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Mass. congressional delegation wants answers from Stop & Shop about price disparities
The Democrat delegates are warning of “predatory” pricing by one the largest grocers in the state.
After a report found price discrepancies at Stop & Shop locations across urban neighborhoods and their wealthier counterparts, lawmakers are demanding answers.
In a letter to Stop & Shop’s leaders at its parent company, Ahold Delhaize, U.S. Sens. Elizabeth Warren and Ed Markey and Reps. Jim McGovern and Ayanna Pressley are raising concerns over price gouging.
The delegation gave an Oct. 14 deadline to answer questions on pricing algorithms and detailed reasons for the price discrepancies between the stores.
“It’s been over a year since the first reports of these price differences at Stop & Shop stores in the Commonwealth, and the company has not addressed the problem,” said Sen. Warren in a statement to Boston.com. “Right now, customers in Jamaica Plain are paying $1.50 more for a frozen pepperoni pizza — almost 30% more — than people in Dedham. That just isn’t right, and I’m pushing for answers.”
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The issue was first revealed last year when teen volunteers from the Hyde Square Task Force published the results of an investigation into price discrepancies between store locations in Jamaica Plain and Dedham.
The letter says that the teens found that Stop & Shop is charging 18% more for groceries in a predominantly minority and working-class area of Boston compared to the affluent suburban location.
The task force found that a grocery cart with the same products at the Boston location cost $34 more than one at the store’s suburban site.
In a subsequent report, the teens calculated that a household spending $300 on groceries weekly would spend $2,808 per year more at the Jamaica Plain store than at the Dedham one.
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The Boston Globe followed up on the report last week by visiting several regional stores, confirming the teen’s account from a year earlier.
“These types of price discrepancies place significant burdens on already-struggling consumers,” the lawmakers’ letter says.
The letter said the median household income for the census tract around the Jamaica Plain Stop & Shop is $35,900 per year. The high prices have forced some consumers to search elsewhere in the city for lower prices.
Stop & Shop response
“Under no circumstances does Stop & Shop consider a store neighborhood’s socioeconomic makeup when setting prices,” the company said in a statement in response to the letter.
Stop & Shop says prices vary by store location to account for whether the property is owned or leased, rent, labor costs, store size, and store offerings.
The company said the Hyde Park and Roslindale stores in Boston are priced similarly to Dedham because tenants at these locations offset operating costs.
The store acknowledged that high inflation, supply chain disruptions, increasing energy prices, and high labor costs have resulted in elevated food costs across the county.
To combat this issue, Stop & Shop says it has recently lowered prices on thousands of items in select locations, such as in Boston, Western Massachusetts, and Connecticut.
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There are 124 Stop & Shop locations in the state. Over the summer, the company announced that it would be closing 32 underperforming stores by year-end, including eight in the state.
The company said the closures are part of a refocusing effort to improve the chain’s performance, lower customer prices, and remodel stores.
At the end of August, Stop & Shop closed its first store in the state, in Newton.
‘Predatory’ pricing
The lawmakers’ letter said Stop & Shop isn’t the only company using “predatory” pricing practices. Since the pandemic, large corporations across the economy have taken advantage of supply chain disruptions to “prey on consumers” by raising prices by more than necessary to cover the cost increase, they said.
“Nearly two years later, corporations’ production costs are down, and their profits are ballooning, yet prices continue to climb—suggesting a pattern of corporate profiteering,” the letter says.
The letter points to major grocery companies, including Kroger and Walmart, which are considering dynamic pricing that would change the prices of goods based on temporary factors such as the time of day or the weather.
Lawmakers are concerned that dynamic pricing could lead to surge pricing during periods of high demand, similar to rideshare apps during storms.
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“It is shameful that Stop & Shop appears to be engaging in corporate profiteering schemes that squeeze residents and families in Massachusetts,” the letter says.
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