Oddbean

Attention shoppers. Here’s a question that’s been on my mind with all the talk about whether grocery store price gouging is a thing or not. Two stores. Three blocks apart. Same product. Why is there such a massive difference? https://image.nostr.build/02c3ceba71c43957365f103b2c9aa767caa76b04104f8d13308f906b58b6df5f.jpg https://image.nostr.build/ea9f476307629008689c5fc4df8fef0f8dfc0e66359d6d192f3458a124664edf.jpg

The higher price is at C-Town, a local chain that is “supposed” to cater to lower income neighborhoods. Their price is more than double what Lidl, an international discount chain charges. It’s astonishing that they can stay in business with those prices.

No, I think what’s happening is the larger chain with better prices is more efficiently run and can better negotiate with suppliers than the independent franchises. It could also be the difference between unionized and non-unionized workers. I really don’t know.

In Vancouver this happens in ‘tourist’ areas. Hugely inflated prices. And they also offer ‘unique’ items like these insane square watermelons for $200 each lol. What is wrong with ppl?! Sorry if anyone has purchased these https://image.nostr.build/2ef38ca78111c32cc8db522be543557eadfea25c4f19d7cd9e9332852b97e526.jpg

It’s all done with plastic molds! You can also do it with apples, pears, etc. But you don’t have to make them special shapes. The giant markup is also for very high quality normally shaped fruit. Completely blemish free, uniform size, perfect coloring, etc. If you want a good money maker, try growing absolutely perfect peaches. Peaches are a longevity symbol and a box of expensive perfect peaches is a good gift for one’s parents.

Is one of them a much larger chain? They could be buying a lot more at once. I think some stores take a hit on staples and make up on higher margin products. I believe Walmart does that with some items. Either way, you can't figure an issue like this out by looking at one arbitrary product between two stores in one area. Your methodology here is totally arbitrary and anecdotal. A better way is to look at the profit margins of the most popular chains in a larger region, and profit margins for grocery stores in general are usually considered good at 3%. 3% isn't price gouging. That just meets inflation IF you believe government numbers. The grocery business is brutally competitive and low margin to the point that I can't see why anyone would want to invest in that space anymore unless they have a ton of money and a line on extremely shit quality products, or know they can move a ton of product and beat inflation somehow. You'd be seeing a lot more people come into the space if it was as profitable as politician leeches like to claim. That isn't the case and the rhetoric is dangerously close to becoming price controls. At 3% that equates to stores closing at this point.

Because they can! They do it because they want to and can get away with it. People keep buying it! Did you see my Dollar Tree vs Walmart example? I used spring water as the example. Water from earth. Different price! 😂

Would you consider that to be price gouging? I’m just trying to understand how they can even compete with cheaper options in the same area. Maybe it’s a customer loyalty and class-related thing. These two stores serve very different demographics, but the people who can generally afford to pay more are shopping at the less expensive store.

Price gouging is definitely a possibility. I have been buying this water for years. I started buying it at Walmart. It used to be $0.96. Then the price started to increase especially after 2020. When the price reached $1.28, I stopped buying it from Walmart and started buying the water from Dollar Tree. The price at Dollar Tree has been the same but now the price at Walmart is $1.43. I think Walmart increased the price for many reasons. One, they can. Pushing the price to see how far they can go. Hoping people go along with it. Another reason is to please the shareholders. The profits also help keep the *casino* known as the stock market afloat.

Furthermore, you have a point about customer loyalty and classism. Perhaps, Dollar Tree is seen as low tier for some people. Moreover, for some, it could simply be convenience. Maybe some people don’t want to go to several stores to get items. But that’s also off-putting because in some places Walmart and Dollar Tree are literally in the same area. In one area I frequent, they are in the same shopping plaza. Let me also add a quick story: At a particular Dollar Tree, I asked the manager why they didn’t sell more food items. She said they used to. There’s a Winn Dixie in the same shopping plaza. Winn Dixie complained and said Dollar Tree was taking business away from them. The owners of the shopping plaza told Dollar Tree they couldn’t sell many food items because they’re competing with the grocery store next door. Technically, Dollar Tree isn’t a grocery store. So, now this Dollar Tree has limited food items for sale.

Despite some of the the simplistic answers I’ve seen, it doesn’t make sense to me not to acknowledge the class aspect. I think there’s cultural inertia or societal pressures involved that may be driving the decision to shop in stores that are both higher in cost and lower in quality.

Hard to tell... Maybe the cheaper store bought too much and needs to get rid of it before the expiration date? Maybe the more expensive store didn't order enough and doesn't want to run out? Some stores use the shopper card data to know what sells with what. Maybe they advertise the cheap cream cheese so that people come in and buy salsa and Doritos? Maybe they leave these other items at a higher price?

C-Town is a grocery chain in the northeastern U.S. that put most of its 200+ stores in lower-income areas. It could be that they never had enough competition to keep prices down, but now there are larger chains moving in that are charging 1/2 to 1/3 the same prices on products. Hard to understand how they will survive long-term.

I can't speak for Philly's distributor, but nearly everything on the shelves is not purchased by the store. The distributor buys back the nearly-outdated, and expired product that they remove when they deliver fresh product. The sale price is a negotiation between the store and the seller. With large distributors, they can push a smaller store around. "If you don't sell a train-car load of Tide by the end of the month, you won't be able to sell any more Proctor & Gamble products", (assuming Tide is a P&G product). This causes a major sale of Tide for that chain or store. Meanwhile, they need to recoup revenue, for selling Tide as a loss-leader, (and to keep the supply chain going), so they raise the price of sugar, or coffee, or whatever you're addicted to. Grocery store profits are a very thin portion of a large amount of money. It's a business I avoid consulting.

different stores have different lost leader pricing strategies to get people in the door. the markup is nowhere near the same on every item looks like one store is losing money on cream cheese to get people in the door and one has the strategy of doing that elsewhere to make money on cream cheese

Do not get confused, or create confusion for others: Not only the situation you're showing is NOT price gouging -- it's the opposite of price gouging. You found one shop that sells at a price, and another one that sells at another price. You are able to choose which one you prefer, because there is plenty of inventory and no one is forcing you or any other customer to buy at the more expensive price. Each store has a different strategy, including what margins they have for each item and which ones are loss leaders, hooks, etc. You can't even know if the expensive store is making any money at all just because their prices are higher. Such direct relationship just doesn't exist. This is a perfectly normal situation that has nothing to do with the obvious and undeniable price inflation that the whole world is experiencing, which is a direct consequence of the monetary policies of central banks and irresponsible governments.

It's called free market capitalism.. My guess, the store on the right decided to put some other products on a huge sale, and they're looking to make up some of that discount with higher prices on other things..Cream Cheese. good stuff. Especially on a sandwich with peanut butter and strawberry jelly.