It’s no surprise to most that groceries can cost more in the inner city, where rents and security measures can push prices up. But an activist group says the same is happening in picturesque, bucolic Maine, where rural residents of lower-income towns are paying up to 25% more for their groceries than their higher-income counterparts.
The New England Consumer Alliance has released a report on what it’s calling “The Hannaford Poverty Tax.” The hometown grocery chain was founded in Maine 143 years ago, but came under European ownership when Delhaize bought it in 2000.
While “Hannaford continues to market itself to New Englanders as ‘your local grocer,'” the activist group says, “its priority is keeping European shareholders happy.”
And one of the ways Hannaford is doing so, the report alleges, is by charging “materially higher prices for the same grocery basket in lower-income Maine communities than in wealthier ones” – particularly in towns where grocery shoppers have no other choice.
Earlier this month, the group conducted pricing tests at four different Hannaford stores, comparing in-store prices for 45 identical products – “a mix of everyday food items, household goods, Hannaford private-label products, and national brands” – and found that shoppers who can least afford it are being charged far more. The same basket of goods cost $156.35 in lower-income communities and $124.97 in higher-income communities – a $31 difference, or 25.11% more.
The stores analyzed include one in Millinocket, population 4,114, in northern Maine. A former mill town whose local paper company closed in 2008, its poverty rate is 21% and median household income just $44,167. Machias, a coastal town in eastern Maine, has a population of just over 2,000, a 16% poverty rate and a median household income of $48,049.
In both locations, “Hannaford is the only supermarket in town,” the report notes, “in effect operating a monopoly in these regions.”
The higher-income locations analyzed are both in suburban Portland. The poverty rates in Falmouth and Scarborough are under 2%, and median household income is more than $125,000, so shoppers there can afford to pay more for their groceries, but are paying much less.
And Scarborough, incidentally, happens to be home to Hannaford headquarters. So while “families with the least ability to absorb higher costs are paying more,” the report points out, “corporate leadership shops at discounted prices in its own backyard.”
Not only are everyday prices higher in the lower-income stores studied, the report found, but promotions can be lesser. It found a couple of examples where regular prices for certain items were the same in all stores, but higher-income locations received a far deeper discount when those items were on sale.
“Hannaford may argue that grocery prices are higher in rural areas due to transportation costs or supply chain challenges,” the report acknowledges. But it says rural grocery price inflation is typically between 7-8%, not the 25% it found here. “Modest rural cost pressures do not account for consistent, double-digit price differences across a wide range of everyday items sold by the same company using centralized purchasing and distribution systems.”
In a response to the allegations in the report, Hannaford said 70% of the products it sells are the same price in all of its Maine stores. “Prices may vary from location to location based on costs to the company,” the company explained, “and individual stores have leeway to adjust prices based on inventory and expiration dates.” It insisted that costs and geography dictate prices, and not a community’s demographics or its residents’ ability to pay.
This is not the first time Hannaford owner Ahold Delhaize has faced allegations that it’s purposely overcharging lower-income shoppers. Two years ago, a group of young community organizers in Boston conducted price checks at an Ahold Delhaize-owned Stop & Shop in the city, and another in the suburbs. Their basket of 35 items cost 21% more in the city. Stop & Shop first disputed the testers’ methodology, then pointed the finger at lawmakers for not cracking down on organized retail crime in American cities, and finally said its chainwide “strategy to lower everyday prices” would ultimately even things out.
But “the new findings in Maine suggest that Ahold Delhaize has failed to address the underlying pricing systems” that continue to produce large disparities in different communities, the New England Consumer Alliance argued. It concluded its report by “calling on Hannaford and Ahold Delhaize to explain their pricing practices publicly, disclose the algorithms and criteria used to set store-level prices, and immediately end pricing structures that penalize low-income communities.”
While there’s no reason to expect every price for every item to be uniform across every store in a chain, the disparities in this report are larger than many might have expected. At a time when grocery prices are a concern for just about everyone, the authors of this report are hoping to ensure they don’t end up being a greater concern for some than for others.
Image source: Ahold Delhaize
