Store Format and Buyer Power in Grocery Retail Competition

Competition in grocery retail is not only about the pricing, quantity, and variety of goods offered for sale to consumers. Importantly, it also has to do with format — size, configuration, locations, physical vs. online, fulfillment and payment mechanisms, to name a few aspects. Manufacturers, producers, and wholesalers that supply goods to grocery retailers understand and appreciate the significant role that format plays in attracting, reaching, and persuading consumers. Accordingly, the market power that certain retailers wield on the buy side in negotiations with their suppliers may stem principally from the formats they present to consumers on the sell side, thereby constituting a byproduct of the competitive process. Calls for antitrust enforcers to curb supposed abuses by dominant grocery retailers should therefore take care to recognize and distinguish such procompetitive or competitively benign exercises of countervailing power from manifestly exclusionary and predatory acts aimed at hurting market rivals.

Republished with permission. This article, "Store Format and Buyer Power in Grocery Retail Competition" was published in the CPI Antitrust Chronicle Fall 2021, Volume 3, Number 1.