Comparison of Prices Paid for Selected Foods in Chainstores in High and Low Income Areas of Six Cities

Report Preface: In recent months, questions have been raised as to whether retail food chains charge the same prices in stores located in high and low income areas of large cities. The Department of Agriculture is especially concerned since the prices charged for food have a direct bearing on the effectiveness of the Food Stamp Program in providing adequate diets for low income participants. Members of Congress have requested information from the Department on the pricing practices of chain organizations to help determine if shoppers in low income areas pay more for identical products and services than shoppers in higher income areas. Congressional hearings on retail food prices have been held in different cities throughout the country, and attention has centered on chainstore pricing policies in high and low income areas. The Department conducted a study of retail food prices in February 1968. The purpose of this study was to examine the question of price discrimination and, to a lesser extent, product quality variation among stores of a chain in a city. Prices paid for items in selected product groups and quality of selected meat items purchased in high and low income area stores of a chain within a city were compared. Two leading chains in each of six U.S. cities were included — providing a broad geographical view of pricing practices of chain organizations. The survey was initiated by the Consumer and Marketing Service. Technical assistance in planning, direction, and data evaluation was provided by the Economic Research Service and the Statistical Reporting Service.