e/ib 



«/lb 



1959 61 



65 67 69 71 



Figure 13. — Price spreads for fresh 

 sea scallops, 1959-71. 



sectors that handle fewer products at one time (Hol- 

 dren, 1960). 



Thus, while price is an important factor for the 

 sale of an individual commodity up to the wholesale 

 level, sales at the retail level are more likely to be 

 determined by nonprice factors such as location, 

 service offered, the personality of the manager, and 

 the layout, decorations, and atmosphere of each 

 store. 



The nonprice factors create product differentia- 

 tion which is further enhanced by 1) the growth of 

 supermarkets in size and in product lines each car- 

 ries (Appendix Tables 1 and 2); 2) joint demand for 

 food products in shifting the attention of shoppers 

 from individual commodities to the aggregate of 

 goods and services offered by a store; 3) imperfect 

 knowledge of the shoppers, most of whom seek to 

 minimize time and energy inputs spent on grocery 

 shopping by making a one-stop purchase instead of 

 pricing around; and 4) suburbanization of population 

 leads to immobility of consumers (Naden, 1953). 



For the retailers, less emphasis is placed on prices 

 or margins of individual commodities. The imputa- 

 tion of retailing costs is imperfect, and the bases of 

 their allocation are different from store to store. It is 

 more economical to allocate costs to a product-mix 

 rather than to each individual product. For these 

 reasons some products are priced lower in one store 

 than in another. The losses on one item could be 

 recouped by profits made on other items. The retail 



Figure 14. — Price spreads for fresh 

 bluecrab meat; 1959-71. 



pricing policy is such that the size of the margin of 

 individual items is less significant; its strategy is 

 focused on the maximization of the overall profit of 

 the entire store. 



The diversity in prices among stores and the rigid- 

 ity of price movement within a store are characteris- 

 tic of the behavior of the retail food market. This is 

 substantiated by the following studies. A nationwide 

 survey of fish retail distributors was made in 1968. 

 The wide dispersion of prices of various fish prod- 

 ucts are shown in Appendix Table 39. In another 

 study, weekly retail prices offish in New York City 

 indicate wide deviations from their means as shown 

 in Appendix Tables 40 and 41. On the other hand, 

 the weekly average retail prices of similar fish prod- 

 ucts from one store in a Chicago study remained 

 stable regardless of changes in costs and sales vol- 

 ume. This is presented in charts shown in Appendix 

 Figures 1 to 12. 



While the price of individual products of each 

 store differs widely from that of another, the average 

 annual price of the same product in a market area 



