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When dealing with competition, two scenarios arise. One is that when there is a lot of competition in a certain area, a store is forced to keep the prices low, in order to attract the most customers. The second is the opposite; sometimes there is not a lot of competition in a certain area. This gives a store the power to raise the prices, since it is able to afford the increase. Thus “inevitably, in the inner city or in rural areas where there isn’t much competition among stores, grocery prices are much higher.”
Operating costs are a second cause for the disparity of prices that customers see. A store’s operating costs are defined as the day to day expenses that a business incurs, for example, sales and administration. The administration includes “jobs in food retailing [which] are often a stepping stone to higher paid jobs in other sectors, making turnover in supermarkets high. This in turn, can lower operating efficiency and increase training costs”
Buying power is the third and last cause of this difference. Buying power is defined as money or other forms of assets that is available for a store to spend to get goods and services. Stores that have less buying power are not able to “negotiate directly [with] manufacturers, as major retailers like Wal-Mart and Safeway do.” This in turns causes the stores to have higher product costs. If the products that a store buys cost more, then this cost gets passed on to the customer in the form of higher prices. “Small grocers have considerably less buying power in the wholesale market” compared to other, bigger, stores. This fact also leads to a “lack of availability of healthful food […] and [a] lack of variety”
Until now, I have been discussing the causes of disparity, but now this effect itself becomes a cause of the choice of foods that a consumer has. The consumer is not able to control the choice of foods that are available in a supermarket. Large corporations are responsible for this. Since large corporations exist to make money, they have to sell foods that are profitable, and “healthy” foods are not always profitable. The power of large corporations is so immense that they are able to even have the government as a buyer of their products, consumer goods, such as food. Government programs supporting consumer goods exist but all these markets are dominated by large corporations. This greatly complicates the choice that a person has to make of what to eat or not to eat.
Competition between stores, a store’s operating costs, and its buying power are all causes that bring about the effect, the disparity of prices for foods. This disparity of prices for foods is a social issue that needs to be addressed. This is because this issue is something that affects society. But there is little that a single person can do. On the other hand, as a society we have the power to enforce change. The Federal government has the power to pass laws to limit the influence of large corporations as they use their higher buying power to make profits, while the other, smaller stores, are forced to have higher prices. Small stores need financial help from the Federal government in order to be able to lower their operating costs, which would lower the price of foods. To control competition between stores, the Federal government can pass laws decreasing the ability of large corporations which come into areas and create competition between other stores with the purpose of driving these stores out of business. Then these large corporations create monopolies in those areas. Once all three of these causes are addressed the choice of foods that a consumer has is also affected. It is hard to tell if this effect is positive or negative, but one thing is certain, that change is occurring. Adam Smith, a political economist and philosopher, would disagree and put forth the argument of laissez faire, which is a policy where the least government intervention in private business is the best government. The solution is to find a middle ground, where the large corporations would be able to find a way to make profits while hurting other stores less. Some people may call this idea utopian, but if you think about it, a lot of the radical ideas that existed in history and which we find commonplace today, were utopian at one point in time. -Dmitry