David Smith, president and CEO of Associated Wholesale Grocers and National Grocers Association member, testified in front of the full Senate Judiciary Committee on the effects of economic discrimination and anticompetitive tactics by power buyers on independent grocers across the country, last week.
When asked by Senator Richard Blumenthal of Connecticut about Amazon’s potential to become the most dominant grocer in America in the next five years, Smith said, “The situation with Amazon is really just a further expansion of the power buyers. Companies such as the manufacturers and producers are unable to be able to get the pricing that they need because of the tremendous dominance that they have. When a singular retailer can have 30 or 35 percent of all of your sales, but yet you and your products may represent 1 percent or less of that retailer’s sales, there’s a disproportionate risk. And so, is that an existential threat to supermarkets? Yes. Is it an existential threat to suppliers? Of course, but having so much of an aggregated power with those companies, it’s a tremendous risk.”
Minnesota Senator Amy Kobuchar asked Smith to weigh in on how the loss of local grocery stores impacts customers, especially in rural communities.
Smith spoke of one of Associated Wholesale Grocers members, which operates several different stores.
“One of our member retailers … he already competes with the largest retailer here in the U.S and he had been receiving a lot of requests to open a new store in an area that really only had a supercenter there to serve the needs. And they wanted a full-service supermarket with really great prepared foods and everything else. And so, he did his homework, and prior to going into the town, he had a service do a full book retail price check to make sure that the retail pricing there was comparable, that the other markets where he was at that he was already competing with that competitor. And sure enough, he found that it actually was higher. So he checked that off the list and said that’s not really a concern and he spent millions of dollars preparing the facility and opened it up and after opening, the retail pricing in that market, because it was isolated, he was kind of carved out and the retail prices there at that competing store undercut him at every turn and anecdotally from the people from that competitor store, we were hearing that a store lost millions of dollars during that period of time that that store was open and our member lost millions of dollars from his family business and ultimately closed.”
When asked by Klobuchar for a solution to these issues, Smith said, “All we’re asking for is a level playing field. Robinson-Patman, we thought, should ensure that we get fair terms and fair prices for the same product, but what we’re dealing with is that it’s gone unenforced and we really see nothing that is stopping the continued increase of market power by those power buyers. So, it’s the same thing, it’s transparency and fairness and an equal opportunity. That’s all that we’re asking for.”
Related: Kaune's Sommer Receives Entrepreneurial Excellence Award; NGA: Independent Grocers Contribute to U.S. Economy.