NYC to open municipal grocery store in 2027
grocerydive.com
grocerydive.com
The municipality which has monopoly on land taxes and costs will compete with stores that must pay taxes and rent? Won’t it just cause neighboring stores to close?
Won’t a better option be subsidizing taxes for grocery stores, and let the discounts competitively pass unto the customers?
Even if we take at face value that this is happening, their margins are famously low (ie. low single digits[1][2]) that any improvements are likely negligible. In the best case scenario where they're run as competently/efficiently as a normal grocery store, but don't take any profits, you'd be saving like 50 cents on a $10 pack of ground beef. Of course, all of this would go out the window if it's less efficient, either due to government incompetence[3], or lack of scale.
[1] https://www.macrotrends.net/stocks/charts/ACI/albertsons/pro...
[2] https://www.macrotrends.net/stocks/charts/KR/kroger/profit-m...
Mamdani has clearly taken lessons like these to heart.
https://www.nytimes.com/2026/04/07/nyregion/how-to-build-a-r...
"The Transportation Department workers arrived at 9:15 p.m., right on time. Mr. Boyce and his crew were ready, having fitted the roof and rear wall panel 30 minutes before. By Monday, the structure was nearly complete. “This is all like synchronized swimming,” Mr. Mansylla said. “To build a structure in New York City in, what, 48 hours? That’s as fast as it gets.”
From the wikipedia article:
>The toilet's original proposed cost of $1.7 million inspired media coverage and criticism of the San Francisco government.
Was all this waived?
It's a kiosk being added to a concrete sidewalk in the middle of Manhattan, by the city itself.
There must be a way to do projects of this small scale without spending years on paperwork.
Site preparation began in February, 2024;[12] the prefabricated restroom was placed by a crane in March;[2] and installation was completed on April 22, 2024, costing about $200,000 to the city.
https://www.cbc.ca/news/business/loblaw-bread-price-settleme...
> The class-action case was brought against a group of companies that includes Loblaw and the Weston companies, Metro, Walmart Canada, Giant Tiger, and Sobeys and its owner, Empire Co. Ltd.
> The plaintiffs allege those companies participated in a 14-year industry-wide price-fixing conspiracy between 2001 and 2015, leading to an artificial increase in packaged bread prices.
What's the point of this observation other than for shock value? Yes, when you multiply small percentage by a huge number, you're still left with a huge number. That doesn't mean it's suddenly worth doing unless you can make the argument that it scales easily.
>That doesn't mean it's suddenly worth doing unless you can make the argument that it scales easily.
Otherwise it's like saying "you know what everyone should do? Raise their own chickens! Sure, you might be only saving $1 or whatever a day, but multiply that 365 days per year and 340 million Americans, and that's billions we're all collectively saving!"
And no, running a grocery store isn't something that scales easily.
Usually if someone steals a millionth of that, they go to jail for a very long time.
The same players are now under investigation for selling underweight meats.
Vast majority of product sold when inventory is low, they just go out of stock still at MSRP right to the last sku in the inventory. Then, you wait until more are available, also at that same price.
Really, why would prices go up for the eggs in this situation if not for gouging? Sure plenty of chickens were culled. But the remaining chickens aren't costing more than they did before the cull. Whoever is producing the remaining eggs being produced is producing them for the exact same overhead they have always been producing. Feed is still probably the same. Maybe cheaper with an excess of feed on the market needing to be sold and moved out of feedlots before the next crop comes in, from the chicken culling your competitors were doing. Water is still probably the same. Power is still probably the same. Staff are still getting the same pay. Property taxes are still the same. Really, who is getting the $10 from the $12 dozen of eggs? Probably some guys smoking cigars if we are being honest.
Supply and demand. Just like blocking the Strait of Hormuz doesn't make oil 2x more expensive to produce everywhere else in the world, you're still left with the problem that the world has ~20% less oil to go around. That means the price of oil gets bid up until it's high enough to convince 20% of oil consumers to stop using oil.
And, even if they are true, the obvious solution would be to enforce the already existing antitrust and competition laws, not to have the government directly engage in commerce.
Yup no distortions here just good old fashion free market!
