Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
A major reason why groceries are expensive in MN is the lack of competition. Cub (SuperValu) distributes to most of the grocery chains in MN like Colbourns, Lunds & Byerlys, Target etc. Unless things have changed, Walmart and Hy Vee are the only two other distinctive major chains that do not buy from SuperValu.
I'm in MN 6 months and a PHX burb for the other 6 months. I typically buy items on sales. In our town of 125,000 people, we have two Walmart Super Stores, a Sams Club, three Fry's, one Bashas', Trader Joes, Sprouts, Target, Walmart Neighborhood Market, two Safeway's, one Albertsons, a Killer 99 Cent Store that puts an Aldi's to shame, and a WinCo.
The competition is brutal. The cheapest chain is the newcomer called WinCo. Walmart is actually pretty expensive as compared to Fry's and especially WinCo. One of the highest $$ chains here in AZ called Bashes' and it is 300 yards from my house. In this weeks flyer, grapes are 99 cents a pound (which happens a couple times a month), $4.97 NY Stripe, $0.77 cent 2 liter of Pepsi, $0.87 large avocados etc. Last week at this 2nd highest price chain, there was boneless chicken breasts for $1.49 a pound (bone in is 99 cents a pound). Often, asparagus is 99 cents when it is in season ($2.50 when out of season). Still at Costco, asparagus is never less than $4 a pound even when it is $99 cents at all of the stores. Berries are often priced at $1 a small tray. It gets as expensive when they charge $2.50 ea. I was at Cub over Christmas and they were $4 a small tray for raspberries, $3.99 a pound for grapes, and $2 for colored peppers each. Yesterday, I paid $0.49 cents for red colored peppers and they were not on sale.
I get sticker shock when I arrive back home to MN. So I do my best to shop at Costco or Sam's and overbuy and do the very least amount of shopping that I can at the normal chains including Walmart. An Aldi's would have a tough time in AZ because a place like WinCo is cheaper with 200,000 more items. I hope a WinCo will eventually march into MN. Their deli and meat selection isn't as good. But Fry's is better for less in all categories over a Cub. But we are where we are and our MN grocery store selection is terrible.
I was reading an article about food costs in Minnesota it stated 60-65% of the cost is energy related (mainly transportation) and almost 50% of our fruit/vegetables come from California (Mexico and Florida are also big slice of this pie). So, if you are living in Arizona and with Mexico next door, the cost for transporting fruit/vegetables are much lower. The transportation cost is transferred to your total cost at the register. Actually, we should expect a higher price the farther you are away from the point of production. This is about transportation not competition.
But isn't Minnesota an agricultural state? Yes we are but 85-90 percent of our agriculture is tied into growing corn (not sweet corn) and soy. Even chicken, pigs, and cows are often exported to neighboring states or countries. The southern states produce most of the poultry consumed in Minnesota.
At one time, around 40 years ago, Minnesota ranked 15th in vegetable/fruit production. But the increased conversion to soy and corn coupled with many of these vegetable farms converted into housing developments in the suburbs (transportation costs cheaper closer to major market-the twin cities), decreased the local vegetable/fruit production.
******************
For me, quality is more important than price. Nothing beats growing your own and we are blessed to grow over 60% of our food. All organic. Once you pick fresh fruit and vegetables from you own garden buying "fresh" food in the store loses its appeal.
I can assure you it's not the lack of competition driving prices up in the region. Our profit margin at the retail end is so low, just over 1%, there isn't a whole lot of wiggle room to keep costs down. That is why we (SuperValu) are growing our business in the wholesale arena over retail. We're good at it.
Maybe your 1% profit margins is because your company cannot manage their retail business as well as other companies. As an example, by worrying about Walmart coming in a decade ago that prompted you to put in stores that are losing money. Nationally, the margin for supermarkets is about 1.5% after tax. Yet Fry's for instance that also makes around 1.5% after tax sells for less than Safeway that makes about 1.5% after tax. Additionally, WinCo sells for even less and they too make about 1.5% after tax. In short, one is more efficient that the other. WinCo for instance doesn't take credit cards (2% profit leak), has a much smaller wasteful Deli so the products they do stock are much cheaper (albeit less options). WinCo targets their stores in neighborhoods that care about prices. Cub plants their stores everywhere. Hence, stiff competition forces inefficient companies like SuperValu to cut overhead to better compete OR they lose their arses Pressure on Cub Foods, other grocery operations, send Supervalu into the red - StarTribune.com .
