Sen. Elizabeth Warren chides supermarket chains for price hikes
Letters to Kroger, Albertsons, Publix request pandemic-related financial information
December 23, 2021
![Elizabeth Warren-US senator-MA.png Elizabeth Warren-US senator-MA.png](https://eu-images.contentstack.com/v3/assets/blt58a1f8f560a1ab0e/bltd20d0abcfb9b0f77/669983527812096de172ac2b/Elizabeth_20Warren-US_20senator-MA.png?width=1280&auto=webp&quality=95&format=jpg&disable=upscale)
U.S. Sen. Elizabeth Warren (D., Mass.) decried high food prices in letters sent recently to The Kroger Co., Albertsons Cos. and Publix Super Markets.
In the three letters, all dated Dec. 14, Warren claimed the supermarket chains could do more to mitigate increased grocery pricing, boosted by inflationary pressures, after they tallied big gains in sales and profit amid elevated consumer demand triggered by the COVID-19 pandemic. The senior senator addressed the letters to Kroger Chairman and CEO Rodney McMullen, Albertsons Cos. CEO Vivek Sankaran and Publix CEO Todd Jones.
“I am writing regarding my concerns about rising grocery prices for American consumers and the extent to which large grocery retailers are earning massive profits for company officials and investors while making it harder for American families to put food on the table. While many Americans faced the loss of jobs, homes, and loved ones during the COVID-19 pandemic, grocery companies like yours saw immense gains through record sales and profits,” Warren said in the letters to Kroger, Albertsons and Publix.
Citing various sources, Warren said Kroger reported $2.6 billion in profit for 2020, up 5.6% year over year, while Albertsons totaled $1.89 billion in net earnings for 2020 versus $612.1 million in 2019. She also noted that Publix reported 60% profit growth for the 2020 third quarter.
“In 2021, these same companies continued to earn massive profits while pushing grocery cost increases onto consumers,” Warren wrote. “I am writing today to request information on what steps your company has taken to protect consumers, and how you will ensure that your company is not putting its profits over the needs of its customers amidst an unprecedented global crisis,” she added.
Kroger, Albertsons and Publix couldn’t immediately be reached for comment.
FMI-The Food Industry Association, a grocery retail and food industry trade group, noted that supermarkets have grappled with a snarl of elevated operating expenses, higher consumer packaged goods (CPG) and fresh food costs, labor shortages and supply disruptions while working to keep products on shelves amid unprecedented demand and customers and employees safe from COVID-19. What’s more, companies had to adapt to sudden changes and cost hikes on the fly.
“America’s food retailers and manufacturers continue their commitment to delivering the safest, most abundant food supply in the world. Through coordination with consumers, supply chain partners and lawmakers, the industry overcame many of the concerns around shortages and runaway prices, and FMI greatly appreciates the [Biden] administration and Congress’ continued engagement on these issues,” FMI said in a statement in response to Warren’s letters.
“Families have seen costs increase for almost all consumer goods, including some items at the grocery store,” the trade group explained. “Current price increases are due to a combination of supply chain challenges – from labor and transportation shortages to higher fuel costs and increased consumer demand. Grocers are doing everything they can to absorb these cost increases, and we ask consumers to continue working with us as we recalibrate our supply chains.”
In November, the Consumer Price Index for food was up 6.1% year over year, reflecting upticks of 6.4% for food at home and 5.8% for food away from home, the U.S. Bureau of Labor Statistics (BLS) reported earlier this month. BLS noted that November’s rise in the food-at-home index marked the largest 12-month gain since the period ending in December 2008, with increases in all six major grocery-store food groups.
In online resources about factors behind food pricing, FMI noted that retailers absorbed abrupt cost increases in the pandemic's early months.
Month to month, the food index edged up 0.7% in November after rising 0.9% in both September and October. The November increase reflected a 0.8% gain for the food-at-home index, marking the third straight month of upticks in all six major grocery-store food group indexes.
Still, U.S. consumers’ weekly grocery spend has largely held firm during the last year, and the amount has decreased since the stockpiling phase in the pandemic’s early months, according to FMI. The organization offers various online resources to illustrate the factors behind food pricing, including the effects of supply and demand.
“Despite concerns about inflation, average household grocery spending has held steady at an average of $144/week over the past year, which is actually down from $161/week at the height of the pandemic, proving America’s consumers are remarkably resourceful and resilient,” FMI stated.
Consumer demand for groceries surged 50% in 2020, lifting food retailer same-store sales nearly 16% industrywide, according to FMI’s “The Food Retailing Industry Speaks 2021” report released in September. On average, grocery retail comparable-store sales rose 15.8% year over year in 2020, and more than 90% of food retailers polled reported higher same-store sales for the year.
The onset of COVID-19 in 2020 shook up workforce dynamics for grocery retailers, according to FMI.
Meanwhile, the U.S. food retail sector spent nearly $24 billion on COVID-19 pandemic-related costs, according to FMI survey research released at the end of March. That total included included $12 billion in payroll and incentive pay, $5 billion in increased benefits, $3 billion in cleaning/sanitation supplies and labor, $1.5 billion in technology and online delivery costs, $1 billion in personal protective equipment (PPE) and related expenses, and $1 billion in non-monetary benefits and vaccine incentives, FMI reported.
Overall, 63% of FMI retailers surveyed said they expect sales to decline in 2021, while 13% project flat sales and 23% anticipate increased sales. On the earnings side, 75% of respondents forecast lower profits in 2021, and just 10% expect increased profits.
In her letters, Warren asked Kroger, Albertsons and Publix to provide information on their profit goals during the pandemic, average wholesale unit prices paid and consumer retail unit prices paid in eight product categories during fiscal 2021, and whether wages have been increased during the pandemic. She said the information is being requested to “address my concerns about your company’s decisions during the pandemic, and the impact of these decisions on your customers and workers” and asked that it be provided by Jan. 7.
“Your company, and the other major grocers who reaped the benefits of a turbulent 2020, appear to be passing costs onto consumers to preserve your pandemic gains, and even taking advantage of inflation to add greater burdens,” Warren wrote to the three chains, adding, “Your companies had a choice: they could have retained lower prices for consumers and properly protected and compensated their workers, or granted massive payouts to top executives and investors. It is disappointing that you chose not to put your customers and workers first.”
Though not cited in Warren's letters, fresh market grocery chain Stew Leonard's also has been dealing with elevated costs that have impacted pricing at the shelf, according to President and CEO Stew Leonard Jr.
“I think Elizabeth Warren is wrong. We are not raising pricing or anything. We have to pass some prices on," Leonard said in a Fox Business video interview this week. "Obviously, we’re dealing with a lot of small, local, American farmers right now. Just look at what happens when they go to fill up their tractor with fuel in the morning. Look at the fuel prices that are hitting them. The feed prices are hitting them, the labor — every single one of our suppliers from our ranchers to our fishermen to our berry farmers are telling us that, overall, their costs have gone up. We’re trying to hold back as much as we can and not pass them along to the customer.”
Customer demand for food also has remained robust, Leonard noted in the interview, pointing to his busy store in the background. The Norwalk, Conn.-based chain has seven stores in Connecticut, New York and New Jersey.
“I feel that half of the costs that people are really experiencing right now have to do with real-life increases in fuel, labor and feed prices," he told Fox Business. "The other half, I think, has to do with just explosion of demand."