And how is that the obvious solution? You see who is in the Whitehouse and you think this is a champion of antitrust and lifting up the little man? Quite the opposite. NYC government is a separate entity than federal government with different limits to its powers. They can't do anything about cartel behavior. They can, however, open a municipal grocery store.
The government engages in commerce all the time. If we took that argument to its logical conclusion there would be no libraries as they compete with book stores. There would be no armies as they compete with Blackrock mercenaries. No public transit as it competes with private transit. No public events as that competes with ticketmaster. No public schools. No public universities. No scientific research grants. No sheltering or feeding the poor. No treating the sick. No treating veterans. No bridges. No roads. No harbors. No anything. What really would be the role of government after we stripped it of all its potential influences on the world of commerce? I can't even imagine what might even be left...
No, it seems a big role in this country for government is facilitating conditions for commerce. Educating the populace such as to upskill the nation's labor pool. Building roads free for businesses to use in transporting goods to market. Treating the sick before they get so ill as to be an undue burden on the medical system that threatens its entire latent capacity. Offering cheaper food seems in line with that. People aren't going to use the spare money to throw into a river; they will use their extra money to circulate back into the economy probably in more productive ways than Kroger buying back its stock or its executives or shareholders squandering it on oysters and boat fuel.
1. https://grocerynerd.substack.com/p/grocery-update-17-how-gro...
It seems to me both that:
1. If this article is true then independent groceries should have a slam dunk in keeping prices low. They aren't subject to the price fixing cartel of the big grocers so if they lower prices they'll drive demand to their store and win out on the market. Margins for staples are quite low anyway so volume is the best way to make profits. This means we should observe independent grocers right now outcompeting large chains or driving costs lower .
2. Alternatively if the price gouging is coming from consolidation of the CPG market then state run grocery stores will be just as ineffective at combatting high prices as independent grocers. I guess one can argue that a sufficiently large amount of state run demand can negotiate better CPG pricing but I'm not sure this experiment is big enough.to leverage this.
Personally I'm not a fan of state run businesses because the US is so polarized. Today's support can turn into tomorrow's opposition. It's hard to build a lasting institution when differences in candidates and parties can wipe out any wins or losses.
Instead I'd like to either see state subsidizing of staples and CPGs using taxes (paying into a food price stabilization fund used to negotiate and aquire staples and CPGs at cost and then resold to grocery stores at lower prices, along with maximum margin guarantees from grocery stores) or I'd like so see an incentive program for independent grocers along with a state blessed way of having disparate grocers negotiate better prices.
But I also don't live in NYC and this initiative's success or failure isn't being run on my tax money.
Certain states the government actually operates the liquor stores so this isn't wholly unprecedented. Government also does this sort of thing for armed forces. It is interesting how the US military with its associated progression, benefits, services, and provided housing, is sort of a gleam into what a communist united states might have looked like in another timeline. Kind of ironic when you get a pro military pro capitalist person I guess. They have more experience with de facto communism than most and seemed to have liked a lot of aspects.
> They can't do anything about cartel behavior.
Incorrect, several states have passed their own antitrust laws, there's nothing that limits it to the federal government.
> The government engages in commerce all the time. If we took that argument to its logical conclusion there would be no libraries as they compete with book stores. There would be no armies as they compete with Blackrock mercenaries. No public transit as it competes with private transit. No public events as that competes with ticketmaster. No public schools. No public universities. No scientific research grants. No sheltering or feeding the poor. No treating the sick. No treating veterans. No bridges. No roads. No harbors....
I do think the government should get out of many of those, so your argument doesn't really land for me.
> No, it seems a big role in this country for government is facilitating conditions for commerce.
I don't see how the government driving out competition by running its own grocery stores, presumably at a loss, is "facilitating conditions for commerce".
If someone is stealing your only $20 out of your pocket and I stop them and you now have $20 in your pocket, I've just created conditions for commerce on the part of you taking that $20 and spending it someplace else in the market than on the thief. When you give a dollar to a rich person vs a working class person, that dollar is far more likely to be circulated back into the economy in the latter case than in the former case. The poor person spends the bulk of their paycheck on needs and a handful of wants, real hard items, not speculative assets. The rich person bids up Tesla stock and makes Elon into a billionaire off a PE of 317 now, thin air pumped into the balloon in other words with all this money tied up in overpriced TSLA stock than empowering real work in the economy.
