Walmart has long been the independent grocer’s foe, particularly after putting full-sized supermarkets into its supercenters, which allowed grocery sales to grow to more than half of the retail giant’s revenue annually.
Lately, though, there is a new nemesis: “dollar stores” – the likes of Dollar General and Family Dollar that have added supermarket staples such as frozen food, cereal and dairy to their low-priced general merchandise shelves and are building new stores at a breakneck pace.
What the two retailers have in common is girth that can be thrown around with suppliers, leaving the independents wanting.
Jimmy Wright, owner of Wright’s Market in Opelika, a city of 30,000 in eastern Alabama near the Georgia border, says the dollar stores can demand special package sizes from vendors that the independents can’t get.
The so-called “cheater size” puts fewer products in a package that can be sold at a lower price, appearing to beat the independents on value. Suppliers say the special size is allowed because the dollar stores are “in a different channel of trade” than the independents.
“These tactics are not just unjust – they’re illegal,” says Wright. But laws on the books to fight such anti-competitive practices “haven’t been enforced for years.”
Wright appeared at a news conference in March organized by the National Grocers Association, a trade group representing the independents – the privately held, often family-owned operations that, along with wholesale partners, account for close to 1% of the overall U.S. economy in terms of sales, taxes and employment.
The event coincided with release of a white paper by the group that chastised big-box stores and e-commerce giants – the “power buyers” – for practices described as “economic discrimination” that the coronavirus pandemic only made worse.
Walmart, for instance, initiated a 3 percent penalty last September for vendors that failed to provide 98 percent of orders on time. The policy came while some pandemic-related product shortages persisted, shortchanging other food retailers.
The white paper urged Congress and regulators to put their shoulder to existing antitrust laws, or to write new ones.
Chris Jones, the association’s executive for government relations, said part of the problem with the laws is that anti-competitive practices have been tolerated for too long in the name of business efficiency.
“[E]fficiency has nothing to do with it,” he stated at the news conference, pointing out that suppliers “are forced to accept” the power buyers’ terms in order to reach consumers.
He said interest on Capitol Hill to reining in anti-competitive practice by Big Tech could help the independent grocers’ efforts, noting that Amazon would qualify as a power buyer in grocery.
A spokeswoman for the association told me this week that the white paper has received some interest from lawmakers “as antitrust has been an important issue in recent months.”
“We’re hoping to see some movement on this in Congress this summer,” she said.
Marlene Kennedy is a freelance columnist. Opinions expressed in her column are her own and not necessarily the newspaper’s. Reach her at [email protected]
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