Charles F. Phillips

Supermarket and Chain-Store Food Prices

T _HE development of large food stores operating to a considerable degree on a self-service basis has raised many questions which, partly because of a paucity of factual information, cannot be answered satisfactorily. Does this large store, commonly referred to as a supermarket, offer a method of operation by which the independent merchant can meet chainprice competition? Or is the supermarket, as is the smaller food store, more efficient if operated as part of a chain? Will the oldline grocery chains become the supermarket operators or will the field be dominated by new chains formed to operate just this type of store? Will the supermarket development continue to force the old-line chains to close their smaller units? As already suggested, answers to the foregoing questions wait upon the accumulation of a body of factual information. We need to know a great deal more about the operating cost of the supermarket under various conditions-chain versus independent operation, downtown versus neighborhood locations, and small versus medium versus large city locations. Except for limited observations of general trends, we know little as to supermarket prices and pricing policies. Moreover, we do not know definitely what influence the supermarket prices have had upon prices in the units of the old-line chain companies. We are ignorant also as to just how successfully self-service operation, which is used by most supermarkets at least in their grocery departments, is going to appeal to persons of various geographic sections and of various income classes. It is the aim of this article to report a study of supermarket and chain-store food prices as a beginning in providing some of the factual information needed in this field. This information will allow us to draw some tentative conclusions as to future trends.

Chain, Voluntary Chain, and Independent Grocery Store Prices, 1930 and 1934

EARLY in the month of October, I930, the writer personally visited the chain grocery stores, voluntary chain grocery stores, and independent grocery stores of five towns in central New York State to obtain factual material to be used as a basis for a comparison of prices among these three types of stores.2 In each store prices were obtained on a number (75) of standard grocery items, the great majority of them being branded (68 out of 75), these prices being recorded on printed forms. Upon detailed analysis of the price quotations for 63 of the 75 items (I 2 were dropped because of a lack of a sufficient number of quotations), it was found that the chain stores were giving a saving of I 2.3 per cent as compared with the independent stores, while the voluntary chain members were underselling the independents by approximately 3 per cent.3 In order to test the validity of the 63 items which were used as a basis of comparison, i.e., validity in the sense of being good indicators of the price differentials which actually exist throughout all the branded goods carried, a weighted index was made for one of the five towns (Earlville). In this town the unweighted index of the percentage savings of the chain over the independent was found to be i i per cent. With the co-operation of one of the chains operating stores in this section of New York State, dollar sales figures were obtained for the preceding three months on each of the 63 items. After putting these sales on a per store basis, the