I had a roommate that insisted on buying his groceries in the working class part of town. Not the ghetto, just a little seedy and worn. The shopping center was at least 25 years old then (dated back to the 60’s).
I liked this grocery that was near my last apartment. It was in the trendy, nice part of town. A lot of new suburban homes had sprung up there in the past decade. The Shopping Center was about 12 years old. Really clean and nice. I really liked the area. Too expensive for me to buy a home in, but it made me feel good visiting.
My roommate always hated shopping there. Claiming it cost more. I never really price shopped. Certainly the nicer grocery store carried luxury items. A live lobster tank, more exotic selections in the produce section, high grade steaks. Foods that a well to do family would buy.
But I always felt the staple foods were priced the same. Stuff like milk,bread, cereal, hamburger, apples, etc.
It is true the shopping centers costs are much higher in a trendy part of town. Imagine renting a small store front. The price per square ft would be considerably higher vs shabby 30 year old strip mall. You draw more customers but your COGS are higher.
Whats the Straight Dope on pricing at Groceries in the trendy part of town?
Certainly costs to rent space are higher in Beverly Hills than in Compton, but rent is only one part of the equation.
I have found that in most cities the cost may be higher depending on the type of grocery store it is rather than where it happens to be located. There are high end grocery stores that are more expensive than large chain grocery stores, and yes those high end grocery stores tend to be built in more affluent areas (where their customers live).
If you’re asking whether a Safeway in the better side of town in more expensive than a Safeway in a not-so-great part of town I wouldn’t think there would be that much of a difference since their wholesale prices and labor costs are fairly similar. Rent would be more in the nicer part of town, but I don’t think it would make that much of a difference. It’s easy to verify this… just check a few prices.
One thing to keep in mind is that stores in the sketchy parts of town often have to have increased security which adds cost that the stores in the nicer part of town don’t have to deal with, so perhaps it’s a wash.
Are certain grocery chains more aggressive in expanding into the new trendy areas of town?
Here in Little Rock, Kroger is very aggressive in building in the newest and nicest shopping centers. If you are in West Little Rock / Chanel Valley theres a Kroger (built within the past 15 to 20 years) near you.I know of at least six Krogers in West Little Rock. They are literally just a few miles apart. They do have old (legacy) stores in the run down parts of LR too. I shop at one occasionally. All my prescriptions are at that store because its close to my home.
Harvest Foods seems to only be in older run down locations. Former Safeway stores (built in the 60’s) that became Harvest Foods. I’m not aware of very many new Harvest Food stores. I never shop Harvest Foods. They seem badly lit, dirty. Just run down. That may only be in my city.
I shop at Wegmans in the northeast, the best grocery store in the nation. It is a remarkable place, and they do carry lots of expensive and exotic items, but their basics? Soda, potato chips, hamburger, cereal, bread? The same price, or lower, than found anywhere else. You can get a small loaf of white bread for 89 cents. Coke varies, about $1.25. Hamburger $4 and something, just as anywhere else. Candy/gum/Little Debbie? same as anywhere else. I also get to go to a grocery store in the heart of the ghetto, and they carry a VAST selection of ethnic goods, but the basics are just a little higher than Wegmans. Now, the mom and pop groceries on the corners are hideously expensive, like 7-11 expensive, but that’s the fate of the poor…There are competing grocery chains that have much higher prices, though you get a discount if you buy in quantity. Aldi’s is pretty low, though their prices have risen over the last few years…So, answer to your question, I don’t think on average prices in ‘nice neighborhood’ stores are higher. If you want big exotic cuts of meat, pounds of lobsters and gulf shrimp and exotic fish, banana leaves, imported sodas and such - yes, you will pay more. It’s the little stores in poor areas that charge far, far more. In the suburbs, chips are maybe 2/$5. Coke $1.39 for a 2-liter bottle, hamburger $4 something a pound. In the little bodegas, chips are $3.89 a bag or more, Coke $2 for a small bottle, and probably no hamburger at all.
I actually find the opposite.
There’s one little grocery store that serves a depressed neighborhood near me. No other stores in the area to speak of. Milk, bread, and other staples are 50% more at least. Oddly enough they have decent meat and produce at good prices so I stop in for those things and then hit a large chain store for everything else.
My experience here in Chicago is that, yes, working/lower middle class neighborhoods tend to have grocery stores where you can find better prices than upper middle class neighborhoods. If the above $4/lb is for hamburger, that seems a bit pricey to me. At my local store, today I bought it for $2.89/lb. But once you get to the food desserts and truly lower income neighborhoods, it seems to me that the prices shoot back up. At least that’s my experience.
I know what you mean. Theres a Food Giant over in a rough part of Southwest Little Rock. High Crime and lots of drugs. Its a really nice clean store. Quite a gem in that rough area. But very limited stock. They have a small produce section, canned goods, the staple items. They have full time security guards (I think at least 2). They didn’t have a medicine aisle. I needed Milk of Magnesia for my mom. They had it behind the service counter. I had to request it.
Their prices are higher but they provide a valuable service to that part of town. Some people over there don’t drive and can’t get to nicer shopping centers.
I’m going to start keeping my Kroger receipts for a couple months. I shop at four different ones, it depends on what part of town my errands send me too. It would be interesting to see how the costs compare.