Quote:
Originally Posted by slamont61;50580857[B
It's also a very good practice to spend your dollars locally as opposed to shipping it off to chains based in other regions[/b].
I'll support the local guy when they can run their business efficiently. The margins on produce for instance are atrociously large and those help fund all kinds of areas in the store that lose money. Personally, I buy a lot of fresh items and that's where Cub rakes people over the coal. I yearn for a WinCo to come to town and plop some stores in the outer burbs. Cub will really understand what competition is.
IMHO, Cub is grossly overpriced. They are losing their shirts because the competition is praying on their inefficiencies.
I was reading an article about food costs in Minnesota it stated 60-65% of the cost is energy related (mainly transportation) and almost 50% of our fruit/vegetables come from California (Mexico and Florida are also big slice of this pie). So, if you are living in Arizona and with Mexico next door, the cost for transporting fruit/vegetables are much lower. The transportation cost is transferred to your total cost at the register. Actually, we should expect a higher price the farther you are away from the point of production. This is about transportation not competition.
But isn't Minnesota an agricultural state? Yes we are but 85-90 percent of our agriculture is tied into growing corn (not sweet corn) and soy. Even chicken, pigs, and cows are often exported to neighboring states or countries. The southern states produce most of the poultry consumed in Minnesota.
When I was in my teens, I worked on a vegetable farm. More specifically, Ed Fields & Sons in Andover. I worked from age 12 to 17. I saw what happened to the price of produce that the farmer charged the store (who drove their produce to various SuperValu locations). Their Cub Foods retail mark-up was horrendous. See Produce Price Index which shows market by region. As you see, LA (close to MX and the farms) is more expensive than hauling it across the country. Putting it another way, when I pay $99 cents for grapes in AZ, there is no amount of transportation to explain why Cub charges $3.99 a pound.
As a side note. I know several wholesalers that sell to Supervalu. They are brutal to deal with. They fight, kick and scream while negotiating. I heard they pay slow, dictate what is shrinkage, etc. They take a page out of Walmart's payment strategy.
I have a theory that for MOST people, how much they spend on groceries monthly is correlated to the # of different stores they shop at.
In other words, many people feel as though they are saving money by buying certain things at certain stores where they are cheapest, BUT STILL STOPPING AT ALL STORES. They swear they are saving money by buying TP at Costco (in isolation, on paper they are), but they overestimate their willpower to say no to other things. Because if you're like me, there's a certain minimum you're going to spend each time you walk in a store, otherwise you would not have justified the trip.
An example might look like this:
Shopper 1: stops 1/wk (4x total in month) at mediocre store (Cub), spends $125 each trip for a total of $500
Shopper 2: stops 3x month at everyday grocer (Hy-Vee)($300), 1x at Costco ($150), 1x at Aldi ($60), 1x SuperTarget ($80), 1x at Fresh Thyme ($50) for a total of $640
Shopper 1 shops at a terrible store, not necessarily known for anything, but only swipes his card 4x in the month
Shopper 2 tries to buy the best of everywhere, but never spends less than $50 (otherwise he wouldn't have gone) at any one place, and ends up swiping his card 7x in the month.
I'm not judging, as I'm victim to this mentality as well, although I've since canceled my Sam's membership for just this reason.
What are your thoughts on this? Seems the weeks I stop at the most stores, I spend the most.
I think it would also be reasonable to include the price of gas involved in driving to the multiple stops vs. the one stop once a week.
I can assure you it's not the lack of competition driving prices up in the region. Our profit margin at the retail end is so low, just over 1%, there isn't a whole lot of wiggle room to keep costs down. That is why we (SuperValu) are growing our business in the wholesale arena over retail. We're good at it.
