Pricing strategies of corporations and consumer co-operatives in the food retail sector: Evidence from England, Sweden, and the Netherlands

Abstract

Food consumers have been engaging in collective action to combat food retail concentration for many years. As modern supermarkets gain in size and power, the activity of food consumer co-operatives may have more importance than ever to prevent food price increases. However, applied research on the price competition between consumer co-operatives and firms is scarce at best. We address the considerable gap with an empirical analysis of price information from consumer co-operatives and firms in England, Sweden, and the Netherlands. Using the market basket approach, we observe significant differences in the food prices of co-operatives and firms. In the case of Sweden, the price index of the consumer co-operative is significantly lower, which may indicate an inability to implement a yardstick effect on the firm. Meanwhile, in England and the Netherlands, the firms have significantly higher price indices, which may be explained by the tendency of co-operatives to return profit to members at the conclusion of the fiscal year.