Op-Ed: The grocery chain wars prove that the modern supermarket model isn’t sustainable
The big news this week was the announcement of an executive order from President Trump that would end the “store-within-a-store” model that the largest stores in America have been using to boost their revenue. The president’s order would end the practice by requiring that supermarkets stop buying products from suppliers in the same state they sell them in. Currently, a number of supermarket corporations (including Whole Foods, Trader Joe’s, and Aldi) have been operating stores within a single state where they buy ingredients and then sell them out from the warehouse to the end consumer. The practice has been highly profitable for these retailers, with the average supermarket seeing a $1.5 billion in revenue increase through the practice in the last five years. Yet the companies that operate in this way have been arguing for years that it’s legal and worth the risk.
There has been a lot of confusion over whether the president’s proposal truly meant the end of this practice, and if it would require supermarket retailers like Aldi and Whole Foods to return to the warehouse model. In an Op-Ed published last week by CBS News, Whole Foods’ founder, John Mackey, went so far as to suggest that the new order is “not really that big of a deal…this is nothing worse than what every grocery retailer already does every day.” The grocery store industry, he said, represents “a lot of very small and family-owned businesses.” I strongly disagree with Mackey’s assessment of this practice.
The grocery store model is not sustainable.
While there’s evidence that the grocery store model isn’t sustainable for all retailers, including Whole Foods, there’s also evidence that it has been successful for all but a handful. Whole Foods is now the largest retail grocery chain in