by Sarah Curry
Director of Fiscal Policy Studies
All of us go to the grocery store, and almost all have visited a North Carolina based store – Food Lion or Harris Teeter. Unfortunately, that opportunity will soon only be left for Food Lion since news that Harris Teeter is selling and believed to be purchased by either Florida based Publix or Ohio based Kroger. I wonder how much of this sell was sparked by Wal-Mart’s direct attack on Harris Teeter in their home market of Charlotte just one year ago?
In Spring 2012, Wal-Mart started a head-to-head price comparison ad on television, online and in newspapers against the local grocery chain. Wal-Mart tried this tactic in Charlotte to see if they could recover from less than expected sales over the last few years, and in hopes this tactic would work in other target markets if successful. Supermarkets or grocery stores do not earn a huge profit margin on what they sell, so having a loyal customer base is essential to staying alive.
Supermarket analysts have said comments such as, “Over the past five to 10 years, we have seen Food Lion, Winn-Dixie, Albertsons, and Bi-Lo close stores by the bushel when they have to compete against a Wal-Mart-Publix combo.” Unfortunately this is partly due to large corporations, such as Wal-Mart, receiving government incentives in the form of property tax breaks or corporate tax breaks from governments. These tax breaks give them an unfair advantage when competing against the smaller local grocery chain stores. According to a New York Times study, Wal-Mart Stores were awarded at least $80.5 million from 176 grants in 23 states in recent years; it’s very hard to compete with a store when they are given such an unfair advantage from the beginning.
Government’s should not choose winners or losers with corporate incentives – free market economics should decide which firm sells products in a market due to price, customer service, quality of products, location, etc. Due to this unfair advantage, Wal-Mart has indirectly caused Food Lion to close 100 stores over the last two years and now the discussions of Harris Teeter selling have become a reality.
Some Interesting Facts about Grocery Stores vs. Wal-Mart
According to the Bureau of Labor Statistics, grocery stores employ approximately 2.5 million people nationwide where Wal-Mart employs 1.4 million. In North Carolina the Employment Security Commission publishes the ranking of largest private sector employers in the state, Wal-Mart is at the top having the highest number employed. Grocery stores combined employ more people than Wal-Mart, and make up a considerable amount of the market share in North Carolina:
|Rank of Highest Employers in NC||Share of Charlotte Area’s Grocery Market|
|#1||Wal-Mart Stores||Wal-Mart/Sam’s Club||26.2 percent|
|#3||Food Lion||Harris Teeter||22 percent|
|#8||Harris Teeter||Food Lion||19.2 percent|
|#19||Lowes Foods||Lowes Foods||3.2 percent|
If our state continues to choose winners and losers by giving incentives and removing the ability for natural business cycles to occur, unemployment will rise and quality jobs will go away.
Something to think about – the national average Wal-Mart hourly wage is $11.75 per hour with an average yearly salary of $20,744 where the national average hourly wage for grocery stores is $12.49 and an average yearly salary of $25,990.