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Grocery Mergers? Not So Good
- sciolist 3y agohttps://web.archive.org/web/20230117020057/https://waterwrights.net/grocery-mergers-not-so-good-january-16-2023/ https://web.archive.org/web/20230117020057/https://waterwrig...
- Animats 3y agoAntitrust enforcement in the US is so weak. It's amazing that the two biggest grocery chains merging is even being considered.
- hayst4ck 3y agoI am honestly more upset about this than I am about the 2008 bailout. It means Kroger has a nearly Comcast like monopoly where I live.
- bombcar 3y agoThe largest grocery store in the USA is Walmart; the second is said to be Amazon (via Whole Foods?). Third is Costco. You likely have those near you. If not, the tenth is Target.
- beardbound 3y agoI don’t think that’s correct. Walmart is first, but second is costco and third is Kroger. https://www.axios.com/2023/04/20/most-popular-grocery-stores# https://www.axios.com/2023/04/20/most-popular-grocery-stores...
- themadturk 3y agoAt least where I live, Target’s grocery department is a joke. Even the non-SuperCenter Walmart has better grocery selection than Target.
- bombcar 3y agoThe older targets that got "upgraded" to have grocery are pretty pitiful. But the purpose-built SuperTargets are decent, if not amazing.
- calderwoodra 3y agoEven combined they'd still be smaller than Walmart (according to the article). They're also competing against Amazon/whole foods and Costco, etc... Grocery shoppers are also extremely fickle and price sensitive. As far as mergers in the US go, I'd be surprised if this was blocked.
- HumblyTossed 3y ago> Grocery shoppers are also extremely fickle and price sensitive. Are they? Don't most people just go to the one that's closest to their neighborhood? I know I do. And I see people from my neighborhood in there every time. Good way to quickly catch up.
- Mountain_Skies 3y agoI'm very price aware though it's not the only factor in where I shop. Publix provides a much nicer environment than my local Kroger so I prefer Publix and pay a premium but I still go to Kroger about once a month for the CarbMaster store brands and cauliflower rice. There are also a couple of regional chains I sometimes to go if they're having a good sale, usually on meat, to stock up.
- zeroonetwothree 3y agoI have about 20 different grocery stores within 10 min driving distance (4 within 3 min). I buy different things at around 5 of them, depending on what prices/selection/quality are better where.
- themadturk 3y agoI live near a Walmart and a Fred Meyer (Kroger) and really have to shop at both because because neither has complete selection of what I buy. Safeway tends to be too expensive, and the smaller chains like Winco and Grocery Outlet are meh. I could probably shop solely at Walmart but their meat, deli and bakery are far inferior.
- mastax 3y agoWalmart is merging with Costco? I kid. The American grocery market is far less consolidated than e.g. the Canadian one. Perhaps there is a minimum size necessary for an efficient grocery chain, or perhaps Canadian anti-trust enforcement is far too lax.
- bombcar 3y agoThe margins are insanely low and you can keep the branding even when merging to one company.
- Animats 3y agoBack in the 1960s, the Federal Trade Commission concluded that the optimal size for a grocery chain, in terms of consumer prices, was 14 stores.
- HWR_14 3y agoWithout defending the current consolidation, numbers from the 1960s may be outdated as advances in computerized supply chains, for example, have taken hold.
- phil21 3y agoMy pet theory as much of the United State's recent... troubles? Stagnation? Is due to lack of antitrust enforcement. There simply isn't meaningful competition in so many areas of society today, business included. To the point I think an entire generation has forgotten what operating in a competitive environment is like. Both as consumers and producers. I watch friends who simply have no concept that there is an option outside of the mainstream grocery store chain they go to - as they drive past 2-3 ethnic stores on the way there, all of which are much cheaper on average for items they both carry. These same friends complain about inflation, but take zero action on their part to even learn about other options - much less pursue them. When I ask the response is usually something along the lines of "I've always went to place X for the past 20 years, why would I change now?". It's going to take shaking a lot of people out of their comfort zones for healthy competition to return to society.
