https://www.thebignewsletter.com/p/how-albertsons-kills-rural-grocers [https] BIG by Matt Stoller SubscribeSign in Share this post [https] How Albertsons Kills Rural Grocers with Land Use Restrictions www.thebignewsletter.com Copy link Facebook Email Note Other How Albertsons Kills Rural Grocers with Land Use Restrictions Albertsons uses land use restrictions in Mammoth, CA to stop competition so it can be the only store in town. Matt Stoller Nov 04, 2024 1 Share this post [https] How Albertsons Kills Rural Grocers with Land Use Restrictions www.thebignewsletter.com Copy link Facebook Email Note Other Share One of the best parts of antitrust trials is how much information comes into the public domain about corporations that usually keep details about their industry private. The Kroger-Albertsons supermarket merger case is no different. One interesting nugget is that supermarket executives sees rural markets as particularly easy to monopolize, because there is often just one store. They even have a name, "no-comp[etition] or low-comp[etition] zones," according to one executive on the stand. Of course that makes sense, we'd expect firms to maximize profits where they can. One might be tempted to say, well, there are some towns that can't support more than one store. And that might be true, except that there are several examples of supermarket chains using tactics in such towns to thwart the opening of competition. How? Well, they find a way to dominate the existing plots of land and building suitable for such a store. In June, for instance, Washington state Attorney General Bob Ferguson, who is also litigating against the merger, fined Albertsons $25,000 for imposing a land use restriction on a store it sold in 2018 in a low-income section of Bellingham, Washington. As part of the sale, the supermarket giant put a requirement on the deed that no grocery store could open there until 2038. Ferguson found this provision was a violation of the state antitrust law. These kinds of land use restrictions are likely common. A few months ago, I got an email from an economist explaining how Albertsons abuses its monopoly power in a small skiing town in rural California using a similar strategy. I'm in Mammoth, CA. The town needs more grocery, but they're limited on land. There's a vacant Kmart that is desirable, BUT the local Vons grocery (which is owned by Albertsons) is leasing the old Kmart of keep it vacant (to the tune of $750k annually). The community is outraged, but feels they cant do anything... It's so apparent walking in the Vons in that region that customer service is dismissed. Workers aren't happy, store shelves aren't stocked, and the general messiness is simply undignified." In Mammoth Lakes, there are two old K-Mart lots that could easily welcome competitive grocery stores, but both are foreclosed by Albertsons. According to the mayor, there are deed restrictions that "deter big box retailers such as Target/Walmart, and basically completely block grocery retailers." According to a different media outlet, the prohibition is not in the deed, but is a direct leasing arrangement. Vons started leasing one plot in 2019 when K-Mart went under, "holding the space hostage." It now leases the other as well. It doesn't actually matter which strategy is involved, both are intended to restrict new grocery stores so there's no competition. And it looks as if Albertson's monopolization strategy has worked. Here are the first several Google reviews about the local Vons, along with pictures. "The most expensive Vons in California is also in the worst physical condition," wrote one reviewer. "Worn and missing floor tiles, empty shelves, rude employees etc..." "This is effectively the only grocery store in town and seems to have a hard time keeping items in stock..." "There were a lot of bare shelves and the vegetables looked well picked over. Got the 6 items that I wanted and tried to pay. Self check-out counters were all closed. There was only one cash register light on and NOBODY was there..." "Definitely the worst and dirtiest Vons I've ever seen... It's clear the owners operate on the "only game in town" ethos. Losers..." "Always a terrible experience at this store. Limited selection of items and saying the older female checker is surly is an understatement. She doesn't understand Vons and Safeway are the same, yelled at me for adding items to our order, refused to honor the digital coupon prices and told us to shop at Grocery Outlet..." "Consensus among locals is that everything purchased here basically rots within a day or so of purchase..." [https] [https] Land use restrictions are common in the supermarket industry, because it costs about $10 million and requires a good plot of land to open a new store. It's much easier to open a store in a building already suitable for a grocery store than to build something from scratch. Conversely, if you have the only store in town, it's much easier to make cash by paying to keep an empty lot from being filled by a rival, than to lower your prices and improve service. Some things are obvious, like land use restrictions to thwart competition. But they require a high-profile merger trial to come to light, nonetheless. 1 Share this post [https] How Albertsons Kills Rural Grocers with Land Use Restrictions www.thebignewsletter.com Copy link Facebook Email Note Other Share Discussion about this post Comments Restacks [https] [ ] Top Latest Discussions No posts Ready for more? [ ] Subscribe (c) 2024 Matt Stoller Privacy [?] Terms [?] Collection notice Start WritingGet the app Substack is the home for great culture Share Copy link Facebook Email Note Other This site requires JavaScript to run correctly. Please turn on JavaScript or unblock scripts