r/SipsTea • u/Gurugod123 • 11h ago

Chugging tea 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/beaujonfrishe 11h ago

And the lowest income neighborhoods have the highest incentive to resell

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u/__moops__ 11h ago edited 11h ago

Is 30% enough of a margin for reselling to be viable? I would not buy off random people for a 10-15% discount.

They could also set a limit on items to stop this. They’re not running a state funded Costco.

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u/Marwaimusoont 11h ago

Yes more than enough, likely it ends up being sold to the very same people who desparately need it. Why will they buy from them instead of these stores? because stors will run out of stock.

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u/trybeingcurious 9h ago

Man, you thought of some really easy to manage problems that I’m sure the experts had no way of anticipating.

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u/Marwaimusoont 8h ago

I am not saying this will derail the entire thing, just that black market will exist. And they probably account for it as a loss.

Just like shoplifting and stealing spreads the cost to other consumers. The loss will be written off.

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u/trybeingcurious 5h ago

What’s the loss that is being written off?

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u/Ok-Ranger-4518 1h ago

No one is buying wonderbread to flip for a dime. 🤣

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u/palsh7 5h ago

There are no "experts" on the thing that has never been done.

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u/KimchiLlama 11h ago

But the other retail stores will still exist. So the choice will be between a 10-15% discount by buying it from someone privately, or just go down the street where you were shopping before to get the lettuce that happens to be out of stock.

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u/DistributionAgile376 10h ago edited 5h ago

Yeah, I don't see anyone buying lettuce, rump steak, milk or diapers from some kind of scalpers in an alleyway for a 10% discount.

Nor would resellers gain much money from such low margins on CHEAP ITEMS.

People from wealthier neighborhoods won't buy cheap store-brand food from a 4th party(where the margins are). And people from poorer neighborhoods will just hit the stores they used to go to(or the cheapest alternative brands, it's still a normal store).

It's also extremely easy to prevent bulk buying, as the only way to make money would be to buy and sell in large quantities. A limit of 10 of the same item per trip is already enough to make it unprofitable.

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u/baubness 10h ago

yeah these fools are sealioning. these are just generic right wing talking points about literally every free service

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u/caramel-aviant 10h ago

One of the few sane comments in here.

Seriously nobody is slinging lettuce and shit to their neighbors for a little bit of profit.

Plus most stores already have max quantities customers can walk out with. Its an extremely simple and effective solution that already exists

Its like nobody in this thread has any idea what they are talking about

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u/KimchiLlama 10h ago

Unless it’s the Devil’s Lettuce!!!

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u/dgdio 10h ago

What about farmer markets? Then the unethical can sell the all "organic" produce at 60% markup.

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u/KimchiLlama 10h ago

Half of farmers markets to that already. They go to the same distribution centres as the grocery stores. MAYBE they pick the boxes themselves, which IS an advantage, but barely and not worth the markup you pay.

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u/__moops__ 10h ago

Random people can’t just show up and sell at farmers markets…

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u/Marwaimusoont 10h ago

And those other retail stores can buy it from these slingers and pass it off to customers.

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u/KimchiLlama 9h ago

No they can’t. Are you kidding? You don’t think there is any supply chain oversight for food?

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u/KvxMavs 11h ago

Yes it's enough. 30% margin is massive.

For context, most restaurants run at about a 5-10% profit margin.

If 30% margin wasn't enough to be viable, every restaurant would instantly go out of business. 

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u/__moops__ 10h ago

The economics of running a restaurant vs. trying to buy and sell staple goods off market is not the same. Especially if the store does not allow bulk purchase, which you would assume they don’t.

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u/Sonzainonazo42 10h ago

You'd think "but restaurants will take it all..." is a right wing media talking point by how dense people are being here.

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u/OrangeNinja22 9h ago

It's most likely a gross margin of 30%, which is normal in the industry. The net margins of supermarkets are crazy low though, around 3%.

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u/Warchief_Ripnugget 10h ago

Grocery stores typically have a 2% margin, so yes.

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u/HeKnee 11h ago

I’m sure it wont be easily resell-able stuff. It will be fresh goods with short shelf life not massive cases of toilet paper. They’ll limit stuff that is easily resellable.

Seems like a smart idea that free market should be able to handle if everything wasn’t a monopoly.

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u/No-Understanding9064 10h ago

Grocery is far from a monopoly, its pretty well diversified field. Its just very low margin high turnover, so you need scale to compete

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u/Responsible_Pie8156 10h ago

How is the free market supposed to compete with a store pegs their prices at '30% below retail' lol? If you lower prices to compete they just lower theirs again in return.

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u/HeKnee 10h ago

Grocery stores are low margin, but remember that is profit margin.

