Eric Fruits on Market Definitions for Grocery Stores
ICLE Senior Scholar Eric Fruits was quoted by the Washington Examiner in a story about the proposed Kroger-Albertsons merger. You can read the full piece here.
Eric Fruits is a senior scholar at the International Center for Law & Economics and an adjunct professor of economics at Portland State University. Last year, he authored a white paper evaluating publicly available information on the potential merger.
The breadth of the competition laid out during the hearing surprised him.
“How to define the relevant market is a key issue,” Fruits said. “No one knows how to handle e-commerce. Both the FTC and the Kroger-Albertson’s team had a hard time articulating how important that is.”
The FTC counts stand-alone supermarkets and the grocery areas of big-box retailers Walmart and Target as competitors. Costco, limited-inventory stores like Trader Joe’s, and the rapidly spreading “dollar store” neighborhood markets are not considered competitors.
What Fruits described as “the archaic concept of the one-stop shopper still holds” under the FTC rule last tested in the 1980s. “It defines the typical grocery store shopper as one who will drive less than five miles and will make all purchases for the household at a single store. These are not the typical customers anymore; it is unusual not to visit several stores.”
In addition to regional competition from destination “club” stores like Costco, consumers now have many options for center-aisle goods. Dog food, paper products, and other non-perishables have moved online for ordering and delivery.
However, Fruits said the labor marketplace has also changed. The retail sector is diverse, and skills acquired in the grocery industry are readily transferable to a variety of retail settings across different industry sectors.
When asked what would happen if the federal judge ruled in favor of the merger and the state court found that the merger violated Washington state law, Fruits speculated that it would most likely result in stores owned by the merged entity in the Evergreen State being sold off or closed.