What do you believe the role of government is? Do you believe that every resource we use in life should be priced such that a handful of individuals have the opportunity to live fat off the transaction? Inefficiencies at every level of the supply chain?
Grocery stores aren't thieves, they're largely pretty terrible businesses with extremely thin margins.
But, to engage with your ridiculous bait and switch: whether I or the thief have $20 is irrelevant to the commerce as he'll presumably spend it at the market too, so even this ridiculously contrived example falls flat on its face.
> rich person bids up Tesla stock and makes Elon into a billionaire off a PE of 317 now, thin air pumped into the balloon in other words with all this money tied up in overpriced TSLA stock than empowering real work in the economy.
Here you go again with some ridiculously biased example, but I'll engage with it for your own sake: money that's invested doesn't just disappear, it goes into the pockets of employees and suppliers or gets reinvested in some other way, continuing the cycle.
> What do you believe the role of government is?
Limited.
Nope, poor person spends far greater share of their wealth on real items.
>Here you go again with some ridiculously biased example, but I'll engage with it for your own sake: money that's invested doesn't just disappear, it goes into the pockets of employees and suppliers or gets reinvested in some other way, continuing the cycle.
Ahh yes, it all trickles down. That is why wages have kept pace with inflation and why inequality has remained the same over the decades! No hoarding going on! It was right in my back pocket the whole time!
Please formally define what you believe the role of government is. I am genuinely curious on what these anarcholibertarians such as yourself actually believe in.
Walmart has low margins. Walmart is also wildly profitable.
Or if there could be some kind of network and information protocol that could provide a decentralized alternative.
Maybe there could be an Internet protocol or NYC Internet protocol that food suppliers could list low price items with. Independent stores could order from here, shipped to their store, or maybe one or two city warehouses where they could pick up.
Maybe another system where suppliers could voluntarily detail cost disruptions, allowing government or other organizations insight and sometimes the possibility of helping alleviate those issues etc.
I mean the government already spends a lot to subsidize retail food purchases. Maybe another idea is just a very easily accessible new app for credits that is NYC only?
It's just that making a single store puts all of the logistical and other issues onto one government department and location, which has been shown in socialist countries to break down.
I am all for a few more socialist policies (I am lucky to have survived this long on outsourcing rates without a consistent healthcare plan), but it definitely needs to be a contemporary effort and not some centralized 1950s model.
I know for stuff like seafood there is a saturday night 1am fish market near our harbor where significant volume is sold wholesale to restaurants and grocers (but also individuals interested in filling a chest freezer).
So I think already there are just few places to order food wholesale in a given region so those prices are probably somewhat even. Then of course you go to vons, kroger, ralphs, save4less, the local korean grocer, and see different prices for the exact same commodified product like Cosmic crisp apple or 6 pack of coca cola, there is your markup that comes from the grocer itself on top of the regional wholesale price. Grocers like to have flexibility in markup to play psychological games like rotating sales, coupons, and offer rewards programs. Seems that sort of finagling isn't tolerated at the next level of abstraction in business to business sales.
Cost disruptions might be good to put the blame on who exactly in the chain is gouging prices. At the end of the day, the eggs in the egg shortage were not more costly to produce than beforehand. And the egg farms that were culled of their hens, were probably not that much of an anchor on operations given that they probably were not consuming their usual power, water, farmhands probably all laid off, land bought and paid for probably decades ago by this point, way out in marginal farmland where property taxes are probably quite low. Certainly not enough to quadruple the price of eggs. And how interesting how Trader Joes still sold $2.99 dozen racks during this whole crisis.
But as others said, groceries are working on minimal margin. And all of them work with the same wholeselles (except those with vertical integrations), and this is a nation wide problem.