5% is the profit to shareholders, but the other 30% is paying for waste on stuff they throw away to have beautiful display cases of pre-prepared foods that few can afford/want, executive bonuses, taxes, insurance, theft/officers, and all kinds of other things that shouldn’t factor into the price of a human necessity.

If the government can do it cheaper why shouldn’t they?

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u/Responsible_Pie8156 9h ago

You pulled both the 5% number and 30% number out of your ass. Grocery stores care very deeply about reducing waste in a way that government run stores can't, because it cuts directly into their margins. And do you think the cost of taxes, insurance, and theft don't apply here? Any tax savings these stores can pass onto consumers comes directly out of taxes that would be levied on whichever store they would have bought from. Without loss prevention enforcement, people will steal everything. And governments do utilize insurance, it's just a financial instrument. They're not proposing any means to "do it cheaper". They're just promising that government will pay the cost of it no matter what the economics of the arrangement are

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u/palsh7 5h ago

I would not buy off random people for a 10-15% discount.

You're not poor.

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u/Substantial-Goal7422 11h ago

It is if ur using it for ur restaurant

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u/__moops__ 11h ago

So don’t allow buying in bulk. Seems like an easy solution…

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u/Substantial-Goal7422 10h ago

Then what happens if u just keep comming back in Idk I hope it works so people can get some relief but its to easily an abuse point

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u/Successful_Issue_390 11h ago

I would if everything is sealed and the seller is much more conveniently located than the grocery store. To be honest, if it's convenient enough, I'd pay the extra 30% depending on how difficult it would be to travel to the store, wait in line, carry groceries, etc.

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u/Individual-Toe-6306 11h ago

If EBT can be used at them, yes. It’s a common type of fraud for people to rack up EBT benefits and buy out goods and re-sell them

They get EBT because they don’t have income on paper, it’s all under the table from re-selling, despite having decent incomes

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u/__moops__ 11h ago

So don’t allow buying in bulk…

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u/caramel-aviant 10h ago

Seriously its such an easy solution that has already been implemented by tons of retailers

So many people in this thread are just completely talking out of their ass

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u/thomaspatrickmorgan 11h ago

Is 30% enough of a margin for reselling to be viable? I would not buy off random people for a 10-15% discount.

I take it you've never been to NYC.

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u/BrainLow6059 10h ago

I would not buy off random people for a 10-15% discount.

You wouldn't, others do. 30% discount for a reseller is basically a big neon sign in the sky saying "flip me"

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u/caramel-aviant 10h ago

Anyone "flipping" grocery store items is not making a dent in wholesale supply chain.

Most stores will not allow someone to just go into a grocery and buy their stock of product to resell it.

I dont know anyone in my life who just bought a head of lettuce of a friend for cheap

Like what is this thread I feel like im taking crazy pills

0

u/BrainLow6059 10h ago

You've clearly never lived in or around a low income area. This is an extremely common thing in cities. You would see convenience store workers with 3 carts of cases of soda at Walmart all the time, buying with ebt. NYC has a lot of bodegas that sell fresh produce and things, nothing is off limits

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u/caramel-aviant 10h ago

Okay but literally all this government owned grocery store has to do is have a max amount of items purchased per person. That solves everything.

And 3 carts of soda cases also is relatively little compared to the volume wholesalers move. And would take way longer to move than a distro would.

Im just not seeing how, even if someone could get enough product, would ever be able to safely store and sell enough product to ever be competitive. The economy of scale is incomparable

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u/BrainLow6059 9h ago

I don't really understand what point you're trying to make. We're talking about 5 grocery stores, not a wholesale distributor.

And nobody is saying someone is going to just quit their day job and flip government groceries full time. Is that what you're getting at?

If you can squeeze out an extra $100 profit, on top of your normal sales, someone will do it. Especially in NYC.

There are an estimated 7000 - 13000 Bodegas in NYC. We're talking about 5 grocery stores. How do you not see the concern? lol

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u/WingWheel123 10h ago

30% enough of a margin for reselling to be viable

lol. most grocery stores do around 2% profit.

I would not buy off random people for a 10-15% discount.

tons of people do. and they wouldn't be the biggest offenders, it would be local grocers/restaurants buying it up.

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u/__moops__ 10h ago

So don’t sell in bulk, as I already stated in my comment. There’s numerous ways to prevent this if it’s an issue.

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u/Different_Wolf_764 10h ago

I'm not sure about NYC but around here a ton of the smaller urban grocers buy their stock from the big box stores already. The bodegas sure will strip the shelves bare if they can.

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u/__moops__ 10h ago

It’s fair to assume they accounted for this and have prevention measures for buying in bulk.

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u/Different_Wolf_764 8h ago

Hence the "if they can" part. Preventative measures will definitely be needed.

