The “international” grocery store

(where “international” seems to means “mostly Korean and Japanese”).

When I was w/o car there for a while, I had to get some ingredients for my mom’s birthday dinner, so I hiked down to the market a couple blocks (it’s about a 10m walk) to buy my stuff. It was initially disorienting, because it’s not laid out in standard grocery store form, and doesn’t have nearly the same stuff: the meat selection, for instance, wildly, wildly different from your local Kroger-owned store.

But that’s not what I’m ranting about. I was shocked at how cheap everything I needed was. I understand the pricing’s going to be different, but on items that you can buy at QFC or Safeway compared to the same item, the difference was astonishing.

For instance: I found an item that sells at my normal grocery store for $3.59 for $.99. That’s not a joke. It wasn’t on sale or anything. No matter how you figure it, it means that the nationally supplied grocery chain’s profit on that item was at least $2.60 — and I’ve paid that $3.59 before. That’s crazy! Noodles! Fish sauce! The list went on and on, and the only thing I saw that was comparably priced was bean sprouts.

This is likely not news to anyone, and I’ve bored you already. But it’s the why that fascinates me.

I thought of a couple ways to look at this, but it keeps derailing.

Say that the normal grocery store knows that people who shop there have no idea how much to pay for fish sauce, so they do some market testing and find that if they put it out at $5, they sell to their normal client base and lose the people willing to go to the international market, for a total profit of $tons.

But then why doesn’t the international market sell it for, say, $4 instead of $1? Why hasn’t that price gap collapsed? Is there a different market force operating between this market and the other international ones?

Even if you figure that the international market is pricing at, say, cost + markup, it’s hard to believe that they haven’t walked up the street to where the other two grocery stores are to take a look at their pricing.

I feel compelled to go take some economics classes.

2 thoughts on “The “international” grocery store

  1. MHD

    I would speculate that the immigrant community, which of course both staffs and patronizes this store, accepts lower wages and is more price-sensitive than a Kroger store.

  2. gordsellar

    It may also be that people are willing to pay more for the fish sauce at, say, Kroger’s, because they can get a bunch of stuff that they can’t get at the little international market. (This is why I’m usually willing to pay a little more for chicken at the big chain market than at the little shop near the campus on which I live — because I don’t want to break down my shopping between two or three or four places. (Actually, it’s already broken down between 3, because in Seoul none of the nearby big groceries have decent bread, or *that* much in the way of non-junkfood Western foodstuffs.)

    All that said, the same discrepancies exist here in Seoul, and more: seafood and vegetables in open-air markets are usually much better and cheaper, but people mostly do their shopping at the big places despite this. They pay more for inferior products because they can also get DVDs, CK underpants, non-cheapie clothing, irons, electronics, and a lot of foodstuffs that you’ll never find in the open-air market. There are only so many hours in the day.

    I suspect that the market-shoppers, however, would flip out if prices in the markets surged as a result. Or, rather, someone would start selling stuff at the old price, and sell more, and everyone else would be forced to lower the prices. (Though the customary prices change sometimes — cabbage can get pricey when a tsunami kills the harvest — bargaining tends to reinforce this. I imagine in the case you describe, other little family groceries are the equivalent competitors.)

    So I guess Kroger shoppers are paying for the added-value of being able to get everything they want in one shot, and the price gap is maintained because it’s inevitable someone will sell the stuff at the lowest possible markup in order to keep the consumers who are more concerned about price.

    But I haven’t studied econ, that’s just a guess.

    Congrats on the Asimov’s sale, from another CWestie. 🙂

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