The Friday Checkout: Grocers have leveraged inflation to drive profits, FTC says
The Friday Checkout is a weekly column providing more insight on the news, rounding up the announcements you may have missed and sharing what’s to come.
As the Federal Trade Commission prepares to try to convince a federal judge to block Kroger from merging with Albertsons, the regulatory agency is hammering home a broader message: The Biden administration believes grocery prices are too high — and it thinks concentration in the grocery industry is at least partly to blame.
In a report issued Thursday, the FTC said it concluded that food and beverage retailers have seen their revenues outpace their costs in recent years, and suggested the grocery industry has taken advantage of inflation to increase profits at the expense of consumers.
“Some firms seem to have used rising costs as an opportunity to further hike prices to increase their profits, and profits remain elevated even as supply chain pressures have eased,” the FTC said in the report.
To conduct its study, the FTC in late 2021 ordered nine grocery companies, including Kroger, Walmart, Amazon and C&S Wholesale Grocers, to provide regulators with details about their operations and also reviewed publicly available data. The information shows that food and beverage retailers took in revenues that were 6% higher than their total costs in 2021, the FTC said, adding that the figure grew to 7% during the first three quarters of last year.
“Grocery retailer profits rose and remain elevated, warranting further consideration by the Commission and policymakers,” the FTC said in its report.
The agency also said that large grocery retailers took steps to protect their market power in the face of supply chain disruptions brought on by the COVID-19 pandemic, putting smaller retailers at a competitive disadvantage. The report also said that Walmart ratcheted up pressure on suppliers to meet delivery requirements.
“The potential for powerful retailers to distort product allocations during a shortage suggests that crises may create an opportunity for some firms to entrench their market power,” the FTC said.
In case you missed it
Powering up with solar
Boston grocer Dorchester Food Co-op could be the future home of an 81-kilowatt community solar project on its roof that would help residents in one of the city’s lowest-income neighborhoods, according to Energy News Network. The project, which is in the pre-development stage, would be governed by a board of community stakeholders and allow residents to buy or earn ownership stakes, the publication noted. The grocer will buy the power at a discounted rate.
Aldi’s new kicks
The discount grocer is expanding its swag collection for fans with $13 sneakers, Parade reported earlier this week. The white shoes, which come in men and women’s sizes, include Aldi’s colorful logo on the side and have a cushioned, padded heel.
Sprouts scores new deals with female athletes
The grocery chain announced this week that it has inked eight new individual Name, Image and Likeness (NIL) deals with female athletes from schools in communities across the country that the grocer serves. Sprouts said it has supported more than 150 female athlete deals through NIL partnerships, to date.
The NCAA in 2021 began allowing college athletes to get paid for the use of their name, image and likeness, following a Supreme Court ruling.
Number of the week: $22
That is the price of Erewhon’s spendy new Glow Smoothie, created by supermodel and beauty entrepreneur Winnie Harlow. The smoothie includes Vita Coco Coconut Milk, Vital Proteins Vanilla Collagen Peptides and is infused with Barcode Lemon Lime. The drink also includes tropical flavors like mango and pineapple.
Impulse find
How much would you pay for a Trade Joe’s tote bag?
Trader Joe’s canvas tote bags, which have lately become a must-have fashion accessory, typically cost just under $3. In the past few weeks, however, their value has skyrocketed.
CNN reported the tote bags, which come in four colors — blue, yellow, red and green — are being resold on third-party sites like eBay and Facebook Marketplace for nearly 200 times their retail value.
The bags’ popularity shot up after going viral on TikTok this month. An Iowa Trader Joe’s employee told CNN that one store sold out after a week of being displayed at Trader Joe’s stores across the country, CNN noted.
So, if you see the Trader Joe’s tote bag on your next shopping trip to the specialty grocer, definitely grab it. Even if you don’t use it, you may be able to start a bidding war for it on eBay and earn up to $500.
Correction: A previous version of this story listed the incorrect price of Erewhon’s Winnie Harlow’s Island Glow Smoothie. The price is $22.
This story was originally published on Grocery Dive. To receive daily news and insights, subscribe to our free daily Grocery Dive newsletter.
