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Free Minds & Free Markets

How Grocery Stores Got Good

The Amazon/Whole Foods deal is just the latest chapter in a long story of progress.

Grocery: The Buying and Selling of Food in America, by Michael Ruhlman, Abrams Press, 307 pages, $28

Abrams PressAbrams PressOf all the stories in the busy news cycle of 2017, the one with the most meaningful long-run effects may be Amazon's purchase of Whole Foods. What this marriage means for the future of the food industry remains to be seen, but the combination of Amazon's reach and delivery skills with Whole Foods' high-quality products opens many possibilities.

In Grocery, his look at the central role the grocery store has played in American life, food writer Michael Ruhlman more or less predicted the coming together of Amazon and Whole Foods. In 1988, he notes, Walmart opened its first Supercenter, enabling it to extend its skill in distribution and cost cutting to the grocery business. That same year, Whole Foods opened its first store outside of Texas, starting the process of becoming a national chain and establishing a new sort of shopping experience. "The next sea change in food retailing," Ruhlman wrote, prior to the purchase being announced, "may come from another master of distribution, Amazon."

Ruhlman made his name writing about great chefs and cooking, but here he takes on the social and economic changes in the grocery business over the last century. He does so through a study of Heinen's, a mid-sized regional chain based in his hometown of Cleveland. Ruhlman uses the company's history and practices as a window on the role the grocery store has played in American culture.

As recently as the 1970s, grocery stores tended to be smaller, had far less variety and quality of food, and weren't always as clean as they are now. Such changes are among the most powerful evidence we have that nearly all Americans today surpass the living standards enjoyed by even very wealthy people a generation or two ago.

Growing up in an upper-middle-class Detroit suburb in the '70s, I knew nothing of avocados, kiwi fruit, or basmati rice. The closest a grocery store had to a "ready to eat" dinner was some frozen pizza that barely deserved the name, not the variety of hot, fresh food-to-go found at a typical supermarket today. When we consider what's now available at food palaces like Whole Foods or Fresh Market, or even just at Kroger, their 1970s counterparts seem closer to the Soviet experience than the modern American one.

This is part of a longer trend. At the dawn of the 20th century, Ruhlman notes, the average grocery store carried about 200 products. By 1975, it had about 9,000. The number now approaches 50,000. The grocery store of my youth had 5 or 10 chip options; today, chips command an entire aisle. Walk past the dairy cases and consider the varieties of milk, cheese, and eggs, then ask someone in his 50s what his dairy options used to look like. And these new choices are available and affordable even to relatively poor Americans. Food takes up a substantially smaller portion of the average family's budget than it did in the past.

The changes don't stop there. At the turn of the 20th century, most people purchased their food from a specialty store. You got your meat from the butcher, your dry goods from the general store, your dairy from someone else. Perhaps your vegetables were homegrown. The idea of a broader "grocery store," let alone a "supermarket," was still decades away.

The key early player in this evolution was A&P—the Walmart of the early 20th century in terms of its size, its buying power, and its influence on its competition. A&P's innovations in inventory and management let it dramatically reduce grocery costs for a large group of consumers, much as Walmart has done; it too was vilified for outcompeting mom-and-pop stores in the process.

The emergence of a true supermarket—an establishment carrying a wide range of perishable and nonperishable food under one roof—was the result of several non-food innovations of the 1920s and '30s. There was the shopping cart, which liberated clerks from getting things and enabled people to buy more at one time. Businesses started locating stores away from downtown, in places with more parking and cheaper rents, and made stores larger, to capture lower average costs. There were also technical advances in refrigeration and freezers, and the development of mass-produced frozen food that came with them.

Heinen's own history reflects these changes, making it an excellent case study. It began as Joseph Heinen's butcher shop in the 1920s and, through a series of innovations such as self-service meat, grew into what is thought to be Cleveland's first supermarket in the 1930s. It soon became a chain and, like many other chains, its stores grew larger in succeeding decades. It kept prices low by becoming one of the first chains to build a central warehouse and production facility to receive deliveries from across the country.

Later, the company benefitted when organic and high-end food began to go mainstream. Whole Foods' launch enabled a large number of small suppliers to thrive, making similar products available to medium-sized chains like Heinen's through the 1990s and 2000s, as consumers demanded more of them. Heinen's now operates 23 locations in Ohio and Illinois.

These relationships with smaller suppliers are a key part of Rulhman's book, which documents how consumer demand has made groceries more transparent about the sources of the food they sell. Several chapters go into depth about the economic relationships that a chain like Heinen's has with smaller sellers to get exactly the sort of grass-fed beef its customers want. As Ruhlman observes, the core of the grocery business is that sellers have to respond quickly to consumer demand.