Not really imo. Private market passes costs to consumers and leverages subsidy offers to achieve rat race outcomes out of competing local governments off each other. It is how you end up with the classic case of a city courting some business but offering enough tax abatement where the city isn't actually getting anything out of the business, and once the abatement expire the business just leaves for somewhere else that will cut them a better deal. City ends up hostage to the business demanding ever more favorable incentives and removal of all taxes (there's been free trade zones established in the middle of ho hum suburbs, stuff brought in there doesn't even count as imported to the US).
In a highly competitive market, every cost saved would be passed to the consumer, obviously this is simplistic microeconomics and doesn’t actually works this way.
In my city, there’s a supermarket approximately every 150 meters. Food cost is high, but for the entire country. Actually research shows that food cost is higher in low density towns where there is much less competition.
Groceries also form cartels as the other commenter mentioned. The biggest grocers in Canada did it for many years until they were penalized for it (though it’s likely still continuing in other ways - the same players are now under investigation for selling underweight meats)
The estimated cost to consumers from bread price-fixing was $4-5 billion
(I am less sure why this happens to such a great extent in large US cities vs elsewhere, vs more of a balance of shops, but it does seem to.)
So it may just be that where they are from, the concept of “luxury neighborhoods” which do not need to cater to the poor and disadvantaged populations does indeed exist, due to segregation factors
That is why you have loss leader grocers, where they pull people with dramatic discounts on specific items, but the total cart costs the same
Some consumers go to specific stores to purchase specific qualities of brands.
But most do not, especially for convenience products. You get it where you can.
Economic viability isn't what led to "wide availability and inventory". No, it's imperialism. It's exploitation of the Global South. It's paying slave wages through subsidiaries in West Africa to cocoa farmers while making sure those countries stay poor, for example.
We also wage economic war on our our anointed enemies like Cuba and then use the inevitable result of that economic warfare as a reason why our system is good.
But economic viability -> competition -> research and development -> economic growth
Do you think working families in NYC don't deserve the same monetary relief that massive corporations get with their own welfare programs? Why should trillion multinational companies take our public money to subsidize their businesses and we can't do the same for workers?
Why do you prefer helping non human entities (corporations) over literal humans?
Hopefully they kept all those profits around from the time they price gouging consumers in the name of “supply chain issues”, “transitory inflation”, “bird flu” etc. I still remember all the headlines about bird flu and how egg prices were doubling because of it. Turns out the egg production barely dropped and it was all a ruse to make more money.
This is ultimately the kind of thing that worries me about a municipal grocery store. Will voters allow it to respond in rational ways to market conditions, or will they expect the city to go out and extort some egg suppliers when market prices rise above what they consider reasonable?
https://www.reuters.com/legal/government/us-egg-producers-fa...
As did a jury:
https://apnews.com/article/egg-producers-price-gouging-lawsu...
I don't blame consumers for deciding they don't care about the underlying market structure and just want cheap eggs. But you can't run a store on that basis, and if the city feels like it has to there'll be problems.
I'm sure this time trickle-down economics will work and not simply line the pockets of business owners
Many things government does are not economically viable. That's why they get left to government.
> Won’t it just cause neighboring stores to close?
The idea is to build these where that has already occurred.
(I say this as someone who is broadly in favor of NYC trying to run city-owned groceries in areas that are underserved.)
Groceries are not one of these. If you have a problem of high grocery costs, there are many better ways to tackle that other opening a government owned store. But it does make for a great photo op.
Or it’s just a way to neutralize the ineffectiveness of the management, since it’s not profitable based, who’s going to be fired?
This is the same trickle down economics principle that has proven not to work over, and over, and over again. There's exactly zero reason to believe these businesses would pass on the savings to consumers.
Consider! Ingles (a supermarket brand here in NC) is criticized for holding huge amounts of abandoned/vacant/dilapidated properties [0], which stifles competition and lets them hold an effective monopoly and makes neighborhoods objectively worse. It's not about the taxes. Don't underestimate a chain's ability to eat costs by maintaining their market position.
[0] https://avlwatchdog.org/opinion-ingles-markets-often-raises-...
You can create subsidies which are inverse to the stores income. It doesn’t HAVE to go to large chains. There are many way to encourage small businesses to open. Competing with them is not one.