Cub foods stores carry several SuperValu private brands which are high in quality and are as good as or better than name brand items. It's also a very good practice to spend your dollars locally as opposed to shipping it off to chains based in other regions.
I had also heard about the 1-2% figure on a MPR program. I was a bit surprised at that.
So, based on the numbers you can see, how much is regional price differences related to shipping vs. competitive or strategic pricing.
I realize this question is FAR more complicated than presented is this thread because of regional distribution centers, National distrubtion center, the last mile issue, employee wage earnings, seasonal costs, wholesale buying/bargaining power etc, but your insight would be very interesting and valuable to this topic. I am more interested in the vegetable/fruits costs and not the processed food aspect. Anyway, thanks for chiming in on this thread.
I had also heard about the 1-2% figure on a MPR program. I was a bit surprised at that.
So, based on the numbers you can see, how much is regional price differences related to shipping vs. competitive or strategic pricing.
I'm in my winter home in AZ enjoying 75 degree weather (I had to rub that in). I mentioned that nearly all of the local brutally competitive stores had grapes for around 99 cents a pound. Generally, if I buy grapes at Fry's, Bashes', WinCo, or Walmart, the highest price is $2.49 which is the out of season price. There is a USBank inside of our local overpriced Safeway so I go there once a week just to bank. For fun, I looked though the produce section to see how high their prices were. I noticed the price on their grapes were $3.99 a pound just like Cub would charge. Yet Fry's which is 300 yards away from this Safeway has a busy parking lot while Safeway lot is empty. I bought some bananas. I asked the checkout person if she has ever observed all 7 lanes having people in a line. She said no and there are employee rumors that they are going to close down this location. I'd assume the cost of buy, ship, and stock costs the same for a Safeway versus a Fry's literally 300 yards away. Yet Fry's sells it for significantly less $$. Again, I predict Fry's as well as Safeway work off of the same skinny 1-2% after tax margin. So Safeway isn't getting rich. In Safeway's case, they nail a lot fewer customers to barely scrape buy. Fry's on the other had is more efficient and goes after volume.
When you go to the outer burbs, people live there because the land (and therefore housing) is less expensive. It might be a bad place to buy a Mercedes dealership too. It seems it is also a bad place to put a Safeway. Customers in the outer burbs who are often cost conscious are not going to pay more money for Safeway supposedly for their "better service" (three checkout lanes were opened each staffed with an employee to bag; each employee were twiddling their thumbs at 6:30 at night). There is no doubt this store is losing big time as well as the suppliers who are constantly stocking full shelves and taking away the out of date products. IF Cub ever expanded to AZ and decided to charge the same price as they do in MN, they would have their butts handed to them.
Meanwhile, the closest Costco I'm told, sells $1M on average a day or $360M per year. That's about 2x the average store of $160M https://www.statista.com/statistics/...use-worldwide/. Costco is extremely well run and they work off of volume. It's why they crush Cub Foods on price. I'll buy twice as much salad mix and other items than I need from Costco in MN and toss what I cannot use; it's actually cheaper in many cases to over buy than pay Cub retail. In a perfect world, I'd love to see a WinCo come to MN. They would put a major dent in Cub's market share and make them become more efficient (or die).
So I just recently discovered Aldi and it amazes me how much we're able to save on groceries compared to buying at Cub, Target, Lunds, Kowalskis. Yes they do sell a few inferior products here and there (don't go near the breakfast cereal, blech), but for the basic staples there is nothing close from a price standpoint. I'm wondering why more people don't shop there? Are people choosing to shop at Cub because they're getting sucked in by the gas discount? I really don't get it. If we shop at Aldi for a whole year I'm estimating our annual grocery savings to be a few thousand dollars.
I've heard that hey have a huge organic selection these days, and I believe they eliminated a number of bad ingredients throughout their offerings.
Just like MN-Born-n-Raised, we experience the same sticker shock when grocery shopping in Phoenix vs. Minneaoplis. Everything is three-or-four times higher in the Twin Cities than in the Valley. That discrepancy in price is even higher in Greater Minnesota. Food prices in rural Minnesota are far higher than Cub.
