The other issue is what’s going to keep prices low at these stores?
A hugely important piece of history here is the Robinson-Patman Act. I’ll throw a bit of AI slop for context, but it’s consistent with what I know. Basically, the direction to the FTC to stop enforcing this act is what created food deserts and Walmart.
From the 1930s until the early 1980s, the Robinson-Patman Act was enforced by the Federal Trade Commission (FTC), ensuring that suppliers offered similar pricing to all retailers, regardless of size. This allowed independent grocers to compete effectively with large chains.
No, the Robinson-Patman Act was not repealed, but its enforcement by the government was virtually non-existent for decades until the Federal Trade Commission (FTC) recently began reviving its enforcement in 2021. While the act remains on the books, it was largely unenforced for a period, but recent actions by the FTC indicate that it is still considered a live statute, say Norton Rose Fulbright, American Bar Association, and Every CRS Report.
- History of non-enforcement: The Department of Justice announced it would stop enforcing the act in 1977, and the FTC had not brought an enforcement case since 2000.
- Reasons for non-enforcement: Enforcement agencies largely abandoned the act due to concerns that it could harm consumers by punishing legitimate volume discounts and that it was anticompetitive, say The Federalist Society, Anderson Kill P.C., and American Economic Liberties Project.
- Recent revival: In recent years, including under the Biden administration, the FTC has signaled renewed interest in enforcing the act and has initiated investigations into potential violations.
A classic example of this is the story where Walmart almost put Vlassic pickles out of business.
Ugh, that’s a depressing read, and I already knew the story. Tl;dr: Walmart kills brands. The Walton family gets richer. Everyone else suffers.
For me the biggest question is: “Will these City-ran grocery stores, be able to complete with the Walmart juggernaut?”
Yes, initially the city-ran stores will be placed in “food deserts”, but if the program is to succeed it need to go toe-to-toe with Walmart. Otherwise, the program won’t be able to reach the people who need it the most.
… and based on the article you posted, I’m sure Walmart won’t take this lying down. Walmart will have no second thoughts or remorse to sacrifice their suppliers in order to compete (thus, keeping customers flocking to their store).
It doesn’t look like there are any Walmarts in NYC. Honestly they probably don’t care about this, their model is big box stores that sell everything. You can’t put a big box store in NYC.
There aren’t, and most of the big box stores are about a third to half the size of their equivalents outside the city
In the article, it’s says 1) they will direct the subsidies away from privately owned stores to spend on the city grocers, and 2) the city will pay rent and taxes on the store.
I don’t know how well it will work, or if some chain tries to mess with their price, like you mentioned, but I’m excited to see it in action and see what happens.
No matter what, I appreciate that he is actually trying something to combat a problem.
The easier way would be to make a law that mimics Robinson-Patman and actually enforce it within the confines of NYC.
But hey, I’m willing to see what happens.
It’s great. Beat out other grocery stores so prices drop to compete. Have grocery stores donate soon to be expired food to these gov stores for tax breaks. That handles safe disposal. If it’s not sold. Turn it into feed for farm animals. Sell it cheap to farms. Their stuff goes down.
If I recall correctly, it’s only one store per borough, only in areas without access to healthy foods, and where public private partnerships had failed in the past.
I love it when a policy that could be populist and rubbish has some thinking and substance behind it!
Plus, it’s probably going to go to the food *desert areas first. I dig it.
Dessert is what you have after a meal. You can help remember this by thinking there are more S’s because you want more dessert.
Thanks for coming to my Ted Talk.
Dessert is Super Sweet.
Genital dessert is the best kind of dessert tho.
I’ll skip the whipped cream, though.
My priest agrees
Yeah, but genital desert means she’s just not into you.
Tales from the dead bedroom
ty
that’s exactly the goal of the program.
there’s something like one grocery store per 1500 residents in new york (far more, per capita, than my entire county).
many residents have multiple options nearby, but some (around 750,000) do not live within 5 blocks of even just one. those are the neighborhoods this program would target.
these city-run stores are not intended to serve ‘everybody’, just those who aren’t served by anything.