But that's not all subsidy mechanisms. The best ones are where pass-through is enforced, not assumed.
You already know of one that works: WIC. It lowers the effective price for customer, which the store receives as reimbursement.
It's not about trickle-down -- that's ideology. It's more about designing the right mechanism.
Also, if anyone has any reservations about a government run grocery store, go ask your representatives to come out against military commissaries. I bet you will not be able to find one active politician who will try to remove that. You know why? Because government run grocery stores work. End of story. Period. There is no discussion. You are wrong if you disagree. We do this. It exists. It works. And people love it. Try to find one politician that will end that service.
So would these stores have lower prices because of tax subsidies? What prevents rich people from exploiting these subsidies?
As for the rich, is this really your concern? A few rich people getting some cheaper groceries is so bad that we have to deny poor people from getting affordable food? Why do so many Americans hate poor people? You know there's literally trillions of waste in agriculture, military, pharmaceutical, oil, etc... subsidies and that's just the tip of the ice berg if you examine the tax code. If you're deeply concerned about rich people gaming the system, why don't you start in those places and then when we figure that out, we can worry about rich people shopping in one of five total grocery stores.
What we have now is the result of unfettered private control. Private companies collude to raise prices and lower wages. The standard of living in real terms has been in decline for over 50 years. Education, medical, housing and food costs continue to spiral. Where we do have publicly owned alternatives, such as with municipal broadband, those publicly-owned alternatives are always far better.
Are we going to make the same argument that EPB in Chattanooga is somehow a moral hazard and has an unfair advantage to Verizon, AT&T, Comcast and Spectrum?
Let's just say that it's true that they do. Why is that a problem? Why is it good that billion or trillion dollar companies can charge higher prices than the government can so their owners can buy another mega-yacht at the expense of the people who depend on that service? Because that's what's going on now.
"Surveys consistently rate the commissaries as one of the military's top non-pay benefits." NYC wants to provide similar benefits for residents.
[1] https://en.wikipedia.org/wiki/Defense_Commissary_Agency [2] https://www.youtube.com/watch?v=PQOXdtPBGXI
>In 2024, DeCA estimated that it saved patrons $1.58 billion and had an operations cost of $1.7 billion, $1.5 billion of which was funded from appropriations.[8]
Isn't this the "selling $1 for 75 cents" business model (aka moviepass) that people made fun of a few years ago?
The same argument can be made for public grocers. Reducing poverty has cascading effects including better health and lower crime rates.
https://old.reddit.com/r/nyc/comments/1sjq9v9/mayor_zohran_m...
But I’ve come around. Let’s try something new! Let’s show people that local governments in the United States really are capable of making a difference in their daily lives. If it fails, well, we tried & we’ll keep trying.
Here's how this will pan out.
- A number of "officials" (friends) will get cushy jobs for running this program.
- It will lose millions of tax dollars
- a small portion of the population will get cheaper produce for a photo op
- Mamdani and friends will call it a success
- But net, this will be net negative for the city (ie. tax dollars to crony jobs and subsidizing food for some).
Whats the point? The USSR has tried this (subsidized grocery stores centrally planned). Lets not.
If on the other hand, the issue was hey its expensive to bring produce XYZ, so why don't we work to reduce that cost by legalizing Kei [1] trucks and exempt from tolls. Now that would be something interesting.
The USSR tried lots of things we do successfully.
This is actually something governments have a proven ability to do, at least in some contexts, without becoming a corrupt boondoggle.
(true stories)
> The USSR has tried this. Lets not.
would rule out things like "going to the moon" or "building roads". It's a pretty useless rubric.
I am not doubting the USSR fucked all sorts of things up. I'm doubting that that inherently means those things must be impossible.
The USSR is an example of many failed things. That they failed at those things does not mean those things cannot be done.
I was offering a tangible example of where the thing being proposed was a failure.
They are examples of the USSR failing at a possible thing. They illustrate my critique of your claim.
The only difference is it doesn’t have to make profits to pay its owners.
The question is, why are you prioritizing being “fair” to people profiting off hunger, over being fair to working people trying to eat? Even if it is “unfair” this is a kind of unfair we should all support (assuming it succeeds at feeding people).