What gets me is the lack of quality meats and produce in Minneapolis St Paul. Food consistently goes bad and spoils well before the best buy date. This isn't usually a problem in Arizona.
Another trend I've been noticing the past decade in MSP, is the rudeness of retail employees ( not just grocery), serious mistakes being made, and general disgust that you're in their store.
Contrast that with the Valley, where yes, a lot of the employees like in MN, appear to have had rough lives, are living on low wages, but they still are very pleasant, helpful, talkative, friendly and are glad you are there at the Ariz stores.
Have not noticed a difference between the Union stores like Fry's Marketplace and Safeway versus the non-union stores such as: Basha's, Wal-Mart or Super-Target.
Fry's is our preference followed by Safeway. We may be the only family in Arizona not close to a Basha's. The Albertsons by us closed, and Food City isn't one of our favorites.
It's too bad that Hy-Vee is slowing their Twin Cities expansion to only completing those locations now under construction, and Meijer was met by such hostility when they proposed to build in: Lake Elmo, Vadnais Heights and Brooklyn Park. The Michigan based retailer decided to concentrate on other Midwest states like: Wisconsin, Ohio, Illinois and Michigan.
There are definitely adjustments we make moving between Arizona and Minnesota a number of times during the year.
Yes, I really like Fresh Thyme, and glad they finally came to the Twin Cities and St. Cloud. In addition to their weekly specials on produce and meat. Their everyday prices are great too. The stores are clean.
My family members in Michigan and Illinois have been shopping at Fresh Thyme for awhile now; long before they opened in Minnesota. The new location near the University of Minnesota (Prospect Park) opens later this month.
A similar store named Sprouts is very popular in the western states. They are everywhere in California and Arizona, and I frequently shop there as well.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
Nationally, the margin for supermarkets is about 1.5% after tax. Yet Fry's for instance that also makes around 1.5% after tax sells for less than Safeway that makes about 1.5% after tax. Additionally, WinCo sells for even less and they too make about 1.5% after tax. In short, one is more efficient that the other. WinCo for instance doesn't take credit cards (2% profit leak), has a much smaller wasteful Deli so the products they do stock are much cheaper (albeit less options). WinCo targets their stores in neighborhoods that care about prices. Cub plants their stores everywhere. Hence, stiff competition forces inefficient companies like SuperValu to cut overhead to better compete OR they lose their arses 
I mentioned that nearly all of the local brutally competitive stores had grapes for around 99 cents a pound. Generally, if I buy grapes at Fry's, Bashes', WinCo, or Walmart, the highest price is $2.49 which is the out of season price. There is a USBank inside of our local overpriced Safeway so I go there once a week just to bank. For fun, I looked though the produce section to see how high their prices were. I noticed the price on their grapes were $3.99 a pound just like Cub would charge. Yet Fry's which is 300 yards away from this Safeway has a busy parking lot while Safeway lot is empty. I bought some bananas. I asked the checkout person if she has ever observed all 7 lanes having people in a line. She said no and there are employee rumors that they are going to close down this location. I'd assume the cost of buy, ship, and stock costs the same for a Safeway versus a Fry's literally 300 yards away. Yet Fry's sells it for significantly less $$. Again, I predict Fry's as well as Safeway work off of the same skinny 1-2% after tax margin. So Safeway isn't getting rich. In Safeway's case, they nail a lot fewer customers to barely scrape buy. Fry's on the other had is more efficient and goes after volume.
It seems it is also a bad place to put a Safeway. Customers in the outer burbs who are often cost conscious are not going to pay more money for Safeway supposedly for their "better service" (three checkout lanes were opened each staffed with an employee to bag; each employee were twiddling their thumbs at 6:30 at night). There is no doubt this store is losing big time as well as the suppliers who are constantly stocking full shelves and taking away the out of date products. IF Cub ever expanded to AZ and decided to charge the same price as they do in MN, they would have their butts handed to them.
That's about 2x the average store of $160M 
