Isn't the real boogieman here rules (zoning, parking requirements, etc) and subsidies (oil industry) than mean we all live in diffuse single-use residential communities and have to have cars to get to work/school/shop, whether we really want them or not?
The claim is that the large grocery chains are able to use their pricing power to demand prices that squeeze suppliers, keeping the difference for the grocer, not for the consumer. Their ability to do this has increased the more consolidated the grocery store chains have been allowed to become, giving them much more power versus their suppliers.
Grocery suppliers are, eg, agricultural producers who need to offload whole crops of perishable goods. The industry is full of well known market failures, examples of monopsony buying power, etc, so an argument from an idealized market I don't find very persuasive.
But Walmart is also a lot cheaper for Walmart. One delta is larger than the other.
Also, traveling to a store that's farther away isn't free. The trip has a marginal money cost and, more importantly, a time cost.
A significant cost savings.
But there are limits, people only drive so far. So once a big chain has driven everyone else out they can charge what they want or maximize profits by extracting value (see comment on Unsafeway).
Free market is good as long as monopolies can’t form. And unfortunately with local businesses that happens due to geographical constraints. We’ve seen it with groceries, next you’ll see it with plumbers (see all the massive PE roll ups going on now).
This was an eye opening article. I had no idea we already had a law on the books for this. It’s just…unenforced.
Restrictive single-use zoning makes this type of community effectively illegal, despite it being a big consumer choice winner in places where it is allowed.
Perhaps instead of a coercive fix for a problem caused by a coercive fix, we should strike at the root and allow people to buy what they want in the first place?
When I need something quickly I just pop by the nearest grocer, they also have a different variety than the larger one further away. If I need to buy some more expensive items then I know it's worth it to bike further away.
It's a good balance, I have options and both grocers seem to be doing fine (the independent one is even expanding, new freezers/fridges, opened a whole new section for cheese, etc.).
Even though it's a suburb it's quite compact, and well planned. There are some 3000 apartments around the station (walking distance no longer than 10 min), while I live further out closer to the forest and lake (about 20 min walking) in a town house, there are many other town houses and some 5-10 min away from me there are some villas. Population of this suburb is around 13-14k people.
On the one hand, haroldp is correct in that the automobile-centered infrastructure enables the coercion of people to travel farther to shop for groceries. But that point doesn't really contradict the article; this coercion is also enabled by the failure to enforce laws that are on the books. I'd argue that there are far, far too few independent groceries in Stockholm, for example, for reasons that have nothing to do with the transportation infrastructure and everything to do with the lack of effective antitrust legislation, or lack of enforcement (I actually don't know which it is).
Completely agree with you, there are far too few independent grocers and I make a point to shop at them to avoid only ending up at Coop/ICA/Hemköp/Willys. Also because my local independent grocer stocks very different products than the big chains, there's a lot of ethnic ingredients (Arabic, Ethiopian [including fresh injera], Korean, South American, and so on) that are entirely missing from the ICA Maxi close by. At least the one around me has found a good niche to compete.
When I moved to Sweden 10+ years ago a friend of mine told me his retirement plan was to save enough money to open a grocery store, I thought he was joking but he did that 2 years ago and it is actually quite profitable to be a Hemköp franchisee...
The article even tacitly admits the solution to the food desert problem is by... making groceries more expensive.
>The problem of food deserts will not be solved without the rediscovery of the Robinson-Patman Act. Requiring a level pricing playing field would restore local retailers’ ability to compete.
what needs to stop is the abuse of the dominant position of the large chains.
If black neighborhoods are underserved, go make a fortune in black neighborhood grocery stores or their suppliers.
If markets worked the way you are implying, then the problem would already be solved. In reality, the inefficiencies matter a lot.
Which is how big stores attract customers with lower prices, provided they already have cars to get to them.
A big central store is more economically efficient, and as a result the consumer preference, in an economic landscape where Men With Guns have removed every option except diffuse suburban housing, where they already need to have cars to get along.
Some suggest as a fix, getting the gunmen back out to force a more expensive, less efficient system for distributing food. I'm saying, can we strike at the root instead of forever hacking at the branches? Allow people to build the cities they actually want, so long as they don't hurt or endanger anyone else.
> Allow people to build the cities they actually want, so long as they don't hurt or endanger anyone else.
Keep following this thought experiment. There is plenty of vacant unincorporated land that a group of people could get together and build whatever city they might want. That scale of investment could even get some legal leeway from state government. The type of blank-slate freedom that you're idyllically invoking ("build the cities they actually want") actually exists right now.
The intrinsic problem is still that of social scaling. Cities need people, and those people will inevitably have conflicts (and these conflicts become more intense with residents' capital buy in - cf a building full of owned condominiums versus rented apartments). Cue you've just reinvented laws but are perhaps calling them by another name (eg "policies" "user agreement" etc).
