Opinion: Bringing grocery stores back to poor and rural areas requires reviving a 1936 law that is now ignored

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A change in federal policy during the 1980's created modern-day "food deserts" in poor and rural communities. While the revision was intended "to reward the biggest retail chains for their efficiency," writes Stacy Mitchell in her opinion for The Atlantic, it put local grocery stores out of business while increasing food costs in areas already hampered by poverty and depopulation. . . . "Food deserts will not go away until that mistake is reversed."

Historically, local grocery stores were shielded by the Robinson-Patman Act. "The law essentially bans price discrimination, making it illegal for suppliers to offer preferential deals and for retailers to demand them. It does, however, allow businesses to pass along legitimate savings," Mitchell explains. For more than four decades, the Robinson-Patman Act successfully maintained the delicate balance of U.S. grocery store competition between big chains and local stores.

In the 1980s, the Reagan administration didn't agree with the "tough antitrust enforcement" that previous administrations had provided through the Robinson-Patman Act, so "the government simply stopped enforcing it," Mitchell writes. "That move tipped the retail market in favor of the largest chains. . . .Walmart was the first to fully grasp the implications of the new legal terrain. It soon became notorious for aggressively strong-arming suppliers, a strategy that fueled its rapid expansion."

Once the Robinson-Patman Act was dismantled, independent grocers and smaller supply businesses couldn't compete on price and were squeezed out of their neighborhood markets. "Price discrimination spread beyond groceries, hobbling bookstores, pharmacies, and many other local businesses," Mitchell reports. "From 1982 to 2017, the market share of independent retailers shrank from 53% to 22%."

Meanwhile, mega-retailers such as Walmart and Safeway continue to dominate sales but still fail to meet needs in rural communities. Why? They don't have to. "Walmart can capture spending across a wide region by locating its supercenters in larger towns."

Stacy Mitchell
(Photo by Brian Fitzgerald via ILSR)

To create an economic atmosphere where smaller local grocers and retailers could succeed, the Robinson-Patman Act will need to be revived and applied. Mitchell adds,"Requiring a level pricing playing field would restore local retailers’ ability to compete. This would provide immediate relief to entrepreneurs who have recently opened grocery stores in food deserts, only to find that their inability to buy on the same terms as Walmart and Dollar General makes survival difficult."

Stacy Mitchell is a co-director of the Institute for Local Self-Reliance, where her research focuses on economic concentration and the health of local economies.