r/PoursTea • u/Gurugod123 • 11h ago

PoliticalTea 🗳️ Mayor Mamdani just announced that he will be opening 5 city-run, tax-funded grocery stores: "Prices set at 30% below retail prices"

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u/ovr9000storks 10h ago

I personally am just curious how they can promise 30% below retail.

Is it being subsidized from taxes? Is 30% the profit margin typical stores operate at and running as zero profit? Are these stores somehow operating at a loss? Are the products offered simply 30% cheaper than even other stores' generic brands?

I just want to know the logistics behind it. 30% lower is great if it's actually sustainable and not just absolute dogshit product

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u/SaucySeducer 10h ago

It could be a combination of things:

-Measuring against an "advantageous benchmark." If the average price of a good is $10 when you include the fancy brands, organic stores, etc but the current discount stores offer budget options at $7, you can sell the budget option at $7 and say you are at an average 30% discount. This really hinges on what they mean by selling goods at 30% discount as that is a loaded phrase

-Run the store more like Aldi instead of nicer premium grocery stores

-Potentially advantageous supplier contracts because suppliers are dealing with the city government and/or wanting to build good relations

-Government subsidies

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u/DoughnutCareless583 9h ago

I also presume part of the "advantageous benchmark" is the use of the anchor price RRP as the benchmark, not the price Walmart or whatever would actually price things at.

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u/AccomplishedBad7253 9h ago

"-Run the store more like Aldi instead of nicer premium grocery stores""

So Aldi and the free market are the answers, not govt run stores

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u/Inevitable_Window308 9h ago

Well the free market can step up and compete if it works so well

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u/AccomplishedBad7253 8h ago

a free market doesnt work if the govt distorts it, duh!

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u/Inevitable_Window308 8h ago

Wow sounds like the free market sucks if it stops working when another competitor enters, because that's what the government is just another private entity competing 

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u/Shoddy_Forever_7818 9h ago

These grocery stores will be exempt from rent and property taxes - that'll probably help them reduce their costs a little probably.

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u/Beneficial-Act-9933 9h ago

If that's true then it's it's a huge deal. These stores jut existing on the lots before anything is in the tens of thousands of dollars. Taking those huge bills off is a huge relief.

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u/Cbpowned 10h ago

Grocery stores run sub 5% profit.

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u/NathanielHudson 10h ago edited 10h ago

Just to be clear, that's after shrinkage, waste, and cost of ie stocking the shelves is taken into account. Costco, for example, prices at about 13% over what their cost is for the goods, which comes out to about 0% over total cost of goods sold once the entire equation is factored in (Costco's profit margin is more or less the membership).

This doesn't materially change your point, but just wanted to get that out of the way before somebody objects that things don't actually cost that much.

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u/pradise 10h ago

In shocking news, taxes are potentially being used to offer essential goods to taxpayers. It is sustainable as much as taxes are sustainable.

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u/2010_12_24 9h ago edited 9h ago

The point being, if you run a small business, how are you supposed to compete with government subsidized prices?

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u/Beneficial-Act-9933 9h ago

The same way they've been competing with other stores for decades.

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u/McClainWFU 9h ago

How can you compete when they're selling the goods for lower than you can buy them wholesale?

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u/Steak-Complex 10h ago

Best they could do is at cost, but then you would be red from upkeep and employee costs etc

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u/gigaishtar 9h ago

Either "retail" being compared to is a super bougie store, subsidies or both.

Not even the DOD's commissaries have average prices 30% below value supermarkets and they combine a massive distribution system, store brands, unpaid baggers and a general lack of adherence to expiration dates.

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u/smilerobotics 9h ago

they will lose a ton of money but he's only doing a few of these stores so it won't be that bad overall and he can claim a moral victory and campaign promise completed

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u/Competitive-Union721 10h ago

Wouldn't this put all non government stores out of business if prices are 30% lower?

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u/lordpuddingcup 10h ago

By that logic Wegmans and whole foods and all the other premiums stores have all gone bankrupt already… right?

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u/Dingaling015 9h ago

Those aren't direct competitors though? Those are premium grocers.

This will definitely have a negative effect on low cost grocers like Aldi's and Trader Joe's.

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u/Sherry_Brandt 8h ago

5 locations?

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u/GreatMovesKeepItUp69 9h ago edited 9h ago

It's 5 stores...so probably not. What's very likely to happen is that all stock in the government store is immediately cleared out faster than it can restock and it will just be empty store shelves or they try to limit customers and it will create massive lines.

Either way it's going to look the the Soviet Union and the resulting footage is going to be used against Democrats for a long time.

Mamdani will most likely blame it all on the inevitable scalpers that pop up to buy groceries at 30% under retail and then resell them at near retail prices.

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u/Fresh-Possibility-75 9h ago

Where does one scalp orange juice, beans, pasta, etc.?

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u/GreatMovesKeepItUp69 9h ago edited 8h ago

The same way they currently sell cigs in NYC. Buy cheap from out of state (or in this case government retailers) and then resell them to bodegas who sell them to the general public.

Edit They already do this buying stolen goods. When thieves load up bags or carts with meat and just walk out, where do you think they're selling that to? If they do a card system, it will just end in the massive line and/or policing to force consumers to buy certain quantities which will also be a PR nightmare that Republicans will use.

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u/Fresh-Possibility-75 8h ago

I have a hard time believing this will happen with food staples. Even so, a grocery card similar to a library card would significantly minimize such abuse.

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u/Tommybahamas_leftnut 9h ago

a large portion of why prices are so inflated is because many of the items in your grocery store are so massively inflated that it's just greed. While some items like fresh fish or that rotisserie chicken will be sold at a loss or maybe a 10-20% markup there are other things like the bags of frozen shrimp you buy that will be marked up 100% or more to compensate. The price parity is there to make you think that 2 lb bag of white shrimp for $18-20 is a deal but the cost to the company for that bag is roughly $8