Last updated on August 30th, 2024
According to news reports, VP Kamala Harris shared the economic agenda for her presidential campaign on Aug. 16, proposing a federal ban on corporate price gouging on groceries. Industry leaders are sharing their thoughts regarding her plan, which includes new penalties for companies that exploit crises and support for smaller food businesses “that are trying to play by the rules.”
Independent Grocers Alliance
IGA CEO John Ross penned an open letter Aug. 21, calling out politicians to stop blaming family-owned independent grocers for high food prices and lays out the facts.
“Yesterday I was visiting one of the IGA retailers in rural Georgia. It’s a third-generation family business, serving their small community today the way their grandfather did almost a hundred years ago – great service, friendly staff, fresh produce and meat, fair prices. If the store closed tomorrow there wouldn’t be another source of fresh food for a 50-mile radius.
“Running a family-owned store (IGA has over 2,100 of them in the U.S. today, serving rural, suburban, and urban shoppers in almost every state) means competing against the biggest companies in the world, like Walmart, Kroger, Albertsons, Target, Dollar General, even Amazon. Now they are facing the European retailers like Aldi, Trader Joes and Lidl. It’s always been a hard job with long hours, working holidays, managing high volumes on very low margins.
“Every day the costs of running your store go up, the availability of labor goes down, and there are more and more companies trying to take a piece of your business.
“When everything goes right, family-owned grocers operate on razor thin margins – 2 percent or less. Lately nothing is going right. You often lose money on commodity items like bread, milk and eggs, and frequently the costs of energy, transportation and labor grow so fast, you realize you worked 80-hour weeks only to lose money at the end of a month.
“Inflation has made a hard job even more difficult. Everyone is angry about the price of food, and they often take out their frustrations on the stock team, cashiers and department managers who work throughout our stores.
“To Vice President Harris and former President Trump, I have one simple request: when looking for a scapegoat on why grocery prices are high, temper your statements with the facts. One third of the U.S. grocery industry is made up of independent retailers, all fighting to ensure they can provide food to their communities. Pre-COVID, post-COVID, our fight is the same and so is our bottom line: less than two cents on every dollar. Maybe. On a good day.
“Last year, independent grocers’ net profits shrunk to 1.4 percent. Which means unlike big corporate retailers, global corporations and credit card companies, we have lost leverage during inflation. Said another way, family-owned small businesses are not gouging shoppers.
“If you are looking for villains in a high inflation market, I suggest you look elsewhere. Global companies would be a great start. Or look at the credit card providers: Visa’s net profit last year was over 50 percent, they might be a good start.
“Independent grocery stores didn’t pump trillions of dollars into the economy, and we didn’t create hyperinflation; we didn’t start land wars in Europe or the Middle East; and we didn’t raise the price of energy, labor, utilities or anything else we pay for to keep our stores operating.
“Our store teams were considered heroes during COVID. While others sheltered at home, we worked to keep our communities fed. I submit our owners are heroes still — fighting inflation, trying to keep costs low, while hoping to make enough pennies to keep the stores going.
“Trying to lower the cost of groceries is a noble goal. We support you; we would work with you. But blaming family-owned grocers for high prices is just plain wrong.”
National Grocers Association
“The proposal calling for a ban on grocery price gouging is a solution in search of a problem,” shared Greg Ferrara, president and CEO of the NGA.
“Our independent grocers, already operating on extremely thin margins, are hurting from the same inflationary pressure points as their customers. Labor, rent, swipe fees, utilities; you name it, the price has increased. But what’s really hurting our local, independent grocers, is the lack of fair competition with big box retailers, who leverage their influence in ways that your independent grocer down the street can’t, leading to increased prices for everyone else.
“We’re hoping the next administration (and the current one) will look closely at anticompetitive behaviors, including price discrimination, that are increasing prices for independent grocers and the community members they serve.
“We firmly believe that rather than proposing new legislation far-off in the future, the government should be enforcing the Robinson-Patman Act, a key antitrust law that already exists but has been ignored for decades as big chains unfairly wield their influence.
“If Washington is serious about helping lower prices for consumers, it can help in three important ways: lower skyrocketing swipe fees, rein in excessive and burdensome regulations and enforce antitrust laws like the Robinson-Patman Act that enhance price competition amongst retailers, regardless of size or location.”
[RELATED: Enforcement Of Robinson-Patman Act Is ‘Biggest Issue,’ Owner Says]
FMI – The Food Industry Association
“Inflation has caused the price of many consumer goods – from gasoline to apparel – to increase,” said Leslie G. Sarasin, FMI’s president and CEO.
“But 2024 Consumer Price Index (CPI) numbers reveal that the pace of year-over-year inflation continues to moderate, and food prices actually represent a bright spot in the data. In fact, yesterday’s July CPI placed year-over-year food-at-home inflation at 1.1 percent, which remains below the 2.9 percent increase in overall inflation.
“Food retailers’ profit margins are, and always have been, extremely tight – just 1.6 percent last year. The entire food industry works tirelessly – amidst fierce competition – to address inflation and keep prices as low as possible to meet the needs of shoppers. However, the food industry continues to face significant economic headwinds – including increases in labor costs, volatile energy prices, an uptick in climate change-related severe weather events, supply chain challenges and an unprecedented level of regulatory burden – that increase the costs to produce food and get it to store shelves.
“It is both inaccurate and irresponsible to conflate an illegal activity like price gouging – a defined legal term in which specific violations of trade practices law occur − with inflation, which is a broad, macroeconomic measure of increases in consumer prices over time due to supply chain cost pressures. In the context of food, inflation impacts how far the dollar goes when buying groceries.
“Americans should feel confident that the food industry has zero tolerance for deceptive practices like price gouging, an illegal activity that has no place in our stores and is inconsistent with the way the food industry conducts its business of feeding American families.
“When discussing food prices, it is imperative that our conversations remain grounded in reality and data, rather than rhetoric.”
