What you think about: Price gouging

Kroger CEO Rodney McMullen said recently that grocery price hikes are driven by rising business costs, rather than by price gouging.

So is he right? Is this really not about price gouging or is McMullen stretching the truth here? 

Here’s what you had to say: 

Carl DiVita, Store Director - Montrose

As costs go up grocers need to maintain those margins. Don’t forget wages and health and welfare are all expenses and as people demand increases in wages prices need to go up. As a grocer, one cannot absorb those increases. The government needs to stay out of this. Imo.

Charles Pitts

I was in the grocery business for 45 years, and was glad to get more sales. The costs do not increase at the same rate as sales. That is a known fact. It is generally known in the grocery industry that more sales is the cure all for most other problems. Sure, costs do increase, but only proportionally. A prime example is payroll. If sales are normally $400,000 then jump to $500,000, the payroll used to handle the increase will give you a better SPEH. That is unless you’re a poor manager of your employees.

Sergio Briglio, Produce Manager at SAFEWAY CANADA/Sobeys western group (Retired)

Every large grocery chain has their margins and they will keep those margins intact, even with the rising costs of manufacturing, supply chain costs, transportation costs, etc, etc, etc. They will not drop and waiver from these target margins and pass on savings to the consumer because they simply don’t care. That’s the cost of doing business. They have a PR department that says they do, and show how much you can save if you shop at any of our stores. Has anyone noticed the packaging sizes are getting smaller and they are charging the same amount? A 1.5 liter is now 1.25 liter, What’s up manufacturers?? Hmmmm? Do the math people, yes they got record breaking sales. Is it price gouging?

Hani Othman, Principal Consultant at Neudesic

Grocers have always operated with tight margins. Growing overhead costs, spearheaded by ballooning payroll expenses, will continue to drive an uptick in grocery markup, even as we begin to see inflation easing in other segments of the market. On the other hand meat processors have enjoyed record profits as cattle prices have dropped significantly while wholesale meat prices remain relatively unchanged from pandemic highs.

Shawn Berg, Founder & CEO of SMB Sales & Marketing, a natural & specialty foods brokerage 

I am sure Kroger is taking a little but who’s to say they weren’t holding the line too long on some retails. The government giving out free money and crunching the supply chain caused our inflation.

Judy Culleeney, Human Resources Generalist

I disagree. I shop at both Jewel and Kroger/Mariano’s here in Illinois. I know prices very well after working in retail for 30 yrs. Yes there are costs to the business, and payroll has gone up because of higher wages. But, Jewel and Mariano’s pay is sometimes lower than smaller grocery chains like Meijer and their price is lower every time compared to both Jewel and Mariano’s. The price gouging is happening from the manufacturers and the stores. The price of everyday items like chips, soda, milk, etc. are far higher than Meijer or a chain store and Kroger’s buying power is huge. Their buying power combined will be even bigger if they merge. My fear is they will have a monopoly on the grocery industry and take out smaller chains like Meijer, Fresh Thyme, Sprouts, Fresh Market, and the like.

Carlo Caparruva, President at The Midtown Companies

The last entity that we need to listen to about business is the United States Government. If we all ran our businesses the way they run the country we would all be broke. That said, every business needs to have its margins. As costs, wages, insurance and interest rates have increased over the last 4 years, so has the cost of food. The food industry as a whole is such a large part of the American economy, it is to be celebrated, not scapegoated.

Eric Metz, Director- Sports and Strategic Brands

It’s both. Higher labor, raw materials and transportation costs and the drastic increase in retail theft as well as retailers not passing along savings in operations efficiency. The shift to e-commerce is real as the operations footprint is much lower than brick and mortar retail costs.

Ryan Turnley, MBA, Fortune 50 CPG FMCG OTC Pharma Supply Chain Executive

100%. Governmental policies during covid created inflation. This is scapegoating by the administration.

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