The Food Journal and Food, Nutrition & Science

An alliance between The Lempert Report and The Center for Food Integrity

Independents: Value Pricing Pressure Must Be Fair and Legal

Independents: Value Pricing Pressure Must Be Fair and Legal

Shoppers and Trends

May 23, 2010

This continues to be an especially sensitive time for millions of American food shoppers, whose psyches are wounded and whose household budgets are broken. Not knowing if they’ll be able to keep their homes, or their jobs, or their retirement savings, people have frozen their spending impulses – even in supermarkets where staples abound, and where luxuries still cost far less than other aspects of the “good life” that many miss.

Today’s consumer is shopping for price in an unprecedented way according to the N.G.A. 2010 Consumer Panel Survey. According to the survey, 51% of consumers say that price is “very important” in the selection of where they spend their most money on food, and 45% of the remaining consumers regard price as “somewhat important”. Additionally, much has been written about the pressure on manufacturers to deliver more value. The independent sector wants to ensure that we receive the same treatment as other retailers that sell the same products, regardless of channel and class of trade, so consumers can continue to benefit for a diverse marketplace.

For over 70 years, the Robinson-Patman Act has served as a code of conduct and has provided a set of guidelines for marketplace behavior. As such, American consumers have access to a more diverse marketplace, and consumers can choose among competing brands, store formats, service levels and a steady flow of new products in virtually every category they shop. Because of Robinson-Patman, American consumers have benefitted from the “5-P’s” available to retailers – pricing, packaging, promotion, product availability and payment terms. Robinson-Patman issues have long been the subject of discussion about fairness between retailers and wholesalers, and their suppliers. The “Act” has historically enabled suppliers to say “no” to any unfair, unjustified and illegal demands of power buyers for various forms of competitive advantages over their rivals. Robinson-Patman has been a leveling force for the playing field on which retailers, wholesalers and suppliers compete and consumers benefit.

In our current environment, with price being a very important component in the consumer value proposition, and marketing differentiation strategies being more customized between suppliers and their customers, we should be reminded that a fair and level playing field benefits consumers. The principles of Robinson-Patman are more important in today’s tough economic climate than ever before.