It’s not the grocery stores, it’s the food corporations. And animal feed can’t just be left over groceries. There’s a science to feeding livestock at scale. Not that some.ofnitncouldnt be used, just saying it’s not all that simple. Otherwise I 100% agree with the sentiment.
Beat out other grocery stores so prices drop to compete.
Grocery stores operate on extremely thin margins. There isn’t much to cut either for the private store or the government store.
They have thin margine but very high turnover. It’s not a business plan based on holding stock. The shelf space turns over multiple times per week. They may pay suppliers 30 days after selling to a consumer.
Given the insane (and insanely sticky) price gouging we’ve seen these past few years, I strongly doubt this. But hey, we’ll see in a few months.
That’s not true, and they make money in lots of ways:
- They sell the end cap and shelf space. That’s why you see the cheap, simple stuff on the bottom shelves. To even show up in a store, a company has to pay to play. Think of it like the Google Play Store or Apple Store.
- They get bulk discounts and contracts to sell stuff.
Costco operates on thin margins because they make their money on the membership fees.
They also pay up to 90 days after they sold the products and get capital gains for that.
That’s not true, and they make money in lots of ways:
You understand that the net profit of 1.5% includes all sales and all expenses, right? It’s neat-o they’re selling space in the store, but that’s already factored in.
That includeds executive pay packages too, right? I dont think whoever is runnung these is going to make $21 million/yr like the kroger CEO.
That and the other blown out of sanity exec pay should help lower in store prices, even if the workers are making his proposed $30/hr wage.
You still haven’t provided any proof besides a link to another comment. Last comment.
I went back to your last comment and it doesn’t fit the discussion
The other commenter brought up Kroger. A grocery store that operates on a 1.5% profit margin.
That’s not true
I don’t know what to tell you. 1.5% profit margin is razor thin. There isn’t anything to cut for the private stores or the government stores.
What I’m saying is, they need to prove that because all that I’m saying is true.
Kroger is a public company, the presented numbers are their financials. Everything you mention is part of how they squeeze out a measly 1.5% profit margin. There isn’t much to cut for the private store or the government store.
Kroger says their gross margin in 2024 was 22.3% and their operating profit was 3.8 billion.
The Kroger Co. - Kroger Reports Fourth Quarter and Full-Year 2024 Results Announces Guidance for 2025 https://share.google/aUYB1Wjkppj7l0qAA
depends on the store and which location, some grocery store in certain areas certainly dont make even after a while.
Kroger’s revenue is $150B, with a net income of $2.3B. That is a profit margin of…1.5%. One-point-five percent profit.
As I said, grocery stores operate on tiny margins. There isn’t much to cut either for the private store or the government store.
gross margin in 2024 was 22.3%
Gross margin is not profit, it only accounts for direct costs of the goods being sold. Hence why their profit is only 1.5%.
What about the $7.5 billion stock buyback program?
lol
A bag of chips at one of the local groceries is $7, and it’s smaller than it used to be.
Everything is more expensive and smaller.
If the private market can’t do it at a profit without cutting corners or stiffing labor, then don’t.
at target nobody touches the CHIPS, CEREAL, or any of the brand foods(like cookies crackers). its mostly the produce, drinks, freezer people are buying, and any otc pharm stuff.
if you can’t do it then quit sucking the air out and let someone else have a go
It’s a bold move, and I want it to work, but I can’t see how it does at this point.
One store per borough.
