Independent supermarkets in New York City are facing a new competitive threat, but it isn’t coming from the “big box” stores—it’s coming from the supply chain.
When manufacturers like Mondelēz International discontinue Direct-Store-Delivery (DSD), they don’t just change a shipping route; they change the economic viability of small retailers. In this episode, we break down how the loss of manufacturer-provided logistics increases the marginal costs for independent grocers, potentially leading to higher retail prices and fewer neighborhood options.
We explore:
The economics of vertically integrated vs. independent supply chains.
How “price-free” service changes can weaken market competition.
The legal landscape surrounding the Robinson–Patman Act and its implications for discriminatory logistics.
For a complete article and illustration of this case, go to:
Distribution as Discrimination: How Supply Chain Decisions Can Raise Grocery Prices Without Changing Wholesale Prices
The competitive importance of vertical distribution arrangements has been a key focus in antitrust economics for many years. The majority of traditional research on the behavior of upstream firms has concentrated on the variations in wholesale prices among downstream purchasers. However, non-price inputs—such as delivery services, inventory management, and in-store merchandising—may play an equally important role in shaping competition among retailers by affecting their effective procurement costs.
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