Retail Grocery Pricing: Inner City, Suburban, and Rural Comparisons

Abstract

Previous studies of price comparisons between suburban and urban areas have, by their own admission, encountered deficiencies in the data, largely because of the complexities in data collection. An equally serious question is the comparison of rural grocery prices to those of metropolitan areas. The magnitude of the issue coupled with the deficiencies of knowledge in the composition of food budgets make grocerypricing research most timely. Contrary to widely advanced belief, the grocery prices faced by urban poor or, as more usually defined, residents of the inner city are not significantly greater than prices in suburban groceries. In some instances they are lower. Donaldson and Strangways (1973) reported that the poor consistently received groceries at a lower price than those of the stores in more affluent neighborhoods. These findings confirmed the earlier conclusions of Alcaly and Klevorick (1971), who found that grocery prices tended to be elastic and not discriminatory toward the poor of the ghetto areas: . . rarely does the price of a commodity tend to increase as the median family of the neighborhood decreases. In general, the price-income relationships found commodity by commodity, in both chain stores and other stores, are insignificant or show that the commodity's price rises with the level of neighborhood income (p. Grocery-pricing difference between inner city and suburban neighborhoods has been a repeated topic of concern and study. This current study expands upon these previous designs with the inclusion of rural areas. The data collected indicated that people in the rural areas are in the upper extreme of the price spectrum. Conversely, the inner city prices are decidedly lower than either suburban or rural grocery prices. These price differences were evident not only in the composite prices but also in the major product categories. While these results confirm the findings of prior inner city pricing practices, the disclosure of the higher prices in rural areas adds a significant dimension to pricing studies.