- Animats 3y ago> There simply isn't meaningful competition in so many areas of society today, business included. To the point I think an entire generation has forgotten what operating in a competitive environment is like. Both as consumers and producers. Yes. There's a whole school of thought, headed by Peter Thiel, that "competition is for losers" and "monopolies are good."[1] [1] https://www.wsj.com/video/peter-thiel-why-monopolies-are-a-good-thing/3D9A5E99-02E5-42EB-8B10-ED8E37FA26DD.html https://www.wsj.com/video/peter-thiel-why-monopolies-are-a-g...
- dreamcompiler 3y agoBefore 1980 antitrust enforcement was pretty good. But then Robert Bork and the Chicago School got a stranglehold on mindshare and convinced policy makers that "monopolies are good." That's still the prevailing mindset but the tide is now just beginning to turn back toward sanity.
- hayst4ck 3y agoGreedflation is a word that's been seen a lot lately and it implies that corporations are greedy and that's why we see inflation, but the reality is that corporations are only able to be greedy because they don't have meaningful competition and therefore no market forces to push their prices down. Mergers like this create less competitive markets.
- diordiderot 3y agoIt also helps managers bend employees over. Where else are they gonna go
- drdaeman 3y agoI wonder, besides classical antitrust stuff (which doesn't seem to work at all), is there some sort of measures that would make the process inverse, making giant corporations want to disperse into smaller autonomous companies?
- gostsamo 3y agoRegulation. If you forbid verticals on a market, you might prevent mergers or create splits. E.g. american cinema where studios are forbidden from having their own saloons and are forced to license their products. Currently made irrelevant by the streaming services where the rule does not apply.
- nostromo 3y agoRegulation often has the opposite effect by raising barriers to entry and reducing competition.
- rocqua 3y agoRegulation against vertical integration should have much less of such an effect.
- hayst4ck 3y agoI think that is a simple view of regulation. "You must do this" style regulation like GDPR does raise barriers of entry. "You can't do this," style regulation like trust busting doesn't seem like it would involve raising barriers to entry. It seems like it would lower them.
- fzeroracer 3y agoThere's been a similar trend among drug stores as well. Bartell Drugs for example was a staple pharmacy here in Seattle until it was taken over by Rite Aid, where it became a hollow shell of its former self and rapidly falling apart. Companies buy out the competition, push up prices, kill local competition and then hold a monopoly over regions where they can freely mandate whatever price they want.
- exmadscientist 3y agoThat's been an interesting one to watch from here, being right next to both a Bartell's and a (horrifyingly awful) CVS. The Bartell's pharmacy disintegrated immediately when Rite Aid got around to touching it. The rest of the store has been a slow decline, as stock becomes more and more generic, but somehow it's still the best place nearby for that mid-day snack break. (Maybe that says more about what's nearby than anything else?) Though I doubt it will stay that way for too much longer.
- lotsofpulp 3y agoAnd yet, retail pharmacy and grocery store businesses have near zero profit margins.
- tahoebeers 3y agoAccount suspended? Any other way to read this?
- kzrdude 3y agoYes, find the other comment that posted an archive link
- kellyfaraway 3y agoThe archive link is how I read it. Puzzled by why the account is suddenly suspended. It looks like the author is essentially the driver of the website. Too much traffic from the Hacker News link?
- bombcar 3y agoUsually that kind of thing happens because of a very small host that has limited bandwidth; the provider suspends them when they go over.
- EdwardDiego 3y agoAsk New Zealand how a grocery duopoly is going, it's bad for both consumers and producers. https://www.rnz.co.nz/news/national/489686/fruit-and-vegetable-costs-up-22-percent-as-annual-food-price-inflation-soars https://www.rnz.co.nz/news/national/489686/fruit-and-vegetab...
- euroderf 3y agoThere was a big duopoly in the Finnish market, between the K chain and the S chain. But then Lidl (Aldi) (German chain) moved in and shook things up.
- christophilus 3y agoIs Aldi owned by Lidl? We have both here in South Carolina. They seem quite different. I like one and not the other. Edit: It appears they aren’t related corporations.
- hexo 3y agomergers are always bad
- LgWoodenBadger 3y agoI agree. I’m having a hard time thinking of a merger that was actually beneficial to anyone, first- or third-party.
- zeroonetwothree 3y agoPayPal is a famous one in tech. There is Exxon Mobil as a big one. You’re right there are barely any though. Most mergers seem to be bad in hindsight. It’s acquisitions that end up working out better.
