You’re overpaying for groceries, but here’s what you can do about it now

Grocery stores are “incredibly competitive” (except when they’re not)

“Food retail is an incredibly competitive business in the United States,” says Randy Burt, who leads the Americas Grocery Practice at A.T. Kearney, a management consulting firm. “Not only are margins famously razor thin, but there is a tremendous amount of competition.”

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So why is the FTC involved? Because while the big picture on competition is good, food retail is a local business. And in some places, competition is not so good.

“Given this situation, the decision by the FTC to force divestitures within selected markets may be justified to protect consumers in those markets,” says Burt.

Consumers are deeply divided when it comes to regulation. No one wants to spend more on food. The average U.S. household spent $4,015 on groceries in 2015, according to the Bureau of Labor Statistics, a 1.1 percent increase from the previous year. But Americans are also wary of overregulation, well, anything.

“We do not need more laws,” says Shira Newman, who works for a moving company in Portland, Ore.

Peter Hoagland, a marketing consultant in Warrenton, Va., says while the federal government has an important role in food safety,” it should not be involved in controlling prices.” He adds, “that is best left to the free market.”

To be clear, the FTC is not enacting any price controls. According to the agency, the supermarkets operated by Ahold and Delhaize “compete closely” for shoppers based on price, format, service, product offerings, promotional activity, and location. But without a remedy, a merger would eliminate direct supermarket competition, to the detriment of consumers in certain local markets.

“The merger would increase the likelihood that the combined company could unilaterally exercise market power, and that the remaining competitors could coordinate their behavior to raise prices,” the FTC noted.

So in a way, it’s trying to do the opposite of controlling prices. At least that’s what it claims.

How to get a lower price

Overall, grocery stores may be competitive — and thanks to the FTC, maybe a little more competitive — but there are ways to ensure you’re always getting the most competitive rate, say experts.

“Consumers can tell whether or not their local stores are competitive by comparing prices store-to-store within their own city, and at supermarkets nearby cities,” says Josh Elledge, the founder of SavingsAngel.com, a coupon site. “This is accomplished fairly easily online, as mainstream and even small local supermarket chains have their sale ads available online.”

9 thoughts on “You’re overpaying for groceries, but here’s what you can do about it now

  1. Please, please, please go back to a single page for each article. It is really annoying to have extra clicks to see the whole thing.

  2. Are groceries too expensive is a relative question.
    If I make $20 million a year, they’re cheap.
    If I make $300/week, they’re out of sight expensive.

  3. I’m glad the FTC is keeping large mergers chains with a lot of overlap on a short leash, but it IS true that the grocery industry generally runs on very tight net margins. (Markups over the raw cost of the goods look high, but there’s an immense amount of labor, spoilage, facilities, promotional expense, etc. involved.) There isn’t anybody minting money there. In many stores, the only departments to make much in the way of profit are Deli/Bakery, Drug/Cosmetics, along with the departments where space is leased out and vendor-serviced. (Non-fresh bakery, Snack foods, Soda, and Beer/Wine) Produce, Dairy, and Meat have high shrinkage due to spoilage, and Grocery (non-perishable foods) is not particularly high margin to begin with.

  4. Near my house are two grocery stores. One is Giant, that has a gas station on site with the lowest prices around, plus offers gas savings from buying groceries. the other doesn’t. Guess which one is significantly more crowded.

  5. After January 20, the FTC may no longer exist or, if it’s still there, blocking mergers will not be on the agenda. Consumers in the United States are about to find out what pure, unregulated capitalism looks like.

  6. If you have the means to stock up at sales, and can buy low and seasonal, groceries aren’t too bad, but for people living week to week, who can only buy that week’s food and/or like out of season produce, groceries can be very expensive. Also, groceries are expensive at mini-marts in poor parts of cities, and cheaper at places like Aldi’s way out in suburbia.

  7. Where I live (B.C. Canada), we have a choice of Safeway, Costco, Save-On-Foods, Walmart, No Frills, Superstore & other smaller markets, to purchase our groceries. A few of these stores ‘price match’, so to save money, I collect all of their flyers, make my list & go to Superstore.
    They will match all prices, have the lowest gas prices,( with loyalty card), all cashiers are open on weekends, & they have an excellent loyalty program, which provides cash for future grocery & pharmacy purchases. None of these stores is more than a 5 or 10 minute drive away, so competition is very healthy here.

  8. I shop at Whole Foods so food shopping is expensive for me, but I’m okay with it. I like the experience, and the yoga pants/ponytail moms.

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