Though he lacks the economics background to put it this way, Ruhlman is showing how falling transaction costs driven by competition and technology have allowed smaller players to survive while providing niche products. Even as large firms like Walmart and Target have moved into the grocery business, there has never been a better time for small sellers to find success with distinctive products that appeal to more discerning buyers. Given what Amazon has done for small publishers, we might expect this trend to continue in the Amazon/Whole Foods future.

Ruhlman distrusts corporate food, but he isn't anti-market; he has a libertarian sensibility about empowering customers to make informed decisions. His detailed descriptions of how our food gets from the farm to the local Heinen's furthers his goal of making us more informed about what we eat.

He also offers extended commentary on the science of food. He's a major skeptic of trendy diets, "detoxification" treatments, "purges," and other fads with no basis in nutritional science. His wise advice is to cut way down on sugar and, as Julia Child used to say, eat things that taste good. He frequently acknowledges that we just don't know a lot about how different foods affect our health, as witnessed by recent reversals in views on fat. He argues as well that while genetically modifying crops is not by itself a problem, the pesticides used to grow them might be.

Grocery engages us in the wonder of the unplanned order of the market process. When Ruhlmann notes that 11 million bunches of broccoli are distributed to American grocery stores every week all year long, he reveals a giant and enormously complex process that happens without a master planner.

The evolution has hardly ended. Amazon's late August announcement that it is cutting prices on several Whole Foods items is just what Tom Heinen and other grocers fear. Ruhlman suggests that we will see the non-perishable food at the physical center of traditional grocery stores slowly disappear, particularly if Amazon continues to get more effective at delivering cheap jarred, canned, and boxed goods directly to our doors. Instead, brick-and-mortar stores will supply what's now around the perimeter of the supermarket: high-quality, customized produce, meat, dairy, and both hot and frozen prepared foods.

This would mean that grocery stores would reverse their century-long physical expansion and return to a size we associate with years gone by. The days of the stand-alone butcher might be our future as well as our past. But this time around, the quality and variety will far surpass what our parents and grandparents could buy.

Ruhlman's book is a terrific case study in the benefits of competition and the ways markets have enabled even Americans of modest means to live better than the rich of the not-so-distant past. With Amazon bringing to the grocery business the cost savings, variety, and speed of service that have improved our living standards in so many other realms, there is every reason to expect an even more cornucopian future.

Photo Credit: Abrams Press

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  • Fist of Etiquette||

    Wake me when they start emailing me my online grocery purchases.

  • Tom Bombadil||

    Do you have a 3D printer?

  • Fist of Etiquette||

    Wake me when I can download a 3D printer in a zip file.

  • AlmightyJB||

    Wake me when I can get cocaine delivered by a topless hottie.

  • Scarecrow Repair & Chippering||

    Is that a knocker-knocker joke?

  • Fist of Etiquette||

    I'm not your alarm clock.

  • Telcontar the Wanderer||

    I'm not your alarm clock.

  • Fist of Etiquette||

    Read the fine print.

  • Telcontar the Wanderer||

    I'm not your paralegal either.

  • SIV||

    As recently as the 1970s, grocery stores tended to be smaller, had far less variety and quality of food, and weren't always as clean as they are now. Such changes are among the most powerful evidence we have that nearly all Americans today surpass the living standards enjoyed by even very wealthy people a generation or two ago.

    Ah, the old "Cornelius Vanderbilt didn't have an Obamaphone".

  • C. S. P. Schofield||

    In what detail is that NOT true?

  • SIV||

    The highlighted portion in the quote is not true.

  • gaoxiaen||

    State College, PA really sucked for shopping because it sucked for parking. The crony tow truck drivers (whose trucks I disabled whenever tempted, with a screwdriver, when passing by an unguarded radiator) can suck a bag of dicks. You got thirty dollars from me, but I cost you several thousand.

  • gaoxiaen||

    I got three when I picked up my impounded car. They had tow trucks parked within the same fence as my car. Dumbasses.

  • Scarecrow Repair & Chippering||

    You were sticking it to the man!

  • creech||

    When were you in Happy Valley? Now, there's all sorts of grocery shopping outside of town with lots of free parking.