As for people who own grocery stores and don’t work in them? That’s an investment not a job, gov has no duty to protect individual investments over people’s basic needs.
As opposed to the millions that come out of your pocket on top of the taxes you pay? At least this brings some of the tax money back to the people. When you let grocery store price gouge you without competition, the money goes to executive pay and shareholder value.
You could be right about it losing millions of dollars, we’ll see. Millions isn’t very much on the scale of NYC’s civic infrastructure; it would be difficult to even call it a waste at that scale, since the results will themselves be valuable.
(This is in pointed contrast to our last mayor.)
The USSR fell before I spoke my first words. The world is a very different place, and the United States works very differently from the USSR.
At worst, some people will get some cheaper groceries out of this. If you want to get mad about government spending, maybe we shouldn't be building a ballroom attached to the White House.
Sounds like it’s a bunker of some kind, and the ballroom was just a cover story
(https://www.independent.co.uk/news/world/americas/us-politic...)
The kei truck thing might be a good idea, but so is groceries managed as a public service.
The USSR had a problem with corruption. Ok? There have been gov run groceries outside the USSR, and in recent times - not decades ago.
If you don’t have an example of this leading to corruption more recent than the USSR, i gotta assume it was a USSR problem, not a gov grocery problem.
Governments should do more experiments, and this does seem to have been thought out enough to not be a total waste of money.
I honestly don't understand the desire for municipal grocery stores at all. Grocery stores famously operate on super slim margins, so it's not like they're raking in the dough. Many of them are often run extremely well. In Texas, HEB is so beloved that a lot of people consider it far better at disaster recovery operations than the actual government.
I'm not against plans to better help people afford groceries, but somebody needs to at least explain how the plan is economically rationally viable, not just "let's try something new!"
There gotta be a lot of accounting magics working here. Otherwise you can't explain why they simply don't sell everything and buy bonds. I don't have a theory so hopefully some finance people can explain.
Error 1: "Something must be done, this is something, therefore this must be done." Yeah, but "this" is something stupid, with no real-world chance of working.
Error 2: "We will not do anything until we can prove that it will work." You can analyze things to death and waste years in the process, and never do anything.
Somewhere in between is the right answer. You see plausible success, but still far from certain. Then you experiment.
Now, is New York striking the right balance? I have no idea. I'm not privy to their internal discussions. But I know that, if it fails, everyone is going to mock them for trying. That is, everyone is going to assume they fell into error 1. But did they? Getting the balance right still means that the experiments fail a fair amount of the time.
So many conservative states and cities absolutely running things into the ground, making people miserable and oppressed and their cost of living skyrocketing for years, decades, look at Texas look at Florida, so many examples
So why not try something progressive for a change and see what happens?
Why the heck not just try?
If you don't like grocery stores gamifying or selling junk, regulate those aspects. Or put the taxpayer money towards something useful like building public housing.
Food deserts exist in NYC, and many New Yorkers buy staples at corner stores that charge significantly more than a standard grocery store. Your second paragraph implies that this policy is due to some dislike of existing grocery stores, but that assumes these communities are actually being currently served by grocers at all
A perfectly competitive market requires the following (this is not everything, just some):
- Supply perfectly meets demand (yep already wrong here)
- Marginal costs equal to average revenue (this means there should be effectively 0 profit for the seller)
- Zero transaction costs
- Zero externalities (can't exist)
I just hope they properly track and monitor the outcomes and foster honest/open feedback. The gov't loves to throw money at problems, but never really does much to analyze, pivot, or admit when something doesn't work because that just gives the opposition ammo.
The Secret Life of Groceries: The Dark Miracle of the American Supermarket by Benjamin Lorr, and
Grocery: The Buying and Selling of Food in America by Michael Ruhlman
Extremely insightful about how much it cost to run a grocery store, where profits go, who the food suppliers really are, etc. Very eyeopening.
Well it's interesting enough to try. Are they going to keep the stores open at a loss, that's not really competing then, is it?
If they sell things that are much cheaper, restaurants could start sourcing their food from there, too. Why get your chicken from some supplier if you can buy it from a cheaper government run store at much less.