And so sorry, there is no blanket "striking the root" answer here, just a lot of messy tradeoffs. If you think eliminating some type of regulation (eg minimum lot sizes, height restrictions, etc) might change consumer preferences to make neighborhood grocery stores viable again, you can argue for that! But recognize that you're arguing tradeoffs (eg denser buildings now mean more traffic, taller buildings mean the fire department needs higher ladders, existing properties lose access to sunlight, etc) rather than some imaginary null hypothesis of a blank slate where everything will be correct by construction.
This is just a big network affect failure. A bunch of zealots starting a cult in the desert isn't a city, and fails quickly every time.
> there is no blanket "striking the root" answer here
I didn't invent this. This is how the whole world worked, in general, 100 years ago. Japan already went back to this 30 years ago, and it absolutely worked.
> denser buildings now mean more traffic
But less need for cars when you can walk to where you are going. Also, public transit becomes a viable option at higher densities.
> existing properties lose access to sunlight
Exactly the NIMBY attitude that supposes you get to say what other people do with their property. This is what makes homes unaffordable, neighborhoods unwalkable, our working days full of commute time, the atmosphere full of CO2 and soot, and consolidates all sorts of commerce from the small and local into the national and international mega-corps. Great tradeoff!
What do you mean "just" ? The whole point is that the difficulty of social scaling is the network effects.
> I didn't invent this. This is how the whole world worked, in general, 100 years ago.
Sorry, you cannot reverse the arrow of time. From the little I understand the Japanese model is close to what I proposed about buying up land and creating a new urban area from scratch. So as I said, that is actually legally still on the table in the US. The problem is it seems to be off the table culturally (development companies in the US are building suburban tract houses instead of train stations and sky scrapers).
> But less need for cars when you can walk to where you are going
Yes, as I said, it's a tradeoff. I didn't explore all the facets. You're free to make these arguments. In fact, I encourage you to in general! I'm in a more ruralish area now and at this point in my life probably won't ever move back, but I used to live in a good sized walkable/bikeable city and I really enjoyed it (but for the economic treadmill).
> Exactly the NIMBY attitude that supposes you get to say what other people do with their property
Here we've gotten to the heart of the matter where so called right-libertarianism falls apart [0]. We're not talking about property (the buildings), but rather real estate (a land area relative to other people's real estate). That distinction exists for an important reason - because physical proximity means that your actions on your real estate does affect your neighbors, regardless of how much you want to ignore it. The retort of living next to a chemical plant is cliche, but for a good reason.
The null hypothesis base case is to move somewhere less dense so you don't affect your neighbors as much (which is precisely why the American conception of freedom encourages the sprawl it has!), not somehow having high population density without any conflict-resolving regulations. Scaling population density inherently requires social technology, not merely the rejection of social technology. If you're concerned about freedom in the urban context, you should be looking for freedom-preserving social technologies.
[0] just for context here I am libertarian, but have come to see right libertarianism as pathologically specious.
> What do you mean "just" ?
You've made the, "If you don't like the oppression here, move to Somalia" argument. If you don't like the way that cities are mismanaged, abandon them. We could also stop mismanaging them, as an alternative.
> From the little I understand the Japanese model is close to what I proposed about buying up land and creating a new urban area from scratch.
Japan had a king-hell housing crisis in the 1980s and solved it by liberalizing zoning and permitting, quashing NIMBY vetos, easing parking, setback and height requirements. Today in Tokyo, families earning median incomes can actually afford to own a home in Tokyo. That is something that can't be said of New York, LA, Boston, San Francisco, Paris, London, and to a growing degree, the middle sized cities across the US. Restrictions on land use drive up the price of housing. This should not be shocking. They also create a list of negative unintended consequences I already mentioned.
America creates new housing on the model of turning pasture and desert into tract-houses and strip malls, that has been known for decades to make things worse.
> So as I said, that is actually legally still on the table in the US.
"If you don't like the violent coercion that keeps poor people poor, you are free to move to the desert." But we already own houses in a city where no one can afford the rent. Why can't we replace the building on our land with one that is actually appropriate to people's needs? [0]
> not somehow having high population density without any conflict-resolving regulations.
...was never suggested. Merely liberalization.
[0] Actually I don't want to tear down my house, I just don't feel it is my business what my neighbors do with theirs. And the effects of imposing my will on their property seem very bad, indeed.
Errr, yes, this is a very valid critique. My argument was based on the assumptions you seemed to be coming from, which fit the same pattern of conjuring up new structures out of thin air:
>> If black neighborhoods are underserved, go make a fortune in black neighborhood grocery stores or their suppliers.
You then continued on about "men with guns" and willfully ignoring that actions on one piece of real estate can affect someone on another piece of real estate. All three are common tropes of right libertarianism.
