Why New Yorkers Want Public Grocery Stores

Forbes

2 days ago

NEW YORK, NEW YORK - JUNE 24: New York mayoral candidate, State Rep. Zohran Mamdani (D-NY) speaks to ... More supporters during an election night gathering. (Photo by Michael M. Santiago/Getty Images) Getty Images
The Democratic mayoral primary victory of New York City's Zohran Mandani has attracted global attention. The 33 year old from Queens won due to an impressive grassroots field campaign and a focus on economic justice issues. At the top of that agenda are publicly-owned grocery stores, which would be a first for the sprawling metropolis. But New York City already has thousands of grocery stores. Why would America's largest city want to road test such a plan?
Mamdani's proposal would establish a pilot program of municipal grocery stores with the goal of providing affordable groceries to New Yorkers. Recent polling from Data for Progress and Batul Hassan of the Climate and Community Institute (CCI) shows the idea resonating with New Yorkers. Two-thirds of New York City voters (66%) support a proposal to create municipal grocery stores, including a strong majority of Democrats (72%), as well as a majority of Independents (64%) and Republicans (54%).
Grocery costs are a top concern for New Yorkers. Climate and Community Institute/Data For Progress
The polling found that 85% of New Yorkers are paying more for groceries now compared to last year and 91% of New Yorkers are concerned about how inflation impacts what they pay to get food on the table. Four out of five households in New York report finding it harder to afford groceries over the last year. More than half of all families struggle to cover basic expenses.
These household economic strains are at crisis levels, and the private sector cannot solve for them in the current economic climate.
Two-thirds of New Yorkers polled (66%) support the creation of municipal grocery stores in New York ... More City. Climate and Community Institute/Data For Progress
Syndicated market data from NIQ shows that grocery prices have spiked over 32% since 2019. Prices have shot up even higher in many ultra processed food categories such as snacks, frozen foods and meat that make up over 60% of America's calories. Such categories are usually dominated by a handful of companies. Market concentration in the grocery industry has enabled processed food conglomerates to raise prices and generate enormous profits, all while actual food consumption has been stagnant since 2019, vastly increasing food insecurity.
According to CCI's Hassan, the resources needed to establish a public grocery program are infrastructure within the city's control. Grocery store planning and rollout would be driven by communities, incorporating the food preferences of people in the neighborhoods.
Some grocers have expressed skepticism at the idea, including the billionaire owner of Gristedes and D'Agostinos, who has threatened to close stores.
But publicly owned grocery stores are quite common and already exist at scale—in the U.S. military.
Every branch of the military has its own public grocery system, called an exchange or PX, that provides goods and services for enlistees. These include groceries, commissaries, department stores, gas stations and convenience stores, the same services that many full service grocers provide for civilians. The exchanges provide basic consumable goods, tax-free, and generate over $4.6 billion in annual revenue across 236 commissaries. This size enables commissaries to leverage supply chain efficiencies at the level of any national grocery chain. If the PX were a U.S. grocery chain, it would rank in the top 20 by sales nationally.
How much of a stretch would it be to municipalize such the PX model, especially if there were a large scale, committed effort to build multiple locations quickly and create the efficiencies of scale to make it viable?
Exchanges keep their costs down by operating as cost (not profit) centers, with a 2-3% percent gross margin, while budgeting labor and administrative expenses, rent, occupancy and utility costs centrally and not through each operating unit. This math means exchange prices can be 30% lower than typical retail prices, and saved military families and veterans over $1.6 billion in 2023.
By comparison, independent and specialty grocers typically run at 35-40% gross margins, while national chains such as Walmart and Kroger run at 22-25%, all to cover their costs and generate a thin profit margin, usually 2-5% of sales. Lower costs and massive profits are the result of massive sales volumes that give bigger chains market power with suppliers, especially due to lax enforcement of antitrust laws such as Robinson Patman. This is also why smaller independent grocery operators, such as those that dominate the New York Metro area, typically have higher prices and high operating costs. Like a post exchange, a civilian-facing public grocery option could take some of these costs out of the consumer price equation.
FT. BELVOIR, VA - MAY 31: Commissary at Ft. Belvoir in Ft. Belvoir, VA. (Photo by Bill O'Leary/The ... More Washington Post via Getty Images) The Washington Post via Getty Images
Military exchanges still rely on the same supply chains as the private sector, stocking familiar brands and products. For example, the wholesaler SpartanNash, which was just acquired by C&S Wholesale, is a large supplier to military exchanges. A network of New York City public grocery stores could leverage city purchasing power to negotiate strong wholesale contracts and keep markups low, as well as buying food directly from local growers and producers in the Northeast.
And public grocers could require vendors to meet values-based purchasing standards, such as those being implemented in New York City's public schools. Such standards emphasize healthier, whole food options, fair wages for workers, environmental impacts and diversifying supply chains. In South Korea, such public investment in 'precautionary' supply chains ensures that public institutions have access to healthy, safe and sustainably grown products. In New York City, it could mean healthier options are also the most affordable, turning typical grocery value chains on their head.
Public grocery stores could therefore operationalize the Right To Food, an idea supported by over 80% of Americans.
A public grocery option would not be a utility, which would imply a monopoly. New York would still have a thriving and diverse grocery sector, from Food Bazaar to Trader Joe's, to thousands of immigrant-owned bodegas, even Gristedes- if they want to stay open. Nor would it be a charity vehicle, dependent on donated or lower quality products from grocers, wholesalers and processors.
A public grocery sector could instead be a backstop, a vital public service and an expansion of the safety net in the tradition of the New Deal, one that bridges affordability and access for cash-strapped New Yorkers. With the Trump Administration delivering a one-two-three punch of raising grocery prices through tariffs and trade wars, sharply cutting back on SNAP food assistance and not enforcing antitrust laws to ensure fair competition, a public grocery option presents a proven, pragmatic and timely policy solution.
In an era of constant supply chain crisis and disruption, Mamdani's idea for public grocers is not any more radical than the Pentagon. But it has captured the imagination of hard-working New Yorkers hungry for change.