[AnthonyMouse]

> Why is a large box of cereal $8 at the supermarket? It costs pennies to produce, maybe a dollar in landed cost. The small box costs almost the same landed and it's $5, which is also absurd. There is no supply shortage of corn and sugar, and no glut of demand for cereal.

Most of the cost of the cereal isn't the cereal. First you're paying for the store. That's real estate costs -- currently excruciating. Property tax and insurance, based on the real estate prices. The store needs heat and light, that's oil and electricity. There are people who work at the store, has your state recently increased its minimum wage? Grocery stores that don't buy advertising have fewer customers and have to amortize these costs over fewer sales, so you either have higher costs per unit because they didn't buy advertising or higher total costs because they did, etc.

The next question you might ask is, why don't they get rid of the store? Ship the cereal to your door. But it's like 8 oz of cereal, you'd get killed on the shipping. To make it work you'd need your whole grocery order to be delivered in one trip.

That could actually be an interesting business model. Instead of "free shipping" encouraging you to buy one item at a time but then the shipping cost is really baked into the item price, have "flat rate shipping" where you pay e.g. $35/order for shipping with no item limit. Then if you're buying what would otherwise be $400 in groceries for $200 by cutting out the retail store, paying the $35 is totally worth it, and you could be adding items to your cart all month for a scheduled monthly delivery.

But is anybody offering that?

[arrosenberg]

> First you're paying for the store. That's real estate costs -- currently excruciating. Property tax and insurance, based on the real estate prices. The store needs heat and light, that's oil and electricity. There are people who work at the store, has your state recently increased its minimum wage?

Same box of cereal costs the same in Southern California and South Carolina. South Carolina is cheaper in every way - electricity, rent, insurance, and labor. Same $8 premium cost for a commodity product that costs a dollar or so to land.

No one is competing for the customers' dollar, they are imposing a price scheme because there is extremely limited competition and distributors are being allowed to abuse their pricing power.

[AnthonyMouse]

Cost of living index is 96.5 in South Carolina, 134.5 in California. It's higher in California but not by an order of magnitude. Somewhat unexpectedly, grocery costs are not just the same but actually higher in South Carolina:

https://worldpopulationreview.com/state-rankings/grocery-pri...

Could be California's higher population density allowing store costs to be spread across more units.

Also unexpected: The highest and lowest grocery prices in the continental US are Vermont and New Hampshire, respectively, and they're geographically right next to each other with nearly identical cost of living index but Vermont is paying 2.7x as much for groceries. But New Hampshire does also have 2.2x Vermont's population density.

In any event, price fixing doesn't seem like a strong explanation, because what are they doing, fixing prices in Vermont but not in New Hampshire?