Within the same chain, the prices seem to be similar, if not exactly the same, but there are certain chains and independent groceries around here that tend to be only or mostly located in working class neighborhoods. (And “food deserts,” not “food desserts” in my last post.)
I found this to be true also. But it depends. Certainly, the high priced Gourmet type stores are in the ritzier areas, and the discount stores in the blue-collar.
But in the same chain, I found slightly higher prices in the “bad area store” due to much higher 'shrinkage".
There is probably a sweet spot in moderately-low economic neighborhoods, where average prices dip the lowest, but prices are higher at the far ends of the spectrum – the highest and lowest income neighborhoods.
In high-end neighborhoods, the quality of the produce and meat are probably higher, hence cost more, and there is a higher proportion of high-priced designer brands and name brands occupying more shelf space. Plus the cost of offering amenities to make the stores more attractive to opulent shoppers.
On the other hand, stores at the very low end of the spectrum may have their prices forced up by higher costs of security and insurance, more shrinkage and vandalism, and a seemingly higher price paid per check-out by less-discriminating shoppers who buy convenience and junk food, which has an overall higher cost, and lack the acumen to comparison-shop. Also, low-income neighborhood stores are often smaller, suffering from economy of scale.
I noticed that the main difference between the “fancy” grocery store in the slightly-slightly-more-ritzy towns next door to mine, is that there’s not as much variety. To make room for their huge bakery, deli, produce and organic food displays, the aisles of processed food are much smaller. And the shelving is shorter, the aisles are wider, and the frozen cases take up a ton less room.
So there’s not enough room for 5 different varieties - and 5 different price points - of every item. In my squarely-middle-class grocery store you can get store-brand apple sauce, generic apple sauce, regular name-brand apple sauce, different flavors of name-brand apple sauce, and a couple of fancy brand apple sauces.
At the fancy store, they only have room for the fancy apple sauce and the name-brand apple sauce. So even if the name-brand apple sauce costs the same at both stores, you aren’t able to buy cheaper apple sauce at all, so it seems like the fancy store is more expensive.
I’m sure this applies to the tiny corner stores in poor areas too. You get your choice of one brand of something and it’s the marketable brand and you don’t get to choose from something cheaper. Makes the whole experience more expensive, without even having to charge higher prices (not that the poor corner store or the fancy people store don’t ever charge higher prices).
Based on my experience working at SuperValu headquarters, which has many chains of grocery stores all over the country, the best values are at stores catering to middle-class consumers.
This is greatly dependent on what specific grocery items you are buying, of course, but it applies to the basics.
Stores in the poorest areas are higher priced because:
they have higher costs for security & staffing.
the older buildings often have higher maintenance & operating costs
they have higher losses to shrinkage & vandalism inside the store.
poor customers tend to be less price-conscious and more impulse buyers.
And stores in the ritziest areas are higher priced because:
there customers are much less price-conscious
they have higher staff expenses to keep the store cleaner
they have higher expenses to remodel the store more often
So the middle-class stores end up having slightly better prices in general.
I have some experience of working on IT systems for UK retailers. It’s my experience that most retailers categorise their stores into a number of Price Bands.
Different Price Bands will contain different ranges of products and different prices for the same products.
A stores price band will be chosen based on a number of factors, one of which is the affluence of the area in which the store is located. Other factors influencing a stores price band might be its geographical position (I.e the cost of getting goods there), competition (I.e do you need to undercut rivals) etc.
In Toronto, the major chains each have a discount version of their stores: for instance, Loblaws has “No Frills”, Metro has “Food Basics” and Sobeys has “Price Chopper”. So that makes it a bit difficult to compare areas of town in an apples-to-apples way; ritzy neighbourhoods are unlikely to have a discount store instead of a regular store.
That’s not “not as much variety”, it’s “different varieties”. Since I avoid processed food, that’s a kind of variety I don’t care about; for someone whose pantry is mostly in the freezer, a place with lots of fresh produce would be a side alley of Hell.
Safeway and all other major chains distribute advertising circulars throughout the entire metropolitan area of cities. These circulars give sale prices as well as touting “everyday low prices”. It is possible that some stores may have discretion to stock and price items unique to that store but for the most part the prices are going to be the same.
However, to make a more general statement about economics, wholesale prices and labor costs are only part of the equation in pricing. Demand and competition are important too. Just check out gas prices around town to see what I mean.
It’s also the obvious fact that the more money people have, the more they’re willing to pay. I took a course in marketing in college, and the one thing the professor said that’s stuck with me since is, “The best price for any product is the highest price the customer is willing to pay.”
A lot of poor neighborhoods are served by small mom and pop places, and those places tend to be pricier. But I have never noticed chain supermarkets in poor areas charging more or less than other stores.
At least here in Brazil… YES. I live on a good neighbourhood, that sits between the cheap city centre and a fancy neigbourhood. The supermarkets on the city centre may have some products that cost 10% less (or even more) than on the fancy area.
I never really price shopped. Certainly the nicer grocery store carried luxury items. A live lobster tank, more exotic selections in the produce section, high grade steaks. Foods that a well to do family would buy.
All my prescriptions are at that store because its close to my home.