Big Supermarkets Kill Your Favorite Products
Discover more from BIG by Matt Stoller
Big Supermarkets Kill Your Favorite Products
The biggest supermarkets like to sell their own products.
Welcome to BIG, a newsletter on the politics of monopoly power. If you’d like to sign up to receive issues over email, you can do so here.
Since the early 1990s, supermarkets have been consolidating rapidly., with the top twenty biggest increasing their share of the market from 35% in 1990 to 65% in 2019. There were 300 mergers in this industry just in 2019 alone, as the Department of Agriculture shows in this chart.
So what? Why is this bad?
Well, CNN reporter Nathaniel Meyersohn had an interesting observation from oat milk producer Oatly’s F-1 investor document for its IPO. Oatly’s goal is to sell sustainable food products to address health problems and climate change, starting with oat milk. In its risk factor section, the corporation noted that consolidation is a major risk because it leads supermarkets to reducing the number of brands they carry.
Supermarkets, grocers and other retailers in North America, the European Union and Asia continue to consolidate. This consolidation has produced larger, more sophisticated organizations with increased negotiating and buying power that are able to resist price increases, as well as operate with lower inventories, decrease the number of brands that they carry and increase their emphasis on private label products, all of which could negatively impact our business.
One of the arguments Amazon makes to justify selling its own private label products ahead of the products sold on its platform by third parties is that supermarkets often do this as well. What Bezos and co. leave out, of course, is that the ability to self-preference your own private label product, for supermarkets as well as Amazon, is probably a result of scale and some level of monopoly power.
Big Supermarkets Kill Your Favorite Products
Supermarket and convenience store consolidation also, I'm told, led to consolidation in book distribution--which led, in turn, to fewer book titles being offered in mass market, a consolidation on the bestseller lists, and the collapse of the mass market paperback. The story as I've heard it: In the old days, individual supermarkets and gas stations would have mass market book racks filled with books by local distributors, who'd know if, for example, science fiction titles sold more in this neighborhood, or westerns, or romance (and, if romance, which subcategory?).
As supermarkets and convenience stores all rolled up, corporate didn't want to trouble itself with dozens or hundreds of small book distributors, so they started choosing one distributor for large swaths of the country, and working with them. But those deals weren't to stock different books in different stores based on local knowledge--they were to stock the same books in every store. Easier that way.
So, now, if you don't live near a dedicated bookstore--and a lot of people don't--your choices are (more or less) between the same ten or fifteen books stocked by every CVS in the country, and online mega-retail. And even a site like Amazon doesn't match the discoverability power of seeing a neat cover in the wire rack by the checkout aisle of the local grocery store. Those wire racks used to sell a lot of books, even in the mid-list. They launched and sustained a lot of careers. And that channel just doesn't exist any more, for most authors.
Similar situation in most of Europe. Especially UK (although regulators did prevent 2 big chains merging a couple of years ago: Sainsbury's and ASDA. But did let Tesco and wholesaler/franchisor Booker merge).