Hence my:
> not somehow having high population density without any conflict-resolving regulations.
because I thought this is where you were coming from. But if you're really just arguing for "Merely liberalization", that's fantastic! Argue away, and you will get no argument from me on this topic (I don't live in a dense area, and I still recognize that the high cost of housing is strangling our society). But perhaps reformulate your arguments so they don't come off as dead end right libertarian tropes.
(Although I will say, completely independently of the rest of this exchange, and obviously not as a replacement for liberalization - if we could figure out a way to bootstrap new [non-car-based] cities in this country, that could go a long way as well)
This seems to be missing the point, which has nothing to do with consumer preference. When Robinson-Patman was enforced, suppliers had to offer the same deal to all grocers, so prices were the same at the nearby stores. When it was no longer enforced, the big chains used their market power to extract special deals from suppliers, and thus, "Squeezed by the big chains, suppliers were forced to offset their losses by raising prices for smaller retailers"
Sentences like this make me realize nobody writing about these problems has any actual experience in the grocery industry.
Grocery store margins are insanely thin. The relationship you have is backwards - suppliers and distributors have insane leverage over grocery stores. Massive brands essentially lease the aisle space from the stores. And stores have to stock the products consumers want because if they can't find the soda they like, they might never shop at that store again.
The only leverage grocery stores offer is volume pricing. Frito Lay would much rather move a truckload of product a day through a Safeway than drive around and stock tiny bodegas.
> The only leverage grocery stores offer is volume pricing.
This is directly contradicted by the article:
"Congressional hearings and a federal investigation found that A&P possessed an advantage that had nothing to do with greater efficiency, better service, or other legitimate ways of competing. Instead, A&P used its sheer size to pressure suppliers into giving it preferential treatment over smaller retailers. Fearful of losing their biggest customer, food manufacturers had no choice but to sell to A&P at substantially lower prices than they charged independent grocers—allowing A&P to further entrench its dominance."
"That move tipped the retail market in favor of the largest chains, who could once again wield their leverage over suppliers, just as A&P had done in the 1930s. Walmart was the first to fully grasp the implications of the new legal terrain. It soon became notorious for aggressively strong-arming suppliers, a strategy that fueled its rapid expansion."
The A&P case was from the 1930s. It goes without saying that the grocery industry is a lot different today than it was. Robinson-Patman was a pretty obscure law, and it probably wouldn't have had much effect either way on preventing the rise of the supermarket chains despite much of the conjecture in this article.
But for most other supermarket chains, it's the suppliers that dictate the price. The stores essentially lease out their shelves directly to the distributors or manufacturers.
The law made it so no one had the position to squeeze suppliers for lower prices and as a result, consumers paid more for groceries. If the suppliers were shifting their costs unduly to small retailers, then there was a market for new suppliers. If retailers were a monopoly they would have raised prices, and that hasn't happened. The grocery market remains VERY competitive, with stores popping up and closing down all the time.
Huh? Where have you been the past few years?? The price of groceries has gone way up, and this might have even determined the outcome of the Presidential election.
where should these new suppliers come from? and how should they compete? by offering lower prices? how? farming has a cost that can only be lowered through massive scale. to get massive scale, suppliers need to sell to big chains where they face the same problems the existing suppliers already have.
Not quite. The law made it so that suppliers couldn't offer better deals to one of its customers over another. But retailers could still squeeze suppliers by going with another supplier if another supplier had better prices.
In other words, the law didn't make suppliers a monopoly, there was still competition between suppliers, it just prevented suppliers from shifting a disadvantage onto their smallest customers.
We could fix these things by legislating big box stores, preventing effective collusion and hostile pricing, protecting smaller businesses with tax breaks, higher taxes on megacorps, and so forth. It is, in fact, possible, for megacorps to coexist with successful small businesses and this hostile and rank antagonism from big companies doesn't have to happen. They just lose out on .005% potential profit, so it's better to lobby for (and obtain) unchecked influence and dominion over American markets.
Community management and regulation plays a part, but food deserts represent a captured audience or market, so the primary goal is to shut down any possible "competition" no matter how little they actually impinge on profit, effectively disallowing competition. Throw in Amazon's racket, and the whole idea of an American "free marketplace" is more of a sick joke than any sort of principled reality.
You will buy your mass produced stuff from China and Nestle and Coke and Walmart, and you will like it. If you don't like it, good luck, because you've been priced out of leaving unless you're willing to be broke.
If the close store is the same price, then for sure, everyone will prefer what's nearby. If it is one hundred times the price (hyperbole) then everyone will take the drive. At some point of price differential is the current situation where people who are already forced to have cars will frequently take the drive for less expensive groceries. It's prima fascia the case.