  • Jerryskids||

    I've long said that Walmart isn't a retailer, it's a logistics company. As Walmart's CEO said, Walmart's competition isn't Target, it's Amazon. (And if you've ever dealt with Grainger, you know Grainger had a distribution system light-years ahead of anybody else 30 years ago.) But it makes me wonder what happened to UPS - UPS set up a packaging, processing and distribution center where small on-line retailers could operate their businesses right out of UPS. Wholesalers would ship their goods straight to UPS, as the goods were sold UPS would package them up and ship them out to the customer, the retailer never handled the goods. And yet when we order stuff from Amazon we specify FedEx shipping because UPS routinely delivers late , and quite obviously because they need extra time to beat the shit out of the package and guarantee it gets damaged well before they catapult it onto the porch. UPS used to be the standard for shipping, they suck ass now.

  • C. S. P. Schofield||

    It shifts. UPS in our area (Doylstown PA) is still fine. My experience of FedEx is that they are reliable in an urban setting, next to hopeless in the countryside. I think they believe that werewolves roam the hills.

  • Kaatje||

    Definitely. Walmart sells the weirdest stuff straight from Asia like knock off aerial yoga equipment. $195 for the brand names, ships to your home via Walmart for $29.95.

    I started buying muesli (European style granola) online from them as the Walmarts in NM don't carry it. I plan on buying a lot more food on-line from Walmart, over Amazon. Can't deal with the Whole Foods prices and I hate organic.

    A lot of the bigger stores, even Lowe's and Home Depot sell items you wouldn't associate with DIY like candles and fake flowers. All mass produced in Asia of course, but they do are starting to operate like a distribution/logistics center.

  • Jerryskids||

    And I have a question for you guys - do you give your orphans the day off for Thanksgiving? Mine are complaining that today is just another workday for them, but it's not like they have anything to be thankful for nor any family to share the day with and they sure as hell aren't getting anything other than the normal gruel to eat and it somehow seems wrong and illogical to give my orphans Thanksgiving off when the hard-working orphans are right at the top of my list of things I'm thankful for.

  • Don't look at me.||

    If I gave them the day off, who would cook the sumptuous feast I have planned for today?

  • BestUsedCarSales||

    I consider what I do a day off, because I know I'm a great person. Some people say that it's just cruel to strap them down and make them watch me eat. But I figure they're not working, that's a day off

  • Don't look at me.||

    Well it's not a full day off. They did all the cooking first, right?

  • <Unpastable>||

    I've found that it's a nice gesture to lower the sawdust concentration in the orphans' gruel for holidays. They are more productive when they have something to look forward to.

  • Tom Bombadil||

    "it somehow seems wrong and illogical to give my orphans Thanksgiving off when the hard-working orphans are right at the top of my list of things I'm thankful for."

    Funny shit.

  • Azathoth!!||

    Complaining?

    Why haven't you glued their mouths shut?

  • Telcontar the Wanderer||

    IV tubes and gastric buttons can easily lead to infection in work environments such as those found in the culinary, sanitation, and waste disposal industries, as can the exposed tissues generated by repeatedly opening and re-gluing the lips, increasing turnover by as much as 15% and incurring significant cadaver disposal, re-hiring and re-training costs. Substituting simple corporal disciplinary measures is a much more cost-effective and productivity-enhancing way to generate real-world solutions for employee morale while enhancing your reputation to customers and maximizing your stock value.

  • vek||

    I've been ordering certain bulk dry goods online for years. It can save a lot of coin, but some things are simply not practical for door to door delivery. Heavy items don't do well because they're expensive to ship when it's not freight like going to grocery stores. So 25 pound bags of rice not so much, but works great for tea or spices. It will be interesting to see how it all pans out. I've been trying not to buy from Amazon whenever practical. It's not that I don't think they'll stumble eventually, or that I fear them really taking over the world... But when behemoths get too comfortable they do start to slip. Plus most of the stuff I buy not from them is either comparable pricing or lower from specialty outfits with a niche.

  • Kaatje||

    Amazon's return policy sucks compared to two years ago. Absolutely sloppy and no help from customer service. They took the ship it yourself option out too.

  • MikeP2||

    Sounds like a poorly researched book reaching wrong conclusions.

    Retail diversity and growth in all markets has been driven by optimization of the supply chain and a huge reduction in warehousing time and cost. And this is the direct result of the information age, allowing enormous inventories to be controlled quickly and cheaply. The reason we can enjoy Asian fruits in a Nebraska big box grocery store, is because we have eliminated shipping delays caused by inventory management. Mom and pop stores did this by focused control on small inventories. Now, walmart, whole foods, and the like use massive databases to do the same far more cheaply.

  • <Unpastable>||

    Just In Time delivery. Extremely efficient; even more extremely fragile.

  • Kaatje||

    I agree a bit...but wasn't the book from over a decade ago?

  • Brian||

    Happy thanksgiving, you beautiful bastards.

