Tuesday, April 2, 2024

Did Grocery Chains Take Advantage of COVID Shortages to Raise Prices? FTC Says Yes; Supermarkets Supersized Their Profits During the Pandemic: Operating Incomes at Major Grocery Chains Grew in 2021 — and are Still Climbing, and other C-Virus related stories

AP Photo/Eduardo Munoz Alvarez
Did grocery chains take advantage of COVID shortages to raise prices? FTC says yes:
Large grocery store chains exploited product shortages during the pandemic by raising prices significantly more than needed to cover their added costs and they continue to reap excessive profits, according to a Federal Trade Commission report.
The grocery giants also used their marketing power and leverage to widen their advantage over smaller competitors, according to the report, titled “Feeding America in a Time of Crisis.”
“As the pandemic illustrated, a major shock to the supply chain have cascading effects on consumers, including the prices they pay for groceries,” FTC Chair Lina Kahn said in a statement. “The FTC report examining US grocery supply chains finds that dominant firms used this moment to come out ahead at the expense of their competitors and the communities they serve.”
How much have grocery prices risen?
In 2021, food and beverage retailer revenue increased to more than 6% above their total costs, compared with a peak of 5.6% in 2015, the FTC report says. And during the first three quarters of 2023, profits increased further, with sales topping costs by 7%.
“This casts doubt on assertions that rising prices at the grocery store are simply moving in lockstep with retailers' own rising cost,” the report said. The elevated profits, it added, “warrant further inquiry" by the FTC and policymakers.
The Food Marketing Institute, which represents large food retailers and wholesalers, would not comment on the report, saying it needs more time to review the findings. --->READ MORE HERE
Photo: non c (Shutterstock)
Supermarkets supersized their profits during the pandemic:
Operating incomes at major grocery chains grew in 2021 — and are still climbing
The supply chain shock of the covid-19 pandemic in 2020 meant higher prices at supermarkets everywhere. But while shoppers forked up more money for their necessities, plenty of supermarkets pocketed the change.
A new report by the Federal Trade Commission (FTC) reveals how three of the largest grocery retailers in the United States — Kroger, Walmart and Amazon — saw their profits climb amid the pandemic, and how they’ve kept these margins elevated in the years that followed.
The FTC found that in 2021, food and beverage retailer revenues rose to more than 6% over total costs. Those profits are still pushing upwards: in the first nine months of 2023, those profits increased to 7%. In 2022, Kroger reported an operating profit of over $4 billion, Walmart had an operating profit of $21 billion, and Amazon saw a total operating income of $12 billion.
The agency said this “casts doubt on assertions that rising prices at the grocery store are simply moving in lockstep with retailers’ own rising costs.” After all, covid-era lockdowns forced most people to eat at home for months at a time — which meant they had to swallow climbing grocery prices, whether they liked it or not. And the agency said still-high profits warrant further inquiry from the commission and policymakers. --->READ MORE HERE
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