This may seem quite the unusual post for a political blog. I’m not really a consumer affairs spokesperson but there is a political tie-in to this series of posts I’ve done every six months since April of 2006.
The event that made this idea for a grocery comparison come to mind was the enactment of the Fair Share Health Care Act last year. Better known as the “Wal-Mart” bill, it originally passed Maryland’s General Assembly during the 2005 session but was properly vetoed by then-Governor Ehrlich at the end of the session. However, one of the first items on the 2006 agenda for the Democrats in the General Assembly with the support of their union thug allies was to override the Fair Share veto, thus it was to become Maryland law when I began the series. Later that summer, though, a federal court stopped its enforcement due to its conflict with ERISA statutes and the apparent death blow to the bill came this summer in the Fourth Circuit Court of Appeals.
Originally the idea behind “market basket” was to track the price effect this attempt at punishing achievement had on Wal-Mart in comparison to its local competitors. April 2006 would be my basis point (since the bill was set to commence in July of 2006) and as time went on I could track the effects Fair Share would have had on Wal-Mart versus its competition, who labored under no such restrictions. All that went out the window once Fair Share was nullified; however, I still believe this is a valid study to continue because of other government policies such as the increase in the minimum wage and emphasis on solving our fuel problem with foodstuff (e.g. ethanol taking a large chunk of our corn crop.) These also affect the price one pays at the cash register.
The methods of comparison are relatively simple – I just use a base group of twenty items commonly found in our local grocery stores, noting which ones are on sale the week I do my shopping. Most of the time I use national brands because they’re easiest to compare directly, also I buy many of them for my own personal consumption. The actual list of items can be found via the links below, with the prices in effect at the time of purchase (all are .pdf files):
What I’ve found the most intriguing is the larger jump from Wal-Mart and Food Lion compared to the other two. One possible reason is that both outlets have undergone a facelift since I began the process so part of the pricing is likely makeup of the renovation costs. On the other hand, Giant closed one of its two Salisbury stores and their standalone pharmacy so their facility cost has decreased – it may be part of the reason they’ve moved up to #2 in my store price rankings. And while Wal-Mart is still by far the most wallet-friendly of the four stores, their onetime advantage of 25-35% has slipped to about 20-25% as they’ve actually raised their prices more quickly than anyone else. They’ve been suspected of that sort of dirty pool before as they cut prices so low no one can compete and as local players are driven out of the market they raise their prices. In this case though all four chains have survived in Salisbury with just the Giant store and pharmacy closing.
It’s no shock to see that the largest price increases seem to come from dairy products. Milk has shot up 26.4% in the 18 month period, cheese 11%, and eggs a whopping 82.9 percent. Instead of solely raising the price on its yogurt, Breyers joined most of its competition by reducing their 8 ounce cups to 6 ounces for the same price. (Needless to say I was pretty perturbed by that one, yogurt’s a lunch staple for me.) Bread also made a healthy jump, increasing 28.4% over the time period.
Small wonder that people think the economy’s not doing as well as the unemployment rate and the stock market may suggest. When the price of two food staples has gone up over 25% in 18 months, it puts a pinch on families by driving their total food bill upward. And there’s little sign of abatement in either price as feed continues to be expensive for dairy cows and wheat acreage decreases due to the demand for corn to be processed into ethanol. It’ll be a trend that bears watching when I do this again in April 2008.
On the subject of Wal-Mart’s retail cost-cutting and it’s effect on competitors, it’s an easy thing to do for Wal-Mart, a Bermuda Corporation that pays “ZERO DOLLARS” in U.S. Federal and State income tax on profits.
Not to sound like I’m picking on them, they are not alone, among other “Once-Upon-A-Time True Blue American Corporations”, in this case who manufacture nothing jusu like Enron and Global Crossing, like KPMG, Bank of Americas parent NationsBank, AIG/American General, State Street Bank, and 1000’s of others, and those who do manufacture products such as Intel, Lucent, Global Crossing, HP, IBM, etc., etc. etc….1000’s more as well.
Zuuumie