Wal-Mart And The Cost Of Life (Cereal, That Is)

Before I moved from Birmingham to Philadelphia, I expected certain things to cost more – particularly items with large local labor components (day care, for example) – and others to cost the same. For example, I figured that clothes at the Gap and food from the supermarket would be roughly the same price. But the upward spike in supermarket food costs (and the downward spiral in the quality of the shopping experience) have really been striking.

Local labor costs may be embedded in supermarket prices to a substantial degree. I suspect that union workers are checking me out in Philly, while the Alabama staff at Publix or Brunos were probably not organized. And real estate is surely pricier here. But I’m starting to suspect that the big difference is market pressure. The existence of Super Wal-Mart food shopping (and to a lesser, but substantial extent, Super Target food markets) creates clear market segmentation. If you want food at low prices, you leave supermarket chains entirely and shop at the Super stores. On the other hand, when you want a pleasant shopping experience, the middle to upper end large chains (think Publix) deliver a far nicer experience than any place I’ve shopped in Philly. Remarkably, though Publix was distinctly pricier than Wal-Mart and Target, on most food items, it was still cheaper on many items than all the markets in Philly. And Publix stores were consistently nicer than any supermarkets I’m finding in the Philly area.

Life cereal has been a litmus test for me. At Wal-Mart and Target, a 21 ounce box typically costs between $2.50 and $2.80, not on sale. At Publix, a 15 ounce box might run $4.50 or so – substantially more. But at Genuardis here in Philly (owned by Safeway), you might pay as much as $5 for that box. Starbucks coffee follows a similar pattern: $7 at Target, $8 at Brunos in Alabama, and $10 at Acme in Philly. (Warning: all these prices are rough, based on memory.)

What gives? My guess is that in a world without Wal-Mart, there is less of a market divide between “fancy” shoppers who demand a nice store and “value shoppers” who will ignore a little dirt and clutter. The result: fewer nice stores, less competitive prices. Everything is kinda mediocre. In a world with Wal-Mart, even the fancy Publix stores feel serious price pressure. Charge too much and even the BMW drivers will head to the Super Store. At the same time, Publix builds destination stores that leave you happy to drop an extra few dollars at the register. I’m not making the case for Wal-Mart as the best thing since sliced bread. I see the various social problems caused, directly and indirectly, by the retail titan. But I also see the consumer side. If everyone pays a little less for food in a Wal-Mart world, and poorer people are able to pay signficantly less, that’s a social benefit that can’t be ignored.

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7 Responses

  1. Steve says:

    I like the superfresh on Columbus Blvd. Notably, it’s across from a Walmart.

  2. Matt says:

    Food shopping in Philly is fairly bad. I mostly go to Trader Joe’s for various reasons but it exhibits all the pathologies you’d expect from a store managed and staffed by hippies (poor inventory control, back shelf stocking, poor knowledge of products by staff, etc.) You can go to whole foods, the alternative for people who like to consider themselves lefties but actually run by a rabid right-winger libertarian but it’s too spendy for me. The best options (not for price, but for goodness) is the many farmers markets around the city for much of the year. It’s true that you can’t get Life cereal there, but that stuff is pretty gross anyway.

  3. Salil says:

    Genuardi’s had excellent quality at good prices when it was private. That was prior to its absorption by Safeway, who had to take out full-page ads apologizing for alienating Genuardi’s customers.

    http://philadelphia.bizjournals.com/philadelphia/stories/2003/07/28/focus3.html

    The aquisition was timed just before Safeway’s workers on the West Coast struck and the entire chain suffered quality problems.

    A smaller, similar high quality privately held chain, Clemens, was aquired by A&P (Superfresh).

    So what you have now is Whole Foods, Trader Joes, and three chains owned by mega-chains not known for the highest quality: A&P (Superfresh), Albertsons (Acme) & Safeway (Genuari’s).

    The much-beloved (and again, privately-held) Wegman’s chain is probably the solution, but they’re staying on the periphery of the area for now (Exton, Willow Grove, Princeton, Cherry Hill, Mt. Laurel, Turnersville, Malvern).

  4. debris says:

    Workers at Acme and SuperFresh are indeed represented by a union — UFCW Local 1776 (my former client). As I recall, Genuardi’s was non-union, but I don’t know whether that changed after Safeway took them over. Whole Foods is notoriously and aggressively anti-union (and a good illustration of why the Employee Free Choice Act is necessary). Yet, despite paying lower wages and providing fewer benefits, Whole Foods (a.k.a. “Whole Paycheck”) has much higher prices than its unionized competitors.

    The farmers’ markets are, as Matt says, a good alternative, as are the Reading Terminal and the Italian Market (though the quality of the produce at the latter often leaves something to be desired).

    Anyway, I agree with Dan’s point about market (heh!) segmentation, but would add that Wal-Mart is less of an independent explanatory variable than an instance in the broader phenomenon that sociologists and others have examined for some time under the heading of post-Fordism.

  5. Kaimi says:

    Our life in the Bronx got immeasurably better when Target opened shop at 225th street.

    No more 5 dollar boxes of cheerios. Horray!

    Plus, we could finally find a lot of basic items, all in one place, rather than spend all morning wandering from store to store.

  6. notwithoutacoupon says:

    Here in Florida we have seasonal residents, meaning half the year they live somewhere else.

    Publix is NOT the store of choice. Publix’s prices are always over inflated. 30-50% higher. Walmart is always a safe bet, but there are others like Winn Dixie and SweetBay that have coupons and really good sales. I feel that the local Sweetbay and Winn Dixie are making a valid effort to help consumers. They give free milk with cereal purchases. With the added in savings of coupons (I purchased 80 Life Cereal coupons) on ebay for under $15.00 total. I take the coupon to who ever has them on sale 2/$5.00 use 2 coupons and get a free gallon of milk for $3.00!

  7. crissy says:

    Here in Florida I guess they don’t notice the post above theirs is 2 YEARS old.I’m eating my life cereal right now and I got it free,that’s right I wait for my food stamps and the gov. picks up the tab.