- mastax 3y agoIn export-oriented industries, countries often (forcibly) merge all (or many) of their relevant companies into one (or few) companies in order to make them more efficient and internationally competitive. Sometimes it works, sometimes it doesn't.
- tyingq 3y agoOne interesting trend is how they killed off coupons. Now the only option seems to be the store-run digital coupons. These require navigating a (usually) pretty terrible app that makes it hard to use. Manufacturer coupons, that the store can't control, seem mostly gone. Then, in store, it's often difficult to tell if sale prices require a digital coupon. Thus, many items are sold at a higher price than the buyer expected.
- empathy_m 3y agoI think my success rate with grocery store digital coupons is about 80%-90%. I don't bother to ask the self checkout attendant or the unstaffed CS line to fix the bill when a coupon doesn't go through, which I'm assuming is factored into the margins.
- bluedino 3y agoKroger still sends coupons in the mail as well as the ones that print at the register
- Spivak 3y agoAnd they honor manufacturer coupons which are honestly better than store coupons anyway.
- tyingq 3y agoThere are some remains of this, but they have been pretty successful drawing it all down dramatically. A couple of sources: https://archive.is/YpsVv https://archive.is/YpsVv (NY Times) https://couponsinthenews.com/2022/08/01/there-are-now-fewer-food-coupons-or-any-coupons-than-ever/ https://couponsinthenews.com/2022/08/01/there-are-now-fewer-...
- Spivak 3y agoAgreed, you actually have to seek them out now now instead of them being stuffed in your mailbox and it's rare for them to be for staples. I just accept just food will cost more (and switched to Costco) and try to make it up on household stuff.
- Simulacra 3y agoRelated, "the secret life of groceries" by Benjamin Lorr. A surprisingly, gripping book about grocery stores.
- GrinningFool 3y agoYou've put words together to provide a meaning that seems impossible. 'gripping' ... 'about grocery stores'. I think I need to get this -- if only for the possibility that your description might be accurate.
- Simulacra 3y agoI know it sounds strange, but the author went to work at a Whole Foods and decided to trace groceries back to their source and analyze the entire grocery store, logistics chain, and system along the way.
- bluedino 3y agoStarting about ten years ago the grocery store chain started closing all their stores in town (we had 4), and they eventually consolidated into one large store. I'm sure it is easier (read: cheaper) to run one store and all, but now everyone in the city has to come to one store, they don't have enough people working there when it's busy, it's just a huge mess. They brag about spending 8 million dollars to make it better for shoppers and then have two checkouts open. And they don't even fix things like shattered glass on the milk cooler doors, it is just such a dumpy looking place.
- zeroonetwothree 3y agoPractically speaking your only option is to shop somewhere else or open a competitor. Unfortunately if you live in a small town it’s inevitable that service quality will be lower because of lack of competition.
- dreamcompiler 3y agoEnshittification happens in all sectors. Even grocery stores.
- morninglight 3y agoWhen two stores merge, that is one less store collecting your personal information for a "loyalty card discount". Always look on the bright side of life.
- teddyh 3y agoPersonally, I don’t consider more centralization of information to be a good thing.
- _xnmw 3y agoThought experiment: what if we banned all acquisitions and mergers? A corporation could be like a "person" in that regard, strictly not for sale. I think the process of determining which acquisitions or mergers are acceptable vs. not to be completely arbitrary and impossible to judge the correctness of.
- ilyt 3y agoI think banning all would be really hard to pull off (what if company owner dies/retires ? What if it is acquisition vs letting people go and bankrupcy?), but I'd very much like to see much stricter policies, especially on markets dominated by few big players already. There is nothing consumer friendly about big player buying out another part of the market and the consolidation will not be used to lower prices for the consumers, at the veryleast in long run
- Ekaros 3y agoThere is probably some threshold where consolidation is good for economy and consumers. This likely comes down to market share. Hard to say where upper bound would be, but 25-33% at least seems reasonable. If consolidation means more efficiency with less overheads and more buying power.
- ilyt 3y agoThat will be heavily industry-dependent. That kinds of consolidation gets you cartels like OPEC cutting production to keep the price of oil high, completely going around supply and demand. I think it's overall better to accept some inefficiency vs that.
- doctor_radium 3y ago[dead]