Wednesday, January 12, 2022

Elizabeth Warren Blames High Food Prices on Grocery Chains' 'Record' 1 Percent Profit Margins


On Friday, Sen. Elizabeth Warren (D–Mass.) tweeted a video clip from her appearance on MSNBC's Stephanie Ruhle Reports a couple of days earlier.

"What happens," the caption asked, "when only a handful of giant grocery store chains like Kroger dominate an industry? They can force high food prices onto Americans while raking in record profits." Warren claimed that "a handful of giant chains" had replaced the wide selection of smaller stores that used to dot the American landscape, and she called for the use of the government's antitrust power to "break up these giant corporations."

This was not a new topic for the senator: In December, she sent a letter to Kroger, Albertsons, and Publix, excoriating the grocery giants for "passing costs on to consumers to preserve your pandemic gains" and "taking advantage of inflation to add greater burdens." The letter noted that while grocers' profits had risen during the pandemic, the chains had not reinvested that windfall into "lower prices for consumers" and "protect[ing] and compensat[ing] their workers."

But Warren could hardly have picked a worse industry to use as an example: Grocery stores consistently have among the lowest profit margins of any economic sector. According to data compiled this month by New York University finance professor Aswath Damodaran, the entire retail grocery industry currently averages barely more than 1 percent in net profit. In its most recent quarter, Kroger reported a profit margin of 0.75 percent, during a time in which Warren claims that the chain was "expanding profits" due to its "market dominance."...MORE

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