Fragmented mass grocery market fills the basket with local chains – Sentinel and Enterprise

Rosie Hagopian, a veteran employee of 41 years in 2014, walks through the market basket in Methuen and exemplifies the unbreakable loyalty Massachusetts residents have to the beloved grocery chain. (Staff photo by Ted Fitzgerald)

It is painfully obvious to anyone responsible for a family’s groceries that grocery bills in Massachusetts, especially in the Boston area, have been rising faster than in most of the country, even as overall inflation has slowed somewhat .

Consumers who live in cities with a higher cost of living tend to pay more for groceries. But over the past 15 months, shoppers in Boston and elsewhere in the state have seen their grocery bills rise higher than overall inflation compared to other metropolitan areas in America.

According to a recent Consumer Affairs survey, grocery prices in Massachusetts increased 6.6% over a 12-month period, putting the state in the top six in the country in terms of rate of increase, behind New Jersey (6.8%). and West Virginia (6.9%). Maryland (7%), Vermont (7%), and Pennsylvania (8.2%).

It should be noted that every state in New England experienced a price increase of at least 5.9% during that same period.

Among the metro areas that experienced the largest price increases over the past 12 months, Boston (6.7%) ranks fifth, just behind Baltimore (7%), Syracuse (7.1%), and Albany, NY ( 7.25). and Philadelphia (7.4%).

A Boston Globe analysis of Consumer Price Index data from January 2023 to March 2024 for the Boston-Cambridge-Newton area found that the categories with the largest and most consistent price increases were grains and bakery products, dairy products and non-alcoholic beverages.

The nagging inflation demonstrates Massachusetts’ specific challenges, such as high transportation and energy costs and the lack of a major supermarket chain with enough clout to cut prices across broad food categories, forcing others to do the same.

As a result, the added costs have eroded consumer purchasing power, likely leading some consumers to forego or reduce their food purchases to save money.

Since the 1990s, Walmart and Amazon have been two of the most disruptive forces in retail. Both companies expanded rapidly due to their willingness to initially lose money by charging prices significantly lower than the competition, eventually causing many to go bankrupt.

These retail giants also use their enormous power to pressure suppliers to sell them products at deep discounts, which they would theoretically pass on to consumers.

But aside from the Whole Foods acquisition, Amazon has struggled to build a grocery business, analysts say.

Based on the number of locations, Walmart, Albertsons Cos. and Publix are the largest supermarket chains in the United States. Of these three, Walmart is the dominant player, with twice as many stores (4,615) as Albertsons and more than three times as many as Publix.

But Walmart has struggled to penetrate denser urban markets like those in the Northeast. The company operates about 20 stores in suburban Boston, including one in Tewksbury, the headquarters of Market Basket, the area’s and the state’s most popular supermarket chain.

While national grocery conglomerates like Walmart are typically among the most popular – if not the most popular – in a given region, local and regional favorites can give the big stores a run for their money.

And that’s what’s happening in this fragmented Massachusetts market: Walmart is following Market Basket and Stop & Shop in search of local market share, according to Chain Store Guide. The rest of the grocery pie is divided among a mix of national and local chains.

Market Basket owns a 20.5% share of the state’s grocery sector, followed by Stop & Shop (14.8), Walmart (12.3), Shaws (11.4), Whole Foods (7), BJ’s Wholesale Club (6.8), Costco (4.2). ), Brothers Marketplace (3.2), Wegmans (3.1) and Trader Joes (3).

As we’ve seen locally, shoppers often develop loyalty to their local favorites.

That is certainly the case at Market Basket. That supermarket chain, built by the Demoulas family, has created an almost cult-like following.

Customers demonstrated a unique example of brand loyalty in 2014 when they ironically boycotted Market Basket stores until ousted CEO Arthur T. Demoulas regained his previous position after siding with his cousin Arthur S. Demoulas’ side of the family. bought up.

And despite supermarket inflation, not all supermarket prices are the same.

For example, Market Basket’s “more for your dollar” appeal has seemingly grown as prices rise. That is why market researcher Dunnhubby considers it the best supermarket chain in the country in these times of inflation.

Brand loyalty and the state’s complex grocery environment can lead to above-average prices in some cases, but it has also prevented superstores like Walmart from pricing out the competition.

Corby Kummer, director of the Aspen Institute’s Food and Society Policy Program, actually attributes the higher costs to the state’s unique market dynamics.

“(Prices have gone up) because of everything we believe in, which is keeping out monolithic national chains that are putting small businesses out of business,” Kummer recently explained on Boston Public Radio.

That’s apparently how Massachusetts consumers like it — a mix of local, regional and national chains, with each company — aside from Market Basket and a few others — representing a modest slice of the market.

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