Scale

Bad?

I’ve got a popup dinner coming up on April 3rd! I’m cooking all my own recipes, and the meal will be Asian-ish, full of flavor, and lots of fun. The menu:

• Sesame Scallion Focaccia - chili crisp dipping sauce

• Crispy Eggplant - black vinegar, tomato, basil, nori-caper remoulade

• Wood Ear Salad - asparagus, 5-spice tofu, bird’s eye chili, peanut, cilantro, fried shallots

• Flounder or Mushroom En Papillote - ginger, soy, spring alliums, jasmine rice

• Yuzu Ginger Tart - pecans, chantilly cream

Tickets available here.

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The pasta aisle at the supermarket — a huge supermarket by my urban standards, two hours north of NYC — was vast and full, but I couldn’t find anything gluten-free for my friend. Barilla, De Cecco, and Ronzoni marched one after the other in varying shades of blue, repeating the same shapes of penne, rigatoni, spaghetti, and elbow macaroni. I walked up and down the aisle feeling like I wasn’t looking hard enough. There was so much abundance! But so little variety.

While working on my piece about refilleries for Taste Magazine last month, I realized that I was really writing about two things: the sustainable practice of buying food in reusable containers and the experience of shopping at independent grocery stores. That the two are linked (for now) isn’t an accident, but I know that the thing I most love about my local refillery Maison Jar is the small-scale of it all — talking to Lara about the tofu she sells and what I’m working on with the Japanese sweet potatoes. It’s so cool that I could request a product she doesn’t carry and it would likely show up. But many of the independent stores have been closing, and the question in the air is whether they can make it in today’s grocery landscape.

I started researching, and the more I learned about the supermarket business, the more astonished and pessimistic I became. I already knew it was hard to start a small business and that the mega-corps were doing everything they could to profit and monopolize, but I didn’t realize how much they get away with. Here’s a morsel to get your eyes watering, which may help explain why the pasta aisle feels so monotonous: I learned from Jon Steinman’s book Grocery Story (most of the history below comes from his book) about the practice of Category Management. So choose a supermarket category, like frozen desserts. In many cases, the supermarket doesn’t take charge of stocking the shelves and designing the layout of that aisle. Instead, they appoint a Category Captain, who is actually a manufacturer (they frame this as an opportunity for “retailers and manufacturers to work collaboratively.”) So, Nestlé is in charge of frozen desserts and they decide (or “advise on”) how to organize the ice creams and what promotions to run. In one case they placed marketing signage on a freezer door to cover up the ice cream made by a start-up competitor. Even when anticompetitive tactics aren’t so explicit, the Category Captains are clearly incentivized to promote their own brands.

Category Management, along with expensive “slotting fees” (brands pay to get their product carried), and exclusive long-term contracts are only a few of the business practices that tighten the relationship of the supermarkets and big manufacturers and kill competition for both of them. The amount of money flowing directly from the manufacturers to the supermarkets (called “trade spend”) also means that shoppers are no longer the only profit stream, and start to matter less.

If all this sounds vaguely illegal and not how capitalism is supposed to work, I can’t disagree, but it may be helpful to rewind a hundred years in grocery store history. The modern American grocery system began with the chain Piggly Wiggly, according to Benjamin Lorr in his book The Secret Life of Groceries. Shopping formerly took place at local general stores, where clerks handled food behind the counter and prices varied according to quality, effectively meaning that wealthier customers subsidized the groceries of poorer ones. The invention of the self-service model at the Piggly Wiggly, which was cheaper and more scaleable, meant that shoppers were now walking down aisles choosing products themselves. At the same time, there was an explosion in factory-line packaged products, so the idea of the food brand became paramount. The old dynamic of the clerk and customer was gone, and what mattered now was satisfying self-directed shoppers hungry for the cheapest price.

Grocery chains shot up, each vying to lure customers into their stores with practices like loss-leading (selling certain items at prices below their cost) and engaging in other anticompetitive behavior, according to Steinman. In the 1930s, Kroger and Safeway were making backroom deals not to compete in the same markets where they artificially dropped prices to kill existing small stores. A&P, drunk on its power as the largest chain, would pull nasty tricks like getting a supplier to build a whole factory to make them a breakfast cereal, then demanding the supplier lower the price or they’d make the cereal themselves.

But then for a moment, the government fought back. (Honestly, this is the part that surprised me more than anything.) Charges were brought against A&P, with the judges writing that “the inevitable consequence of this whole business pattern is to create a chain reaction of…purchasing power for A&P, and for its competitors hardships not produced by competitive forces, and…ultimate extinction.” In 1936, Congress passed the Robinson-Patman Act against price discrimination, so that chains could no longer demand cheaper product to undercut their small-store competition. Texas Congressman Wright Patman, who sponsored the bill, said the chains were “sapping the civic life of local communities with an absentee overlordship, draining off their earnings to [their] coffers, and reducing independent businessmen to employees or to idleness,” which, to my modern ears, is an amazingly progressive analysis. The lawmakers feared that the concentration of power in large corporations would adversely affect local communities and economies, and so empowered the FTC to rein them in.

This anti-chain attitude prevailed through WWII, but began to flag afterward and dissolved fully in the 1980s under Reagan. Enforcement of the Robinson-Patman Act basically stopped and supermarket antitrust cases fell as the chain stores happily merged and acquired each other throughout the 90s, frequently leaving rural markets with nothing but stores owned by a single corporation. Today, the top 20 retailers account for 65% of food sales, with most of that concentrated in the top four.

So what does all this mean? It means that what the judges and (I can’t believe he’s our Cassandra) Texas Congressman Patman were talking about has come to pass, and that the mega-corps’ power has grown unchecked. Their consolidation, which has grown hand-in-hand with their biggest suppliers, means they can effectively set prices for goods however they want, with only the most egregious offenses like last year’s egg price-fixing conspiracy being penalized. It means that today we have an incredibly uneven playing field, with the chain stores relying on advantages and profits that are not due to the simple economy of scale. Most farmers are forced to sell their goods for less than they cost to produce, with government subsidies making up the difference. The up-and-down history of regulation also tells me that this whole situation was predicted long ago and that, in an alternative version of America, it wouldn’t be considered un-American to restrain the power of the chains so that small stores could thrive.

When the refillery owners I spoke to mused about their personal challenges and the closures of other stores, they talked about factors like marketing and business acumen. Generally they blamed themselves or the market instead of the forces that shaped the market so inhospitably for businesses like theirs. They felt guilty about any prices that were higher than the supermarkets’, though we know by now that most of those prices are artificially low. I wanted to say to them that it wasn’t their fault, which wouldn’t have been helpful. They’ll do what they need to to balance their values with the reality of the marketplace.

None of this changes the fact that when I walk up and down the aisles to do my family’s shopping, I keep close track of prices and I try to get good deals. Who could afford not to? (Well, some people, but that’s a different essay.) But whenever possible, I opt for the deals that make sense — the bruised apples at my refillery or the almost-too-ripe fruits in the Korean markets on Manhattan Ave. The bigger the grocery chain I’m in, the more I eye the shelves with suspicion.* Who made these products and what did it cost to get them placed here? Why are these our only choices and what might other choices look like?

*Interestingly, Costco doesn’t accept slotting fees. It also makes a significant amount of its revenue from memberships. I really want to learn more about Costco in particular.

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