City Journal has a piece about Zohran Mamdani, the self-described Democratic Socialist who this week won the ranked-choice Democratic primary to be New York City’s next Mayor. (He beat former governor Andrew Cuomo in an upset. He will face off against current Mayor Eric Adams in the general election. Both Cuomo and Adams can be objectively and fairly described as flawed candidates.)
One of Mamdani’s core proposals is to open a network of city-owned grocery stores that would lower food prices in the city. City Journal notes that “the Mamdani campaign has not indicated that the government-run stores would be limited to low-income residents,” but also points to some flaws in the plan:
“Opening municipal groceries would not address the underlying forces driving grocery store closures in parts of the city – namely, crime and poverty. After all, it was the rampant shoplifting of recent years that led to mass retail closures in the first place … Another argument for the city-owned stores is that they would be able to cut prices by minimizing profit margins. But private grocery chains aren’t exactly price gouging—net profits average a razor-thin 1 percent to 2 percent. One woman I spoke with, a member of a food cooperative in Lower Manhattan, said she wasn’t sure ‘how it could work given the prices at our own nonprofit aren’t any lower than regular grocery stores.’
“Eliminating rent by building on city-owned land might help keep prices down. But those savings could easily be offset by the city’s lack of experience in running retail operations. Mamdani also wouldn’t benefit from the economies of scale that larger retailers enjoy, and no supply chains are currently in place.”
City Journal writes:
“But what problem, exactly, is he trying to solve? If it is ‘food deserts’ – areas without access to grocery stores, which may or may not exist in New York – then the city would be wise to assess what barriers currently exist. Is the problem crime, lack of leasable land – which could be addressed by zoning reform – or low incomes?
“Mamdani assumes that he knows the problem (corporate greed) and tailors his solution accordingly. But since grocery stores aren’t making large profits, his plan is unlikely to deliver meaningfully cheaper goods. What savings could be achieved by eliminating rental costs will likely be vastly outweighed by a lack of supply chains and scalability, and by theft and criminal damage. Only by pouring heavy subsidies into the operation could the city keep it running.
“The result would be a poorly run, taxpayer-funded grocery store that will have little impact on the high cost of living. New York’s small-business owners, and the rest of us, are right to be skeptical.”
KC’s View:
City Journal, to be clear, has a bias – it describes itself as “a publication of the Manhattan Institute for Policy Research, a leading free-market think tank.” In this case, I share those biases – the government-owned grocery store idea, at least as presented, strikes me as one that simply does not understand retailing and market realities. It also may underestimate the impact that implementation of such a plan would have on the existing food retail infrastructure.
Fox Business is reporting that John Catsimatidis, owner/CEO of Gristedes, which operates more than a dozen supermarkets in the city, is saying that “if the city of New York is going socialist, I will definitely close, or sell, or move or franchise the Gristedes locations.”
Catsimatidis, for the record, was an unsuccessful mayoral candidate in 2013. And when he ran for mayor, I observed that he wasn’t someone who was very good at running supermarkets – Gristedes, I thought, was barely mediocre – so I wasn’t sure that he was up to the task of running the biggest city in the world. (Not that business executives aren’t capable in general – I was a big Michael Bloomberg fan. But Catsimatidis is no Bloomberg.)
Catsimatidis’ threat may be both political and knee-jerk in nature, but that doesn’t mean that Mamdani shouldn’t pay attention. After all, Catsimatidis would be one of his constituents, too, and I assume that Gristedes pays corporate taxes that help the city exist.
Maybe everybody ought to take a deep breath and figure out how to work together.
Corporate greed exists, but it isn’t practiced by every corporate executive and it isn’t responsible for all the world’s ills. And maybe Mamdani ought to recognize that running supermarkets is hard. Plus, maybe Gristedes would be better served by solid counter-proposals that address problems as opposed to threaten a potential incoming administration.
The post NYC Faces Possibility Of City-Owned Grocery Store Network appeared first on MNB.
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