Sen. Elizabeth Warren: Stop & Shop is engaging in ‘abusive pricing tactics’

An investigation by a youth volunteer group alleging that Stop & Shop grocery stores in the Boston area engaged in price gouging in 2023 has caught the attention of U.S. Sen. Elizabeth Warren (D-Mass.).

A group of volunteers with the Hyde Square Task Force, a Boston-based youth group that aims to elevate Black and Latino voices, published its findings in June 2023, which revealed price discrepancies between the largely minority, working-class neighborhood of Jamaica Plain and the more affluent suburb of Dedham.

That prompted Warren to request pricing and other information from the Ahold Delhaize-owned supermarket chain in a letter sent to Ahold Delhaize CEO Frans Muller on Sept. 30. Ahold Delhaize is headquartered in Zaandam, Netherlands, and operates 395 U.S. locations, according to data company ScrapeHero.

The analysis by the Hyde Square Task Force members showed that Stop & Shop was charging 18% more for groceries in the lower-income neighborhood compared to its wealthier suburban counterpart.

Stop & Shop said in an email to Supermarket News that price differences are common at grocery stores in the same chain and that the discrepancies do not constitute price gouging.

“Under no circumstances does Stop & Shop consider a store neighborhood’s socioeconomic makeup when setting prices,” the grocer said in a statement. “Stop & Shop, like many other retailers, has prices that may vary by store location to account for factors like whether a property is owned or leased, rent, labor costs, store size, and store offerings, among other things.”

Warren’s letter to Muller explains that last year, members of the youth group purchased identical products at Stop & Shop stores in Jamaica Plain and Dedham and found that Bubba’s brand turkey burgers cost $11.49 in the lower-income neighborhood, while the grocer charged $9.49 in Dedham.

Even Stop & Shop’s private-label products had price discrepancies, according to Warren’s letter. The grocer’s branded crinkle-cut French fries, for instance, cost 90 cents more in Jamaica Plain compared to the Dedham store.

“In total, the task force found that the same grocery cart of items cost $34 more at their local Stop & Shop in Jamaica Plain than in suburban Dedham,” Warren wrote. “According to their subsequent report, ‘If a household spends $300 on groceries weekly, it would be spending $2,808 per year more at the Jamaica Plain store than at the Dedham one.”

Warren continued in the letter saying that large corporations took advantage of supply chain disruptions during the COVID pandemic to “prey on consumers by raising prices by even more than necessary to cover increases in costs.”

Those “abusive pricing tactics” continue, Warren said, noting that Kroger and Walmart, for instance, are expanding use of electronic price tags that enable dynamic pricing based on factors such as the time of day or weather conditions.

Warren and Sen. Bob Casey (D-Pa.) sent a similar inquiry to Kroger in early August, questioning if the grocer was using “surge pricing” to gouge customers.

“These abuses are possible because a handful of giant food and grocery companies dominate each level of the supply chain, a situation poised to worsen with the pending Kroger-Albertsons and Mars-Kellanova mergers,” Warren said in the letter to Muller.

Stop & Shop said in the statement that macroeconomic conditions such as high inflation, supply chain disruptions, increasing energy prices, and high labor costs have led to higher food costs, but the company is working to keep prices low.

“For example, Stop & Shop in May announced a multi-year strategy to reposition the brand, which includes lowering everyday prices across all its stores. Stop & Shop has recently lowered prices on thousands of items in each store in areas like Western Massachusetts, Connecticut, and select locations in the Boston area. This is a large-scale effort that we will continue to roll out to more locations in the coming months,” Stop & Shop said.

Warren requested information about the grocer’s pricing strategies and practices, setting an Oct. 14 deadline for a response.

The list includes the following questions:

Price gouging has become a topic of discussion during the U.S. presidential election, with Vice President Kamala Harris accusing grocers of gouging customers and promising to ban the practice if elected.

Also, the Biden-Harris Administration formed the Strike Force on Unfair and Illegal Pricing, which held its first public meeting in early August. That group, made up of Federal Trade Commission Chair Lina Khan and Department of Justice officials, is scrutinizing a variety of consumer protection issues.

“We have to use the full extent of our reviews to stop any corporate law breaking that inflates costs for American families,” Khan said in August. “This is essential work that will help ensure that Americans can be free from economic coercion and indignities in the marketplace.”