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Major grocers are more inclined to form cartels on price than to engage in organic competitive action. These businesses are too large and incentives too pervers
by asdff 7mo ago
Major grocers are more inclined to form cartels on price than to engage in organic competitive action. These businesses are too large and incentives too perverse for free market dynamics to apply anymore.
- gruez 7mo ago>Major grocers are more inclined to form cartels on price than to engage in organic competitive action. Even if we take at face value that this is happening, their margins are famously low (ie. low single digits[1][2]) that any improvements are likely negligible. In the best case scenario where they're run as competently/efficiently as a normal grocery store, but don't take any profits, you'd be saving like 50 cents on a $10 pack of ground beef. Of course, all of this would go out the window if it's less efficient, either due to government incompetence[3], or lack of scale. [1] https://www.macrotrends.net/stocks/charts/ACI/albertsons/profit-margins https://www.macrotrends.net/stocks/charts/ACI/albertsons/pro... [2] https://www.macrotrends.net/stocks/charts/KR/kroger/profit-margins https://www.macrotrends.net/stocks/charts/KR/kroger/profit-m... [3] https://en.wikipedia.org/wiki/Noe_Valley_public_toilet https://en.wikipedia.org/wiki/Noe_Valley_public_toilet
- ceejayoz 7mo ago> https://en.wikipedia.org/wiki/Noe_Valley_public_toilet https://en.wikipedia.org/wiki/Noe_Valley_public_toilet Mamdani has clearly taken lessons like these to heart. https://www.nytimes.com/2026/04/07/nyregion/how-to-build-a-rest-stop-for-delivery-workers-in-a-hurry.html https://www.nytimes.com/2026/04/07/nyregion/how-to-build-a-r... "The Transportation Department workers arrived at 9:15 p.m., right on time. Mr. Boyce and his crew were ready, having fitted the roof and rear wall panel 30 minutes before. By Monday, the structure was nearly complete. “This is all like synchronized swimming,” Mr. Mansylla said. “To build a structure in New York City in, what, 48 hours? That’s as fast as it gets.”
- gruez 7mo agoYour article doesn't say anything about cost, only that it got built fast. Every time the toilet example gets cited, the punchline is the cost, not how long it took, although that was appalling as well. From the wikipedia article: >The toilet's original proposed cost of $1.7 million inspired media coverage and criticism of the San Francisco government.
- ceejayoz 7mo agoSure... because it was a prefab and still took two years at that cost.
- b112 7mo agoPlus, the cost of building includes a lot of permits, inspections, studies, and money to sldo so. Taxes too. Was all this waived?
- ceejayoz 7mo agoI'm a firm believer that part of progressivism needs to be reining in these sorts of NIMBY obstacles.
- b112 7mo agoEnvironmental assessments are NIMBY? Well regardless, the point is it should be the same for everyone.
- ceejayoz 7mo ago> Environmental assessments are NIMBY? It's a kiosk being added to a concrete sidewalk in the middle of Manhattan, by the city itself. There must be a way to do projects of this small scale without spending years on paperwork.
- asdff 7mo agoThe whole point is in principle these things are good ideas but in practice they are tools weaponized by NIMBYs. This is the fig leaf that keeps them around. "But why would you do away with environmental review???" As if you were to stab 55 gal drums of toxic waste and dump them into a river. But really you were trying to build an apartment as large as many other existing apartments in the middle of the city. Or in this case, install something on the sidewalk.
- _whiteCaps_ 7mo agoIt literally happened here in Canada: https://www.cbc.ca/news/business/loblaw-bread-price-settlement-1.7274820 https://www.cbc.ca/news/business/loblaw-bread-price-settleme... > The class-action case was brought against a group of companies that includes Loblaw and the Weston companies, Metro, Walmart Canada, Giant Tiger, and Sobeys and its owner, Empire Co. Ltd. > The plaintiffs allege those companies participated in a 14-year industry-wide price-fixing conspiracy between 2001 and 2015, leading to an artificial increase in packaged bread prices.
- asdff 7mo agoMargins being low is fine when you've scaled across a nation. Annual gross profit for Kroger is $34b.
- gruez 7mo ago>Annual gross profit for Kroger is $34b. What's the point of this observation other than for shock value? Yes, when you multiply small percentage by a huge number, you're still left with a huge number. That doesn't mean it's suddenly worth doing unless you can make the argument that it scales easily.
