farm goods such as fruits, vegetables and meat products since the closing of a store reduces the market availability for fresh products.
Grocers today are not the grocers of the 1950s anymore than Amazon is just a mail order company. Growing up in a small town back before the event of large change groceries, I noticed the immediate change when an A&P moved in to the neighborhood. This was quickly followed by a Kroger store opening up within 2 miles of the A&P. Within a short period of time the only town butcher shop closed and the smaller neighborhood groceries closed one by one.
The smaller neighborhood stores were a life link for families at the time because the owners were local and knew their customers. They would extend credit for a necessary gallon of milk, some spaghetti or canned tomato sauce, or a loaf of bread. When the paychecks came out at the end of the week families, would go and settle their account with the grocery store. The advent of the larger grocery chains eliminated the ability of a to supply food for their family when the paycheck was short or delayed.
Today’s grocers, such as Kroger’s and Albertson’s, are not just grocers. They are not just a supply point for the community have access to various international, national or local brands. Today’s grocers are in direct competition with national brands in almost every category of grocery items. From canned vegetables, fruit, frozen dinners, pizzas, paper products, bottled water to spices a consumer cannot walk down many aisles and not encounter a “store” or private label brand, usually priced cheaper than the recognized, consumer favorite brands.
In this region of the world there is a grocery store that started back in the day and grew to a sizable chain. It was family owned and run and people had a very nice store in their neighborhood. The owners became elderly and decided to sell the chain to another grocery store. Within a couple of years the new owners made changes in staffing and benefits. They also started to include their private label items. Fast forward a couple or three years and many of the items on the shelves are only private label.
For example, a few weeks ago I was shopping for frozen hash brown potatoes. I have never realize that the potatoes from the Oregon Idaho area were in drastic short supply and the only shredded hashbrowns we’re private label at this particular grocery store. So I thought OK let’s see what happens and I bought a bag because potatoes are potatoes.
When I arrived home I cooked some of the hash brown potatoes. But they looked and cooked slightly different and they had a slightly different taste. So I decided to look at the ingredients. That’s when I noticed that the private label name potatoes contain an extra ingredient, dextrose, or sugar, which is just what older diabetic individuals need in their breakfast.
Private labels are not an insignificant matter in the sales at stores. An recent article at Slottinfee.com reports that the Kroger Company private labels propelled the company’s Q2 profits of $731 million, 56% increase from the prior year. This raises the question - what is causing the inflation in the price of goods and food on the national level.
Since stores also have a limited shelf space, so if an item that they manufacture or contract is on the shelf, what is no longer there? Additionally grocery stores often charge slotting fees to the suppliers of the goods we buy. These expenses would be passed on in the cost of the item to the consumer, but on private labels are they charging the same fees or is that why they’re cheaper? When an item is no longer available is it because there’s a phantom supply chain issue or they are manipulating the availability of other providers to push private label items?
So the merger of Kroger and Albertson’s will impact and increase the direct competition to other items that have become American staples in households across the country. From tomato sauce to frozen potatoes, to boxed prepared dinners, pizzas, desserts, and smaller markets for local farmers and direct competition to local bakeries, sandwich places and other smaller establishments in the community. American consumers and other business will be hosed if the merger goes through.