Grocery store affordability hard to measure

March 4, 2011
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Will Whole Foods Market—which plans to replace Hi-Lo Foods at 415 Centre St.—be more expensive than its predecessor? It could be, or not, a national expert told the Gazette.

“We deal with this question all the time. It depends on what you are comparing,” said United States Department of Agriculture analyst Ephraim Leibtag.

According to popular perception, Hi-Lo—a market that catered largely to JP’s Latino community—was also a boon for JP’s low-income residents because it offered low-price foodstuffs and sundries.

Whole Foods markets itself as a purveyor of natural and organic products, and offers options that are more expensive than other grocery stores, but it does have a generic store brand for many products.

Many residents say they expect Whole Foods prices to be significantly higher than Hi-Lo’s were, but others say that is an unfair perception. Unscientific surveys conducted by the Boston Globe and the Jamaica Plain Neighborhood Development Corporation (JPNDC) show differing results on the issue.

Leibtag said it is likely that a grocery store—like Whole Foods— that focuses on higher-end products, and attracting shoppers who want to buy those products, could be slightly more expensive across the board.

Before comparing prices, it is helpful to “gather information on what people spend their money on,” Leibtag said. No local survey did that.

The average shopper’s “specific goal” is not to “go in and pay the bare minimum for 10 or 20 products,” he said.

From there, one could develop an “apples-to-apples” survey, like the local grocery store comparisons, he said, but it is probably more useful to select 20 to 50 popular items for that type of comparison.

A more complicated survey methodology would look at what goes into shoppers’ grocery baskets at different stores from week to week, he said.

That method allows analysts to look more closely at supply-and demand factors that go into grocery store pricing, Leibtag said.

One major factor in price variations at different grocery stores is how popular different items are. Cheaper brands might be slightly more expensive at grocery stores where they are not as popular, or might not be offered at all, he said.

The work Leibtag has done—comparing price differences between groceries sold by big box stores and traditional grocers—has combined both methods, Leibtag said.

Nationally, Leibtag said, food prices are expected to rise at least 3 to 4 percent in the coming year. That could add around $100 per person to the average annual grocery bill, according to information from the national Bureau of Labor Statistics.

Leibtag warned that the projected food-price inflation could be low. “In three months we could be talking about higher inflation,” he said.

He also noted that national chains are often better suited to absorb the costs of increased food prices and offer cheaper prices. In general, larger chains have better supply-chain management— meaning more control over their inventory and distribution—and more favorable terms with their contract suppliers, because they are purchasing in larger quantities, he said.

The perception that Whole Foods is expensive received backing from a study by the Jamaica Plain Neighborhood Development Corporation (JPNDC). JPNDC staffers conducted side-by-side food price comparisons for 13 items available at Hi-Lo, a Whole Foods store in Brighton and the Stop & Shop in Jackson Square. The JPNDC survey found that at Whole Foods the items cost $52.75, 39 percent more than Hi-Lo’s price tag of $37.83. Stop & Shop’s total came to $42.50, 12 percent higher than Hi-Lo.

Boston Globe blogger Rob Anderson got different results when he looked at different items. He conducted two surveys. The first compared prices at Hi-Lo, Stop & Shop and a Whole Foods on Beacon Hill, as well as other Boston-area groceries for flour, pasta, cereal, eggs, soap, milk and toilet paper. The second, focused solely on produce and meat.

For the items in the first study, Anderson found that Whole Foods and Hi-Lo’s prices were roughly the same. Stop & Shop was cheaper, coming in at $14.35.

Anderson did not present the full results from the second part of his study, and he was unable to include Hi-Lo prices, because he conducted it after Hi-lo closed Feb. 13. He said the results indicate that prices for fruits and vegetables vary widely, but that Whole Foods’ “organic and responsibly raised” meat is significantly more expensive than at other stores.

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