- asdff 7mo agoIt represents the privatized waste figure out of your grocery bill that is not going to the food you are bringing home.
- gruez 7mo agoSee my previous comment: >That doesn't mean it's suddenly worth doing unless you can make the argument that it scales easily. Otherwise it's like saying "you know what everyone should do? Raise their own chickens! Sure, you might be only saving $1 or whatever a day, but multiply that 365 days per year and 340 million Americans, and that's billions we're all collectively saving!" And no, running a grocery store isn't something that scales easily.
- asdff 7mo agoWell, let's check back in 2028 after running this pilot study.
- wahnfrieden 7mo agoThe consumer cost of overcharges from price-fixed bread in Canada was estimated at 4-5 billion dollars. And that's just bread. Is that negligible? Usually if someone steals a millionth of that, they go to jail for a very long time. The same players are now under investigation for selling underweight meats.
- asdff 7mo agoThe whole egg fiasco is as far as I am concerned the biggest proof of price gouging cartel behavior there is. And people assume it is normal. Vast majority of product sold when inventory is low, they just go out of stock still at MSRP right to the last sku in the inventory. Then, you wait until more are available, also at that same price. Really, why would prices go up for the eggs in this situation if not for gouging? Sure plenty of chickens were culled. But the remaining chickens aren't costing more than they did before the cull. Whoever is producing the remaining eggs being produced is producing them for the exact same overhead they have always been producing. Feed is still probably the same. Maybe cheaper with an excess of feed on the market needing to be sold and moved out of feedlots before the next crop comes in, from the chicken culling your competitors were doing. Water is still probably the same. Power is still probably the same. Staff are still getting the same pay. Property taxes are still the same. Really, who is getting the $10 from the $12 dozen of eggs? Probably some guys smoking cigars if we are being honest.
- gruez 7mo ago>Really, why would prices go up for the eggs in this situation if not for gouging? [...] Supply and demand. Just like blocking the Strait of Hormuz doesn't make oil 2x more expensive to produce everywhere else in the world, you're still left with the problem that the world has ~20% less oil to go around. That means the price of oil gets bid up until it's high enough to convince 20% of oil consumers to stop using oil.
- asdff 7mo agoYou say bid up. I say gouged. Potato Potato I guess.
- KK7NIL 7mo agoThose are pretty extraordinary claims with very little evidence. And, even if they are true, the obvious solution would be to enforce the already existing antitrust and competition laws, not to have the government directly engage in commerce.
- darth_avocado 7mo agoWhy is government directly engaging in commerce such a controversial topic. The government already does it in various forms: VA hospitals, Medicare price negotiations, government subsidies in agriculture, owning 10% of Intel etc.
- philipallstar 7mo agoI wouldn't argue that the US healthcare system is so good that no market distortion can be detected from its current structure.
- asdff 7mo ago>Charges $100 for a tylenol because insurance or medicare will blindly pay for it Yup no distortions here just good old fashion free market!
- philipallstar 7mo agoIndeed.
- asdff 7mo agoToo much to write in a HN comment so here is a substack post (1) probably worthy of its own HN post. And how is that the obvious solution? You see who is in the Whitehouse and you think this is a champion of antitrust and lifting up the little man? Quite the opposite. NYC government is a separate entity than federal government with different limits to its powers. They can't do anything about cartel behavior. They can, however, open a municipal grocery store. The government engages in commerce all the time. If we took that argument to its logical conclusion there would be no libraries as they compete with book stores. There would be no armies as they compete with Blackrock mercenaries. No public transit as it competes with private transit. No public events as that competes with ticketmaster. No public schools. No public universities. No scientific research grants. No sheltering or feeding the poor. No treating the sick. No treating veterans. No bridges. No roads. No harbors. No anything. What really would be the role of government after we stripped it of all its potential influences on the world of commerce? I can't even imagine what might even be left... No, it seems a big role in this country for government is facilitating conditions for commerce. Educating the populace such as to upskill the nation's labor pool. Building roads free for businesses to use in transporting goods to market. Treating the sick before they get so ill as to be an undue burden on the medical system that threatens its entire latent capacity. Offering cheaper food seems in line with that. People aren't going to use the spare money to throw into a river; they will use their extra money to circulate back into the economy probably in more productive ways than Kroger buying back its stock or its executives or shareholders squandering it on oysters and boat fuel. 1. https://grocerynerd.substack.com/p/grocery-update-17-how-grocery-cartels https://grocerynerd.substack.com/p/grocery-update-17-how-gro...
