It’s painfully obvious to anyone responsible for a family’s supermarket shopping that grocery bills in Massachusetts, especially the Boston area, have been rising at a faster clip than in most of the country, even as overall inflation has abated somewhat.
Consumers who live in cities with higher costs of living tend to pay more for groceries. But over the past 15 months, shoppers in Boston and elsewhere in this state have seen their grocery bills increase higher than overall inflation compared to other metro areas across America.
According to a recent study by Consumer Affairs, grocery prices in Massachusetts climbed by 6.6% over a 12-month period, placing the state among the top six in the nation for rate of increase, behind New Jersey (6.8%), West Virginia (6.9%). Maryland (7%), Vermont (7%), and Pennsylvania (8.2%).
It should be noted that every New England state had at least a 5.9% price increase over that same period.
As for metro areas experiencing the largest price increases over the last 12 months, Boston (6.7%) ranks the fifth highest, trailing just Baltimore (7%), Syracuse (7.1%), Albany, N.Y., (7.25). and Philadelphia (7.4%).
A Boston Globe analysis of Consumer Price Index data from January 2023 to March 2024 for the Boston-Cambridge-Newton area found that the categories experiencing the largest and most consistent price increases were cereal and bakery, dairy, and nonalcoholic beverages.
The nagging inflation demonstrates Massachusetts’ particular challenges, such as high transportation and energy costs and the lack of a large grocery retailer with enough clout to cut prices across broad food categories, forcing others to do the same.
As a result, the extra costs have eroded consumers’ purchasing power, likely prompting some shoppers to forgo or reduce purchases of foods to save money.
Since the 1990s, two of the most disruptive forces in retail have been Walmart and Amazon. Both companies rapidly expanded due to their willingness to lose money at first by charging prices significantly lower than competitors, eventually putting many out of business.
These retail giants also use their enormous clout to pressure suppliers into selling products to them at big discounts, which they in theory would pass on to consumers.
But aside from acquiring Whole Foods, Amazon has struggled to build a grocery business, analysts say.
Based on the number of locations, Walmart, Albertsons Cos. and Publix make up the largest grocery chains in the United States. Among those three, Walmart’s the dominant player, with twice as many stores (4,615) as Albertsons and more than three times as many as Publix.
But Walmart has had a tough time penetrating denser urban markets like those in the Northeast. The company operates about 20 stores in Boston suburbs, including one in Tewksbury, the headquarters of Market Basket, the area’s and state’s most popular supermarket chain.
While national grocery conglomerates like Walmart typically place among the most popular grocers — if not the most popular — in any given region, local and regional favorites can give the big box stores a run for their money.
And that’s what’s occurring in this fractured Massachusetts marketplace, Walmart actually trails Market Basket and Stop & Shop for local market share, according to Chain Store Guide. The rest of the grocery pie is split among a hodgepodge of national and local chains.
Market Basket owns a 20.5% share of the grocery business in this state, followed by Stop & Shop (14.8), Walmart (12.3), Shaws (11.4), Whole Foods (7), BJ’s Wholesale Club (6.8), Costco (4.2), Brothers Marketplace (3.2), Wegmans (3.1), and Trader Joes (3).
As we’ve seen locally, shoppers often develop allegiances to their local favorites.
That’s certainly the case with Market Basket. That supermarket chain, built by the Demoulas family, has created an almost cult-like following.
Customers demonstrated a unique example of brand loyalty back in 2014, when they ironically boycotted Market Basket stores until ousted CEO Arthur T. Demoulas regained his previous position after buying out the interests of his cousin Arthur S. Demoulas’ side of the family.
And despite the grocery inflation, not all supermarket prices are the same.
For example, Market Basket’s “more for your dollar appeal” has seemingly grown as prices rise. That’s why market researcher Dunnhubby rates it as the nation’s best grocery chain in these inflationary times.
Brand allegiance and this state’s complex supermarket environment may lead to higher than average prices in some instances, but it’s also prevented super stores like Walmart from pricing out the competition.
Corby Kummer, director of the Food and Society policy program at the Aspen Institute, actually attributes the increased costs to the unique market dynamics of the state.
“[Prices are up] because of everything we believe in, which is keeping out monolithic national chains that drive small businesses out of business,” Kummer explained recently on Boston Public Radio.
That’s apparently how Massachusetts consumers like it – a mix of local, regional and national chains, with each holding – aside from Market Basket and a few others – a modest share of the market.