But then, if these stores are not run at a loss, it means somehow there is this large inefficiency that other stores haven't tapped into. And if I had to guess, grocery stores don't seem like a large margin business, but perhaps that's just my ignorance as it's not something I ever looked into in detail.
Restaurants already do this. They buy from wholesalers, because they're cheaper than the grocery store.
But now grocery stores could be cheaper than wholesalers if there are any subsidies involved or selling at a loss is a thing. Why go to wholesalers when you can camp out with a van by the government subsidized stores when it opens or when delivery comes.
Not saying this is insurmountable, the stores can implement a purchase quota: you get X amount of items per transaction and we take your ID or something. But it opens up that kind of a situation. Like I said, I hope it works, it would be interesting to watch.
I really don’t think this will be the case. That’s not the goal here.
It's a low margin, high volume business. I'm extremely skeptical that this plan works beyond just being a politically popular way to light money on fire. I say that as someone who actually like Mamdani.
They don't run out, and Walmart doesn't go buy all of them to resell.
The idea that Mamdani is going to undercut a low margin business with higher labor costs is just silly.
Why?
Stock store/generic brands. Don't stock 40 variants of Colgate toothpaste that all have the same ingredients and are described separately as "fresh mint", "cool mint", and "mint". Stock more staples than sushi.
People pay more for the 16 flavors of Colgate because they want to pay more for Colgate… that higher price means more margin for the retailer. By eliminating the higher margin products in an already low margin business, you are basically making the situation even worse.
The only reason why generic brands at stores can end up being high margin for the retailer is because the retailer has literally used their market position to start manufacturing cheaper versions of high margin products on their shelves. Unless NYC want to start manufacturing dryer sheets and toothpaste, that’s not an option for them.
And we don't think a city of 8M people can use their market position to do such a thing?
The idea that somehow NYC is going to start operating a for-profit toothpaste company to prop up a grocery store is genuinely absurd. There likely isn't even enough people in NYC to justify the costs of production! We're talking about national and international retailers engaged in these practices... selling to hundreds of millions of customers.
These are very risky endeavors that have bankrupted multiple grocery chains. NYC should not be operating something with that risk profile to simple get cheap consumer packaged goods on the shelves... especially when the business is already extremely competitive and low margin!
That is not at all how store brands work.
But, maybe it works and I'm missing something. I mean, is it a worthwhile experiment? Sure, but I hope there is a cap on how much money they're allowed to lose before the program is shuttered.
(This is the theory, the practice will be challenged by NYC’s ability to acquire land in neighborhoods that are underserved by groceries and develop a supply chain for these stores. This will be harder, but I personally don’t vote for mayors to only have easy problems to solve.)
I’m generally partial to that motivation - however doesn’t seem to be happening here.
This location (La Marqueta) is within a couple hundred feet of a "City Fresh Market" grocery store and ~1500 from several other grocery stores
https://www.google.com/maps/search/grocery+store/@40.7983886...
(I previously lived about a ~10 minute walk from that public market.)
I disagree. They could still run the pilot "in the middle of nowhere" or in a food desert and still measure the impact on the nearest grocery stores. Given that's what they want to do long-term, I think that's the configuration they should be studying.
Why wouldn't you want to discover whether and to what degree that actually negatively impacts the existing store?
This told me that for the very simplest consumer items, they might easily be contracted out and sold at just above production cost. Consumers would be free to buy fancier bottle openers, but sometimes a hunk of stamped metal does the trick.
Likewise for many other consumer basics ? Like, a Gotham store brand ?
- Armed forces commissaries. The op ex is subsidized by the taxpayer, but the cost of goods reflects the market wholesale price, plus a 5% fee to pay for capital goods/facilities upkeep.
- Grocery stores run by non-profits/charities. Eligible donations are a tax deduction, which represents a form of subsidy by the taxpayer. These stores are really popular in some places in the US.
- Food banks. Operate on a mix of private donations and taxpayer grants/tax receipts to some donors.
It all amounts to the same thing. The finance model is different in each case, but its all taxpayer supported no matter how you look at it.