“Empty Shelves And Frustrated Customers”: Grocers Issue A Stark Warning

It could be Covid all over again. That’s the warning from a group representing tens of thousands of grocery retailers and suppliers. They’re not suggesting that Covid itself is about to come roaring back, but remember the empty shelves, the high prices, the lack of decent deals? That’s what they say we could be in for, if federal regulators don’t act.

The National Grocers Association, which represents independent grocers across the country, says it’s alarmed by reports that big retailers are pressuring their suppliers not to pass along any tariff-related costs, so the retailers can keep their own prices low.

Some shoppers may like that idea – after all, who wouldn’t want retailers to ensure they can continue to pay low prices? But the NGA says it’s more complicated than that.

“Rising tariffs could disrupt the food supply chain much like the early days of the COVID-19 pandemic, when dominant national retail chains secured priority access to scarce products while smaller, independent and regional grocers were left to deal with empty shelves and frustrated customers,” the NGA said.

So the group has written a letter to the Federal Trade Commission, warning them of the consequences if the country’s largest retailers win price concessions at the expense of their independent rivals.

“One of the greatest competitive threats to our members is the ability of the largest chains to compel favorable treatment from suppliers. Tariffs may intensify this threat,” the letter reads. “When costs rise or products become scarce, dominant retailers are in a unique position to extract priority access to inventory and to reject tariff-related price increases.”

But the manufacturers still have to cover their own increasing costs somehow. And if they can’t raise the prices they charge large retailers, the NGA says they’re likely to do so for others: “the very independent grocers that lack negotiating leverage.”

The NGA has been warning for years that bigger stores with lower prices aren’t necessarily better for consumers. If independent grocers are driven out of business because they don’t have the pricing power of the national chains, the result will be “higher prices, and reduced choice and quality for consumers,” the NGA warned in 2022.

The FTC itself issued a report last year about the causes and impacts of the supply chain challenges that retailers, suppliers and shoppers experienced during the early months of the Covid pandemic. Among the report’s findings were that smaller grocery retailers were more likely to experience empty shelves at the time, as their larger rivals exerted financial pressure on suppliers to favor them when delivering products that were in short supply.

“Only firms with significant buyer power have the leverage to succeed in these demands,” the NGA argued in its letter to the FTC.

The letter asks regulators to enforce and remind retailers about antitrust laws, which state that “prices, promotions, and services must be provided to large and small purchasers on proportionately equal terms.” It also calls on the FTC to monitor how any tariff-related disruptions impact large and small retailers, and to investigate if small retailers are disproportionately affected.

“Independent grocers once again face the risk of being pushed to the back of the supply line if tariffs trigger product shortages,” Chris Jones, the NGA’s chief government relations officer, said in a statement. “Independent grocers are the backbone of food access in rural and disadvantaged communities across the country — and they deserve a fair shot.”

So for shoppers who are looking to save money, it may seem there’s little not to like about large retailers that are able to maintain low prices. But independent grocers say those low prices can have long-term consequences. We all learned that once, five years ago – and if regulators don’t act, the NGA says we may be about to learn it again.

Image source: NGA