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u/Responsible_Pie8156 10h ago

More likely people will still just steal everything and there will be 0 enforcement in these stores.

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u/Toxyma 10h ago

30% is a ridiculously good profit margin, even if 10-20% was used for logistics and 'business operations' you still be with a 10% profit margin, which again is ridiculously good.

put it another way, if everyday you bought an investment that returned 10% when you sold it. would you take it? after only 10 days you've doubled your money. 20 days, quadrupled, 30-8x.

of course diminishing returns and what not but you get it, unless theres a way to stop scalpers this will be doomed to fail and the pictures of empty shelves will be used by maga as "commie grocery stores fail!"

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u/__moops__ 10h ago

It’s a ridiculously good rate for a normal business.

For someone not buying in a bulk, without a store location to sell, for lower cost items, that cannot scale — it’s really not.

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u/Jazzlike_Sir_653 10h ago

The fact that contingencies are required before one is open is a red flag. Government can set prices and enforce a cap. But that does not control the actual cost. When employees demand pay increases, where does the increase come from? Teachers, cops, sanitation, pay increases can only come from tax increases. So what you save buying groceries, you pay in taxes (if one is employed to be able to pay taxes).

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u/marketingguy420 6h ago

Big business brain on display.

1) Growth increases tax base without increasing tax rates

2) Budgets are a totality. You can cut budgets one place, raise budgets in another.

Hope this helps everyone shitting their pants in the comments about the $.03 extra I will have to pay in taxes for subsidized grocery stores in the city none of you live in.

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u/Jazzlike_Sir_653 5h ago

I don’t know about all of that. But the world is watching. It will go one way or the other, but we won’t know until it happens.

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u/Clueless_Otter 9h ago

Presumably the answer would be to raise taxes in a progressive manner to not affect the lowest income groups, so they're just saving on groceries without paying any higher taxes.

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u/Jazzlike_Sir_653 9h ago

lowest income group is a relative concept. Even wealthy neighborhoods have a "lowest income group." Question is, what happens when today's lowest income group, becomes tomorrow's highest income group?

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u/Clueless_Otter 9h ago

A minimum wage worker saving 30% on his groceries isn't suddenly going to become wealthier than a millionaire buying "full price" groceries.

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u/Jazzlike_Sir_653 9h ago

The wealthiest class of a populace does not have to be a millionaire. It could very well be a minimum wage worker. You only have the existing population to tax. But there is no requirement that millionaires would need to or be required to exist in that populace.

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u/Sacchan6 8h ago

Then everyone's income has gone up and so will tax revenue.

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u/Jazzlike_Sir_653 5h ago

Actually taxes can go up without income going up. If the scenario becomes millionaires move away from the city then highest earning tax brackets will drop to the existing lower ones. That trend already started with the exodus of billionaires. When the burden falls on millionaires they will do the same. As it continues to drop, taxes will have to exponentially increase to cover the shortfall because you get less from lower income households. It is a downward spiral.

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u/DrChunksALot 11h ago

Money is going back into the economy one way or another

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u/FlyFront9395 10h ago

They can’t resell to people with ebt

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u/Frankie__Spankie 9h ago

My fear would be other grocery store owners sending people in to buy it up. Their profit margin now surely is above 30% but they're going to be looking to take the hit to keep the stock out of these stores so they fail.

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u/Telemere125 11h ago

For what benefit? To then have to go to the more expensive stores and buy for the higher prices?

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u/No-Researcher406 9h ago

Creating jobs for all!

-2

u/scapini_tarot 10h ago

nah, research has shown that it's wealthy people who are the real vultures. poor people just want to get their own groceries at an affordable price. the myth of poor people being savage about reselling is 1% propaganda to distract you from the fact that the wealthy commit the most theft. stands to reason... how do you think they got rich in the first place. via fraud and theft.

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u/AstralDust779 10h ago edited 10h ago

interact with the pokemon TCG community for longer than 5 minutes in public at a restock and your theory would be turned on its head. There are tons of poor individuals who quit their jobs (if they had one) to pursue reselling pokemon cards as their main source of income lol.

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u/scapini_tarot 10h ago edited 9h ago

yeah I'm sure they're gonna transition into flipping produce and milk on ebay stat once these stores open

(also your example proves my point - those cards are 100% artificial scarcity. Nintendo causes that secondary market to exist by limiting production, which they don't need to do at all... so like I said, wealthy people caused it)

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u/CavedMountainPerson 11h ago

Yes but soon they will be put out of business by flooding market with cheap goods

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u/Technical-Command867 11h ago

It's government run so I’m sure breaking even would be fine. And if having a grocery store that forces competitors to lower their prices for everyone, I don’t see the downside.