One-supermarket towns pay a price with no competition

Food prices at Shaw’s Supermarkets in the North Country are considerably higher than at Shaw’s stores and other competing supermarkets farther south in New Hampshire, a survey conducted by The Courier of Littleton has found.

Some Littleton area residents have been driving to Plymouth and farther to shop for groceries, and the survey indicated the savings could be substantial.

At the lowest-priced store surveyed – the Wal-Mart Supercenter in Plymouth – a family that spends $150 a week on food could save more than $1,200 a year compared to the Shaw’s store in Littleton.

The survey demonstrated that Shaw’s charges higher prices where its stores have less competition – in small, rural towns such as Littleton, where state statistics show average weekly wages of $530 are far below the New Hampshire average of $695, and Lancaster, where weekly wages average $497.

The differences in prices at the stores surveyed by The Courier were substantial. At the Lebanon Shaw’s – the most expensive supermarket – the Courier’s shopping list totaled $50.73, which was 23 percent higher than the least expensive store, the Wal-Mart Supercenter in Plymouth at $41.25.

The results of the survey raise questions about possible anti-trust violations by Shaw’s in Littleton. Anti-trust laws prohibit practices that restrain trade, such as corporate mergers that cut competition and predatory acts that achieve monopoly power.

Last fall, Shaw’s acquired eight Butson’s stores in New Hampshire and Vermont, three of which were subsequently closed. One of the three was next to the Shaw’s supermarket off Route 302 in Littleton, a shutdown that eliminated Shaw’s only large local competitor.

Shaw’s controls the lease on the Butson’s space, which remains vacant nearly a year later.

The Route 302 Shaw’s was among the most expensive stores in the Courier’s survey of 20 identical food items at 14 locations on the morning of Aug. 18. Three supermarkets had higher prices: Price Chopper in St. Johnsbury, Vt., at 1 percent more; Shaw’s in Gorham at 2 percent more; and Shaw’s in Lebanon at 3 percent more.

By comparison, the prices at Shaw’s in Concord were 9 percent lower than in Littleton. At Shaw’s in Gilford, the prices were 8 percent lower, and at Shaw’s in Tilton, they were 7 percent lower.

“People have the perception, at least, that Shaw’s is jacking the prices up because they’re the only store in town,” said Burt Ingerson, the chair of the Littleton Board of Selectmen. “I hear that all the time. I don’t know if it’s true or not, but that’s what I hear. I hear it all the time.”

A new light

David Rienzo, an assistant attorney general in the state Consumer Protection and Anti-trust Bureau, said his office received some complaints soon after Shaw’s announced the planned closings of the Butson’s stores in Littleton, Lebanon and Laconia.

He said people were worried primarily about convenience – having to travel farther to buy their groceries – rather than the effect that the loss of competition might have on prices.

“Was it anti-competitive? Sure,” he said. “But it could just be competition, the way some businesses are going to succeed or not.”

Anti-trust cases are not easy to make. They rely on complex economic analyses, Rienzo said, and “will float or sink on the definition of the relevant market.”

“How you define the market is key,” he said, “and whether or not you can convince a court of your definition is really key.”

He declined to disclose whether his department initiated an investigation after receiving the complaints about Shaw’s. “We didn’t just file this matter away and say nothing here,” he said. “We had some communication with the folks from Shaw’s, but I can’t really go into what that consisted of.”

He said the complaints about the acquisition of the Buston’s stores by Shaw’s “went away” after the initial wave of concern.

But Ronald Cotterill, an economist who directs the Food Marketing Policy Center at the University of Connecticut, said The Courier’s survey raises the issue in a new light.

“[State anti-trust officials] may not have thought it was a serious issue, but you’re pointing up after the fact that it seems to be fairly serious,” he said. “Talking in general, a lot of these smaller rural towns are indeed anti-trust markets for supermarket analysis.”

Cotterill is a professor who has testified as an expert in court and before congressional and state legislative committees. In May 1989, he provided an economic analysis of the P&C/Grand Union merger for the Vermont attorney general and assisted in the design of a consent decree that ordered the divestiture of 13 supermarkets to promote competition in Vermont grocery markets.

Referring to the results of The Courier’s survey, he compared the prices shoppers pay at the Littleton Shaw’s to a tax.

“People who are buying $100 worth of groceries a week might be paying as much as $5 to $10 more in Littleton than they would be elsewhere,” he said. “Is that an issue? Yes, that’s a tax on people living in Littleton. If there was a way to get rid of that tax, they should do it.”

Cotterill said there is a potential “remedy” in Littleton’s situation that could restore competition because Shaw’s still owns the lease on the former Butson’s store.

Survey faulted

Because of a lack of undeveloped land for sale, the former Butson’s is the only place in Littleton where another supermarket could go, according to Andy Smith, an owner of Peabody & Smith Realty who specializes in commercial real estate.

“It frankly would be difficult to find a spot for a supermarket right now. Nobody is out marketing a piece that’s suitable for it,” Smith said. “And Butson’s is not available.”

Terry Donilon, director of public relations for Shaw’s, which is based in West Bridgewater, Mass., declined to say whether his company would allow another supermarket to take over the Butson’s space.

“I don’t want to get into our strategy on that for competitive reasons, and I can’t predict who is going to go in there,” he said Monday. “But I guess the question is: Is a food store going to want to go in there, because we already have an existing presence there?”

As for anti-trust questions, Donilon said, the issue was evaluated last fall and “my understanding is that this didn’t apply here because there was no need of divestiture, or anything like that.”

He declined “for competitive reasons” to discuss the wide divergence in Shaw’s prices and the company’s pricing policies, other than to say, “We look at every location independently. We look at the marketplace, we look at the competitive nature of the industry.”

He said The Courier’s survey showed that Shaw’s prices in Littleton are competitive with those at the Price Chopper store in St. Johnsbury, Vt.

While he did not dispute the results of The Courier’s survey, Donilon said he thought it was unfair because it tested prices at eight Shaw’s stores while only checking three Hannaford stores and single stores owned by Price Chopper, Wal-Mart and Market Basket.

Mona Golub, the director of public relations and consumer services for the Golub Corporation in Schenectady, N.Y., a family-owned company that operates the Price Chopper stores, faulted The Courier’s survey for its shopping list of 20 items.

“That’s a very small number of items, akin to covering the 50-yard dash and saying you’ve covered the Olympics in Athens,” she said.

She said her company surveys every item in every competitor’s store every week and additionally surveys the top 100 items every day.

“Those surveys, I suppose, are perhaps a little bit more accurate than picking 20 items randomly,” she said. “We are always on the much more competitive end than it appears from your survey that we are.”

She said Price Chopper sets its prices by zones and the St. Johnsbury store is in a zone that includes the entire state of Vermont. So St. Johnsbury Price Chopper prices would be the same as those at the company’s stores in Burlington and Bennington. “We have thousands of advertised specials every week,” she said. “All of those components define our pricing strategies.” nhbr

Lyn Bixby is a reporter for The Courier of Littleton. This article appears through a special arrangement with the newspaper.