How the 'water bed effect' is costing you at the grocery store
Walmart is known for getting the absolute best prices and terms from its suppliers.
"So when Walmart demands special deals, suppliers can't say no," Mitchell wrote."And as suppliers cut special deals for Walmart and other large chains, they make up for the lost revenue by charging smaller retailers even more, something economists call the water bed effect."The water bed effect or phenomenon has been used to explain a wide range of systems, fromto computer code.
The grocery industry has become more consolidated over the last few decades. Walmart commanded about one-quarter of US grocery sales in 2021, according to Euromonitor. Kroger represented about 8%, followed by Albertsons at just under 5%. That consolidation is set to continue, with Kroger and Albertsons seeking federal approval forThe subject of grocery consolidation was a concern to small grocers before the most recent merger proposal.
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