BY ALANA SEMUELS
ECONOMY
EVERY WEEK, I GO ONTO WALMART’S WEBSITE AND order a bunch of groceries to be delivered to my house, and then feel a little bit guilty.
By shopping at Walmart, I am likely contributing to the demise of the independently owned grocery store, which is disappearing across the country. But the prices make the choice easy. On a recent day, a 42-oz. tub of Quaker Oats was $9.99 at Key Foods and $5.68 at Walmart; a 500-ml bottle of California Olive Ranch olive oil was $14.49 vs. $8.37; and Rao’s homemade tomato sauce was $9.99 vs. $6.88. These prices are one major reason Walmart captures 1 in 4 grocery dollars in America.
That may not last. These days, the U.S. government appears ready to listen to the argument that Walmart and other big chains including Dollar General, which is expanding at a rapid clip across the country, come by those prices unfairly because of their market power. There’s a law on the books—1936’s Robinson-Patman Act—that essentially says suppliers in any industry can’t give lower prices and special deals to big chain stores if it costs the same to serve them as other stores. The law also says retailers can’t bully suppliers into giving those discounts. But because Walmart and dollar stores are so huge, representing a big part of a supplier’s business, they’re able to extract deals and low prices from suppliers, according to Small Business Rising and the Main Street Competition Coalition, two groups of independent business owners making their case in congressional hearings and television ads. It’s not just groceries; independent pharmacies, bookstores, auto-parts stores, and other types of retailers are also struggling on an uneven playing field, they say.
Walmart’s leverage may seem like a good deal for consumers like me. In an era of runaway inflation, who doesn’t want the lowest prices they can get? But the rise of Walmart does indeed contribute to the demise of independent stores, the grocers say. Since suppliers lose money by giving discounts to stores like Walmart, they increase the prices they charge to other stores, a phenomenon economists call the “waterbed effect.” The higher-priced stores struggle, lose customers, and go out of business. Then the big-box stores, their dominance established and their competitors wiped out, raise prices. During the pandemic, that meant consumers living in lower-income areas far from big-box stores weren’t able to get the groceries they needed. “Everyone deserv