  • Domestic Dissident||

    The psychotic Block Insane Yomommatards at GQ Magazine tell their fellow junior grade Alinskyites that it's their civic duty to ruin Thanksgiving by bringing up Trump. That is the actual headline of this bitter, unhinged piece.

    Have a happy and safe Thanksgiving, even to all you leftards and professional fake libertarians of Reason magazine!

  • BestUsedCarSales||

    Anyone else thing Whole Foods is overrated? After finishing grad school and becoming a wealthy working man I shopped there for a bit. But I didn't think there stuff was particularly good, and it cost 3 times more.

    Also, endless patchouli.

  • Sevo||

    I think it was "The Underground Economist" who pointed out that WF is expensive 'at eye level'. They peddle their shelf space like all grocers do, and they award the high-end stuff the eye-level shelves.
    My wife has learned to look one or two shelves below, and often finds some real surprises. She likes bubble-water and was getting it at Costco. The '2-shelf-down' WF water is cheaper. And not by a penny or two.
    Their meat and fish are pricier than Safeway, but cheaper than Bryon's or any of the other really good meat sources.
    So I think it can be Whole Paycheck, but you can pick and choose for the deals/quality.

  • Jerryskids||

    I visited a WF once, the first time I ever saw one, and it looked kinda like the Harry's they used to have in Atlanta. A lot of expensive stuff but a lot of it is high-quality stuff you can't find anywhere else so you just buy what you think is worth a premium price. I'm not paying top dollar for peanut butter because the store brand stuff I buy at Food Depot is good enough, but I'll pay good money for good quality figs and there's only one place you're going to find them. My niece goes to a Trader Joe's once a month or so, not doing regular weekly shopping there for milk and eggs and bread, but picks up a selection of specialty stuff her family really likes.

  • StackOfCoins||

    All I remember from my WF was a large barrel of "artisinal soaps" which looks vaguely like mineral samples.

  • BestUsedCarSales||

    Trader Joe's is weird because it's not actually super expensive. They just have a very limited inventory.

  • Kaatje||

    Nice! Thanks for the tips.

  • Kaatje||

    I hate Whole Foods and even Sprouts. Horribly overpriced. Trader Joe is a mixed bag, good stuff, cheap sunflowers but I hate the shoppers. I once asked Sprouts employees for inorganic apples, "You know, the cheap ones" and they didn't understand.

  • BestUsedCarSales||

    But not even price. I will admit that I haven't shopped enough to comment on Sevo's deal finding. Every time I buy stuff there, Particularly baked goods and such, I think they're not very good. Not just for the price. Just period, not anything special.

  • Earth Skeptic||

    I have to give WF credit, in the strip mall waste land of Houston, for opening mini-pubs in their stores a few years ago. At least some food shopping trips could include a pleasant delay over a craft beer or glass of wine.

    (But then at least one new, larger store that replaced the mid-size WF across the street--with pub--reverted to the previous prohibitionist model.)

  • Sevo||

    OT:
    Mozilla gave me a link to a GQ on-line story about the assault on R. Paul:
    https://www.gq.com
    /story/inside-rand-
    pauls-neighborhood-fight
    It's GQ, so as you might expect, they didn't quite blame him, but managed to locate a couple of people who said 'he was difficult to work with', so THERE!
    At least it put paid to the notion that 'that nasty libertarian wasn't obeying the HOA rules!' It seems the worst he might have done is cut his grass shorter than the perp, and maybe sprayed some grass clippings over the property line, the CAD!
    Doesn't help that there's an Olberman rant in the middle (dunno what his latest metal problem is; had the sound off).

  • flyfishnevada||

    I find stuff like this interesting. You go into the history of just about any industry or service provider and you find that the Bells, IBMs, A, etc. either don't exist today or have moved into a completely different role in the market. Yet you see so many folks worried Wal-Mart, Amazon, Apple and Google will rule the world forever. Id' suspect in 50-75 years at least one, and probably most, of those companies won't be a household name despite their market share today.

  • <Unpastable>||

    Bell and IBM were each dominant in one specific industry. No comparison to Amazon or even Google.

  • BestUsedCarSales||

    Google also makes money in exactly one place, ads. Which is you consider IBM to be one industry, all computer related things at all levels at the time. Then Google is just one as well.

  • ghadeerco||

    thanks a lot for this posts

  • emmanuel||

    Don't know about any of you out there in internet land, but I do my own shopping. I will never use Amazon to deliver my groceries, nor will I ever shop at Whole Foods. There is a very good grocery chain that is over 100 years old, and headquartered a few miles down the road. Buy local, they butcher their own meat, they sell locally grown produce, dairy from local farmers, in addition to all the other crap you find at the upper tier stores.

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