American communities need independent grocers and their wholesalers — these are the people and businesses who stayed on the front line during the pandemic to keep their communities fed, and who can prevent food deserts by providing fresh, healthy food to families across the nation.
Yet these businesses are facing greater discrimination than ever before in the form of higher prices than competitors, less access to grocery staples, and high credit card swipe fees that make electronic transactions costly.
"When a retailer gets so big that no manufacturer can afford to lose their business, the balance of power shifts," IGA CEO John Ross explained. "They dictate terms, punish brands who can't provide supply, and threaten them with expulsion if they don't comply. No brand wants to bow to their demands, but the cost of saying 'no' might result in their factory shuttering."
It's time for independents to leverage their collective clout, with Ross and the National Grocers Association (NGA) calling on retailers to speak to their lawmakers during NGA's Fly-in For Fair Competition in Washington, D.C. June 6-7, 2023.
The Issue: Pricing & Promotion Discrimination
It may seem like large national chains can offer efficiencies that smaller retailers can't match, but Ross said that isn't true.
"Our wholesalers are an enormous network with billions of dollars of annual volume," he said. "Their DSD suppliers' trucks are no more or less efficient calling on our stores as the big chains. In addition, shoppers shouldn't have to choose between quality and value. But when power buyers at big chains hold brands hostage, they are destabilizing the market. In the long run, that's bad for the shopper and bad for local communities."
Large national chains pressure suppliers for more products and in-demand package sizes so that independents can't get their fair share. While there are antitrust laws (including the Robinson-Patman Act) intended to prohibit exclusionary conduct and price discrimination, they have not been enforced by regulators in a generation.
In fact, the FTC has not brought a Robinson-Patman Act case since 2000. Before that, its last case was in 1988. Two cases in the last 35 years. For reference, the government brought 518 Robinson-Patman cases against one form or another of price discrimination in the 1960s, according to the National Law Review.
Why is the government not enforcing this act to protect small businesses and consumers?
"It is nearly impossible for aggrieved private parties to bring cases in court because the burden of proof is all but impossible to overcome," NGA said. In other words, the competitive landscape has changed so much that it's difficult to enforce.
But there is hope: FTC Chair Lina M. Khan has signaled interest in modernizing U.S. antitrust law, which includes "resuscitating the Robinson-Patman Act" through enforcement and resources to police anticompetitive conduct in the grocery industry.
Furthermore, NGA is calling for Congress to update the antitrust laws to reflect the modern competitive landscape in grocery, which should gain bipartisan support since it impacts Congressional districts across the U.S. (and 43 members of Congress sent a bipartisan letter to the FTC urging for investigation and enforcement of antitrust laws).
The Impact: Independent Grocers
Bob Rybick, president and CEO of Geissler’s Supermarkets, a seven-store group in Connecticut and Massachusetts, has watched national retailers around his stores become direct competitors as they have expanded to offer grocery over the years, which has directly impacted his business due to product offerings.
“Their access to items is vastly different than ours. There may be items that are a different size, a different pack, that manufacturers will sell to them. And if we're lucky enough to see a manufacturer's rep, they're telling us that those are exclusive to those retailers.
“We don't see that as fair, because sometimes you can create price perception by changing the number of sheets on a roll of towels or bath tissue, or how many rolls are in a package, and make it appear to be a different value than what we can offer — oftentimes with larger pack sizes — that are that are exclusive to club stores,” Rybick said.
Even more frustrating is that the vendors rarely speak to the grocers, making it difficult to negotiate. "The power buyers get a seat at the table with these large manufacturers and can present ideas to them and oftentimes twist their arm on what they want to see,” Rybick said.
The Impact: Consumers
Independents are the only ones losing out; so do communities, especially rural and inner-city communities that tend to rely heavily on independent grocers. These shoppers pay higher prices, have fewer choices, and can’t access key products in high-demand scenarios like the COVID-19 pandemic.
"Simply put, Americans in rural areas and inner cities bear the brunt of this discrimination," NGA said.
And if the independents that serve these communities go out of business because they can't compete, these people lose access to food, which means more food deserts.
How can Independent Grocers Alliance (IGA) members fight for change?
NGA has been working to fix these issues on independent retailers' behalves, submitting public comments to the Federal Trade Commission (FTC) on the state of competition in the grocery sector, offering a first-hand account of how economic discrimination has harmed independent community grocers and consumers across the country.
They continue to educate important stakeholders and lawmakers on the issues with materials like the video below, featuring Independent Grocers Alliance member store Nam Dae Mun.
Independent retailers, wholesalers, and state association executives can meet with their representatives in person on Capitol Hill in Washington, D.C. to discuss the pressing issues that are affecting their business and impact the policymaking process June 6-7, 2023, during the Fly-in For Fair Competition.
These issues include calling for:
- Enforcement of the Robinson-Patman Act
- Legislation to reform credit card routing to lower swipe fees
- Passage of a strong Farm Bill that ensures grocery retail remains at the center of delivering nutrition assistance through SNAP
"It is critical that independent grocers have a voice at the table on these issues, and IGA’s strength as a local grocery brand in so many communities across the country gives that voice more volume," NGA SVP Government Relations and Counsel Christopher Jones said. "By joining us in Washington, IGA member retailers will be participating in a once-in-a-generation opportunity to promote and protect a competitive grocery marketplace."
After you have registered, the NGA’s Government Relations team will:
- Schedule your Congressional meetings and pairs you with other NGA members and experienced advocates
- Prepare you with briefing materials, meeting tips, and all logistical information needed for a successful day on Capitol Hill
- Provide opportunities outside of your scheduled meetings to interact with lawmakers and their staffs at receptions and fundraiser
Rybick has been attending the NGA fly-in event for a number of years. “It's so important that you get in front of your legislator, because grocers are small town America…we represent small business, we represent thousands and thousands of employees. And those are the things that matter to representatives,” he said.
“We have to remind them in person that, ‘I'm only seven stores’ and another owner might be a couple stores. But collectively we're very big. We represent a large number of people. But we also represent small business. We deserve to be heard. And the best way to do that is to tell your own unique story in person in front of your legislator.”
Want to make your voice heard? Register to attend today.
For more background on NGA’s efforts with antitrust enforcement, click here.
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