Couldn't have put it better myself:
While reform on this front could be effective, the tendency of smaller retailers to align their pricing strategies with dominant supermarket chains – known as “price leadership dynamics” – may undermine any downward pressure on retail prices.
In essence, any slight reshuffling will recalibrate the balance of power between suppliers, wholesalers and retailers. But consumers may see little direct benefit.
One solution that might work, however, is a publicly owned grocery chain, tasked explicitly with stimulating genuine competition. For the sake of argument let’s call it a “community provisioning enterprise”.
This could be designed as a conglomerate of wholesale centres, distribution networks and retail outlets. By leveraging state-of-the-art logistics and retail technologies, it could achieve significant efficiency gains.
Potentially, that could see gross profit margins driven down into the 4–7% range, compared with margins of 55% or more on individual items enjoyed by major retailers.
The main priority of such an enterprise would be to move commodities efficiently from producers to consumers. It would have a competitive edge because of operational efficiency, minimal marketing spend, streamlined supplier contracts and capped executive salaries.