Population estimates as of 2023:
Bronx - 1,356,476
Brooklyn - 2,561,225
Manhattan - 1,597,451
Queens - 2,252,196
Staten Island - 490,687It’s a pilot program, like how they tried one free bus per borough. Easier to get past your opposition, and you gather data on if expanding to a program with real impact makes sense. And it makes sense that they don’t want to spoil or reveal how big this might get if it starts working, because that’s just handing ammo to your opposition. It’s exactly how thing like this ought to be done, slowly and scientifically, and in a way that is not so immediately threatening to the status quo that it will get squashed before we can see if it works or not as a solution.
One per borough as a pilot program, to see if it’s feasible to expand.
This is the way it should be done. Instead of spending millions of dollars on a multi-year feasibility study and building hundreds of stores, just build a few and see how it goes.
So, using agile approach here might work?
Only if there are a pair of employees at each store.
I mean, it did say at least one per borough. But, still not as many as we’d like. Maybe if it succeeds on a small scale, it’ll be expanded.
I would hope so! I’d think with that kind of population they’d need 10 stores per borough, maybe more.
If the goal is to serve people with larger distances to groceries today, and unmet needs, it’s probably not as helpful in wealthier areas like Staten Island. Though surely some people there will benefit.
I can’t find easy data on grocery store density, but I’m guessing if the program is as successful as it seems like it should be, dozens of stores across NYC seems like a place they could get quickly. Probably not evenly distributed across boroughs though.
Yeah, with a fraction of the population, I’d be less concerned about Staten Island than the others.
Not everyone will need to go to the city run grocery stores so it’s not 100% of a borough to a to a single store
You have to start somewhere, I guess?
Everything starts somewhere! Hope it works!
It’s a bold move, and I want it to work, but I can’t see how it does at this point.
Could you expand on your thoughts here? Which part do you see as failing or what your definition of failing for this project?
I’m guessing the original OC is pointing to the enormous customer bases each store would have to service and how inadequate the amount of stores per borough are relative to the amount of customers
The stores aren’t supposed to replace the existing stores or serve the whole city population. They’re supposed to put some outlets into underserved neighborhoods whose residents now have to subsist on junk food or else use transit for basic groceries.
I haven’t looked into the proposal much but this is what I envisioned with the term food deserts.
All areas have bodegas but they don’t often have a selection of fresh fruits, vegetables, or food staples.
source: I’ve lived in NYC.
One store per borough when the populations exceed 1 to 2 million won’t achieve the goals of increasing food availability or reducing prices.
If the goal is universal grocery availability at the lowest prices, then I agree: this plan alone won’t achieve that. However, I see a couple of factors here with the plan that could achieve some measures of success.
The first is that the plan is to place these stores in, essentially, food deserts in the city. That would have an immediate positive impact on grocery availability for the localities around the 5 stores. Further, the fact that the city stores will be selling at wholesale will mean that food prices at these could be noticeably cheaper. This would steel customers from other grocery stores, forcing them to lower prices to attract their customers back. While grocery stores usually run on small profit margins, that usually is still while having to pay property taxes (which city grocery won’t), but land (which city grocery won’t), and pay for expensive business operations (marketing, executives, etc) (which city grocery won’t).
I’ll be the first to say its not a slam dunk win for everyone in the whole city immediately, but the locals around the store benefit immediately, and the success of an alternative without a profit motive puts pricing pressure on existing stores possibly fleecing customers with higher prices.
This would steel customers from other grocery stores…
The plan is targeting areas without grocery stores. The areas will already have bodegas but they typically sell junk food and alcohol.
I’m referring to customers not local to the area that want lower prices and would be willing to travel to get it. In economic terms this is called Price elasticity of supply.
Yeah this was always my issue with it. I can understand the plan to drive down the price of goods with government subsidized competition, but that only works if it’s a highly available alternative.
focusing on food deserts, or areas with limited access to full-service supermarkets,
he isn’t out to take on the competition to ‘drive down’ prices, but rather to serve neighborhoods that have no stores…where you have to walk a half hour just to get a carton of milk and a loaf of bread.
Oh, well if that’s the primary goal - to eliminate food deserts - then hell yeah. Makes total sense
