Zohran Mamdani, the favorite to become New York City’s next mayor after winning the Democratic primary, has a contentious plan to create a network of city-owned grocery stores. But it’s less radical than critics portray, some food policy and grocery industry experts say.
Mamdani has proposed five municipally owned stores, one in each New York City borough, to offer groceries at lower prices to customers with limited access to supermarkets. In some New York City neighborhoods, more than 30% of people are food insecure.
The proposal has been blasted as a “‘Soviet’ style disaster-in-waiting,” “farcical” and “economically delusional.” John Catsimatidis, the owner of New York City-based supermarket chain Gristedes, threatened to close stores if Mamdani is elected. (Catsimatidis is a two-time Republican candidate for mayor.)
But Mamdani is drawing on government-owned and subsidized models that already exist in the United States, such as the Defense Department’s commissaries for military personnel, public retail markets that lease space to farmers and chefs, and city-owned stores in rural areas such as St. Paul, Kansas. Atlanta is opening two municipal grocery stores later this year after struggling to draw a private grocery chain. Madison, Wisconsin, and rural Venice, Illinois, also plan to open municipally owned stores.
“This is more common than people are aware of,” said Nevin Cohen, director of the City University of New York’s Urban Food Policy Institute. “There’s a wide spectrum of food retail establishments that could be created by or with the support of city government.”
Mamdani has not released all the details of his plan yet, and it’s not clear what role New York City would play in the opening or operation of grocery stores. Would it build stores? Lease them out to a private company or a non-profit? Would the employees be on the city’s payroll?
Mamdani’s campaign did not respond to CNN’s requests for more details of the proposal.
But a government-owned supermarket “concept is sound” and can take a “variety of formats,” Cohen said. “Rather than giving incentives to private supermarkets without the assurance of low prices, a city-focused program that puts affordability front and center is a better approach.”
Yet municipal-owned stores have recently closed in several towns, such as in Baldwin, Florida. Chicago also shifted its effort from building city-owned stores to a city-run public food market, despite a study showing stores were “necessary, feasible and implementable.” These cities’ struggles underscore the challenges of government stepping into the grocery business amid fierce resistance from the private sector.
Industry representatives say government-owned stores will compete with private businesses and unfairly disadvantage grocers, local bodegas and other stores in New York. If government stores drive out other food retailers, it would also hurt the problem it’s trying to solve.
“This proposal seemingly could use taxes paid by business, and use that money to compete against said business, which is an alarming precedent to set,” said Michael Durant, the CEO of Food Industry Alliance, a trade association.
‘Policy experimentation’
Privately owned grocery stores already run on slim 1% to 3% margins, according to industry estimates. Government stores would be able to offer low-cost groceries because they would not have to pay rent or property taxes, according to Mamdani.
“They will buy and sell at wholesale prices, centralize warehousing and distribution, and partner with local neighborhoods on products and sourcing,” the campaign said on its website. Many companies already buy from wholesalers, have centralized warehouses and partner with local communities, however.
His proposal would cost $60 million, Mamdani said in an interview on the podcast “Plain English” released last week. Mamdani argued his proposal would be cheaper than an existing city program that provides tax breaks and subsidies for supermarkets to open in underserved areas, but does not include any requirements for food to be below certain prices.
In many cities, grocers and other retailers governments recruited have closed in low-income areas after their tax incentives expired or they struggled to make a profit.
“This is a proposal of reasonable policy experimentation,” Mamdani said. “If it is not effective at a pilot level, it does not deserve to be scaled up. But I believe it can be effective. I think that there’s far more efficiency to be had in our public sector.”
Advocates for independent grocers and small chains say that stronger antitrust enforcement would be a better solution to help lower food prices and spur competition.
But Errol Schweizer, a veteran of the grocery industry who publishes the newsletter “The Checkout Grocery Update” and has written in support of a public grocery sector, said Mamdani’s proposal would address a failing in the market. Government-owned grocery stores would not compete directly with bodegas and convenience stores, which typically do not sell fresh produce and meat.
“New York has a great grocery sector,” he said. “It could be a backstop for cash-strapped New Yorkers.”
Other experts, however, say that for government stores in New York City to be successful, they must draw from customers with a wider range of incomes. This would help them maintain broader political support and offset bigger losses from lower-performing stores.
“A network of stores can be really effective if you’re placing them in different areas. You’re creating a chain of stores to support one another,” said Erion Malasi, the Illinois director of policy and advocacy at the non-profit Economic Security Project. He is working with Venice, Illinois, a historically Black community that received a $2.4 million grant from the state to open a municipally owned store.
Public option for groceries
Rural areas have often been the site of government-owned grocery stores in the past. It’s harder for sparsely populated towns to draw a private chain, find a distributor to service the store and labor to operate it, and have a large enough customer base to sustain it.
But more cities are trying to open stores in neighborhoods with limited access. Cities can leverage their scale to buy from suppliers and city-owned land.
Atlanta recently approved $8.2 million in incentives to a small grocer to operate two stores on city land in low-income, predominantly Black neighborhoods. Azalea Market is set to open this year and also offer cooking demonstrations, nutrition workshops and other resources for families.
Atlanta Mayor Andre Dickens told CNN that the city created tax incentives and low-cost land to draw national chains, but it couldn’t find a taker.
“We said that if they’re not going to help us build it, we’ll build it ourselves,” he said.
Dickens believes government taking a role in offering affordable groceries is similar to investing in other public goods, such as housing, education and health care.
“We should be investing in the public good, from the urban farmer all the way to the independent grocer. People need to eat.”
The post Zohran Mamdani wants to build government supermarkets. America already has them appeared first on CNN.
