FTC scrutinizes Walmart food prices
Walmart Inc. was one of three national grocery store chains scrutinized by the Federal Trade Commission in a report released last week as part of a look into persistent high food prices.
In the report, the FTC said supply chain disruptions caused by the pandemic led to periodic shortages of groceries and household necessities. The commission said big-box retailers like Walmart took advantage of their size and buying power to press for favorable allocations of products at the expense of smaller retailers.
The report, released Thursday, also calls for further investigation into whether Walmart and other large retailers are continuing to charge customers for these items even though the pandemic’s supply chain issues have eased.
The FTC also found that Walmart tightened its ontime in-full policy requirements to pressure suppliers through the threat of fines to get their goods to stores ahead of other retailers during the pandemic.
Walmart responded to a request for comment on the report’s findings with a brief statement, saying the company “is committed to helping people save money so they can live better.”
“We know that price matters to our customers, and they can count on us to be an advocate for them to get the best prices possible,” Walmart said. “Fighting inflation is in our DNA, and we have worked hard to keep prices low.”
The FTC’s 67-page report makes no mention of inflation.
The report is titled “Feeding America in a Time of Crisis: The U.S. Grocery Supply Chain and the Covid-19 Pandemic.”
To conduct the study, the commission said it sent orders for specific supply chain information to three grocery retailers, three grocery wholesalers and three grocery producers “to better understand their practices and responses to supply chain disruptions.”
The three grocery re
tailers that received orders from the FTC were Walmart, Kroger and Amazon.
A copy of the order form sent to the grocers is included with the report as Appendix A.
The order requested information and documentation concerning the grocery retailers’ supply chain issues.
Walmart is singled out in the report as a user of an on-time and in-full program that sets benchmarks for suppliers who give Walmart a delivery target. If the supplier misses the time frame or the amount of goods they told Walmart to expect, the retailer fines the company.
Walmart isn’t the only retailer that uses such a program. It was an early adopter of on-time and in-full, with other retailers following suit. However, each retailer sets its own parameters for its program.
Donnie Williams, executive director of the University of Arkansas’ Supply Chain Management Research Center, said suppliers likely “weren’t necessarily responding so much to a fine as much as they were looking at ‘where are my strategic relationships?’”
“If we’ve got to allocate inventory, then we’ve got to keep our relationships in good standing,” Williams said.
“The strategic partners are always going to be the ones who are served first,” Williams said. “And while some people may say that’s nefarious, I would say that’s pretty standard in business.”
Grocery wholesalers that received orders from the FTC were C&S Wholesale Grocers, McLane Co. and Associated Wholesale Grocers.
The producers of food or grocery and household products that were issued orders for the report were Tyson Foods Inc., Procter & Gamble and Kraft Heinz.
Springdale-based Tyson Foods wasn’t mentioned specifically in the report other than a paragraph describing the company.
The FTC said it also looked at publicly available data on industry costs and revenues.
The investigation is the culmination of a larger one that the White House initiated in 2021 “to better understand supply chain disruptions throughout the economy,” the commission said.
“As part of that broader review, the Federal Trade Commission undertook this examination of the grocery supply chain to better understand how pandemic-related supply chain disruptions affected competition among retailers, wholesalers and producers, as well as the impacts on consumers and businesses,” the commission said.