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.
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.
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.
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.