Zohran Mamdani’s City-Owned Grocery Stores (Part I): Can It Work?
So the likely next Mayor of New York, Zohran Mamdani, has proposed a pilot of City-owned grocery stores, which means that, even though he is not the first to have done so, the idea will now get an airing in many cities and towns across the land. This is not entirely a surprise: I had expected a renewed focus on food deserts ever since the pandemic, during which the inequality in severe outcomes was clearly attributable in part to poor nutrition. Yet this is not actually his primary concern (see TikTok below): rather, his “public option” is more about lowering prices.
I am intent on giving it a fair shake, but still… color me skeptical. Margins are notoriously slim in grocery to begin with, and it takes a real lack of humility to proclaim that he or the City can do better.
His five-store pilot will not come close to triggering the volume discounts from wholesalers that bigger operators enjoy, nor the economies-of-scale that centralized logistics can provide. (In full-service grocery, scale is pivotal, and the lack of it, often fatal). Indeed, those wholesalers, fearful of losing their larger accounts, might not even be willing to do business with his chain-let.
He also talks about local sourcing, but that ain’t cheap either: when was the last time a New Yorker found anything remotely affordable at their nearby farmers market?
Then there is his crude understanding of pricing strategy, a science all its own, which can lose its critical feedback loops – and bring all sorts of unintended consequences – if based on aspiration or advocacy, rather than actual demand.
Finally, there is the track record. I am not aware of a single, City-owned/City-run success story in this country: the one or two that have endured are in tiny rural towns, which are not exactly the best analogs for NYC.
Now, the absence of “comp(s)” does not mean that we should not try new things; indeed, I applaud the openness to experimentation. Yet other alternative approaches might be a bit more promising. Stay tuned for Part II next week, where I’ll discuss a few…
(To view Zohran’s TikTok video on the subject, click on “Read the Article” below).