- woah 7mo agoOh, that must be why the grocery business is wildly profitable
- ceejayoz 7mo agoLow margins, high volumes. Walmart has low margins. Walmart is also wildly profitable.
- asdff 7mo agoYou know what they say about massively consolidated multinational corporations with tens of thousands of employees and millions of square feet in real estate: no one making money there.
- ilaksh 7mo agoI wonder if there is a way to improve pricing more systemically by combating some of this. Or if there could be some kind of network and information protocol that could provide a decentralized alternative. Maybe there could be an Internet protocol or NYC Internet protocol that food suppliers could list low price items with. Independent stores could order from here, shipped to their store, or maybe one or two city warehouses where they could pick up. Maybe another system where suppliers could voluntarily detail cost disruptions, allowing government or other organizations insight and sometimes the possibility of helping alleviate those issues etc. I mean the government already spends a lot to subsidize retail food purchases. Maybe another idea is just a very easily accessible new app for credits that is NYC only? It's just that making a single store puts all of the logistical and other issues onto one government department and location, which has been shown in socialist countries to break down. I am all for a few more socialist policies (I am lucky to have survived this long on outsourcing rates without a consistent healthcare plan), but it definitely needs to be a contemporary effort and not some centralized 1950s model.
- asdff 7mo agoThis is probably not far off from how things already work in distribution. Most restaurants are ordering from the same food wholesalers in a given region. When I go to more "independent" grocers or local chains they still have much of the same offerings as major grocers in my area, so I'm guessing they also order from the same sets of distributors (or lease shelf space to the same groups). And I'm not talking just the packaged stuff. But when certain varietals come in e.g. Cosmic Crisp apples, its like all the grocery stores in the area are getting the Cosmic Crisp apples over the next few weeks with the same sticker and all. I know for stuff like seafood there is a saturday night 1am fish market near our harbor where significant volume is sold wholesale to restaurants and grocers (but also individuals interested in filling a chest freezer). So I think already there are just few places to order food wholesale in a given region so those prices are probably somewhat even. Then of course you go to vons, kroger, ralphs, save4less, the local korean grocer, and see different prices for the exact same commodified product like Cosmic crisp apple or 6 pack of coca cola, there is your markup that comes from the grocer itself on top of the regional wholesale price. Grocers like to have flexibility in markup to play psychological games like rotating sales, coupons, and offer rewards programs. Seems that sort of finagling isn't tolerated at the next level of abstraction in business to business sales. Cost disruptions might be good to put the blame on who exactly in the chain is gouging prices. At the end of the day, the eggs in the egg shortage were not more costly to produce than beforehand. And the egg farms that were culled of their hens, were probably not that much of an anchor on operations given that they probably were not consuming their usual power, water, farmhands probably all laid off, land bought and paid for probably decades ago by this point, way out in marginal farmland where property taxes are probably quite low. Certainly not enough to quadruple the price of eggs. And how interesting how Trader Joes still sold $2.99 dozen racks during this whole crisis.
- halflife 7mo agoThat may be, but you can direct subsidies towards inverse relation to the store’s income. You can even add extra taxes for large chains. But as others said, groceries are working on minimal margin. And all of them work with the same wholeselles (except those with vertical integrations), and this is a nation wide problem.
- asdff 7mo ago>That may be, but you can direct subsidies towards inverse relation to the store’s income. You can even add extra taxes for large chains. Not really imo. Private market passes costs to consumers and leverages subsidy offers to achieve rat race outcomes out of competing local governments off each other. It is how you end up with the classic case of a city courting some business but offering enough tax abatement where the city isn't actually getting anything out of the business, and once the abatement expire the business just leaves for somewhere else that will cut them a better deal. City ends up hostage to the business demanding ever more favorable incentives and removal of all taxes (there's been free trade zones established in the middle of ho hum suburbs, stuff brought in there doesn't even count as imported to the US).
- halflife 7mo agoInteresting. I think it really depends on the competitiveness of the market. In a highly competitive market, every cost saved would be passed to the consumer, obviously this is simplistic microeconomics and doesn’t actually works this way. In my city, there’s a supermarket approximately every 150 meters. Food cost is high, but for the entire country. Actually research shows that food cost is higher in low density towns where there is much less competition.