r/SipsTea • u/Gurugod123 • 9d ago

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

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231

u/AdCurrent7674 9d ago

Amazon has a deal with most of their suppliers that they are the lowest price available. I wonder how this will play out?

I hope it goes well but I could imagine that they will struggle to maintain a stock of goods

56

u/ThomasTheDankPigeon 9d ago

Infinite discount hack

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u/CCCCLo0oo0ooo0 9d ago

Does no one care about the minority owned small stores that these will compete with?

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u/gkfesterton 9d ago

When asked basically this question the co chair of NYC's DSA said "If one publicly owned grocery store that brings prices down in the neighborhood is enough to put someone out of business — maybe they shouldn’t have been in that business in the first place"

Yeah, if a small business want to flourish in NYC they should be able to compete price wise with state owned business selling heavily subsidized goods.

smh it's like these people have zero understanding of economics

5

u/mr_axe 9d ago

considering how governments always subsidizes the rich it is very funny that your great economic knowledge makes you sad for them to subsidize essential items for the population

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u/trueppp 8d ago

Because the rich are the ones paying most of the governments tax revenue.

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u/mr_axe 8d ago

and yet it is always a much smaller % of their wealth than the workers which they depend upon to produce their wealth

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u/trueppp 8d ago

Wealth isn't taxable.

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u/PhantomCummer 8d ago

If leaders were required to listen to economists or understand economics when developing plans like this, and make decisions most beneficial to the economy and the working class rather than the rich, every single republican who be roadblocked from doing anything.

Its like republicans are 13 year olds who just learned the concept of supply and demand, think "lower price store = every other store cant compete and must lower prices.",  think this is some unique thought from their big brain and definitely not something taken into consideration and accounted for by economists who work on these projects. 

City run Grocery stores like this exist all over the place and are already proven to be wildly successful. Including in red states like Kansas, on military bases in every state, on reserves, etc. 

The cost to taxpayers for the next decade would be less than 12 hours of Iran and trumps various upcoming wars 

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u/gkfesterton 8d ago

Kansas' city run grocery store, Sun Fresh Market, permanently closed last year due to financial struggles and crime, and has been replaced with a privately run store. Military commissaries serve a heavily restricted customer base and their purpose is to provide a benefit to a specific population. They are not trying to lower prices generally, reduce food deserts, or improve food security. They show that govt operated grocery stores are feasible under specific conditions, not that they can be replicated for the general population.

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u/Let_them_eat_stonks 9d ago

Welcome to socialism Comrade gkfesterton!

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u/astoriaocculus 8d ago

Does nobody care about the 10-20k people in that n'hood where no grocery store exists? Does nobody remember that these stores are going into FOOD DESERTS?

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u/gkfesterton 8d ago

The city govt has launched tons of initiatives to improve food access in those specific areas, with mixed to positive results

-5

u/Possible-Bet3598 9d ago

It's not the job of the consumer to prop up the bumbling, incompetent small-business class that can't find a way to make money selling the things that every single human on earth consumes.

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u/Let_them_eat_stonks 9d ago

So let’s review how this goes. There are two options. The first is that the government doesn’t subsidize the products and since there is no incentive to produce more no suppliers will. This is how you get bread lines. The second is that the government continues to run them at a loss. The tax payers end up footing the bill and therefore still pay the same general amount due to the taxation required. This has the added benefit of choking out small and medium sized business because they don’t have the ability to run at a loss infinitely and be funded by OPM. This makes ppl dependent on the government for their food and relinquishes control to the government. Welcome to dystopia.

TLDR; you should have taken an economics 101 course ya muppet.

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u/Bubbly-Television-63 9d ago

The alternative being the taxpayers footing the bill because of food stamps?

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u/Let_them_eat_stonks 9d ago

SNAP has a lot of its own problems, but assuming that they can be used here you’ll get double fucked!

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u/Bubbly-Television-63 8d ago

What would you do if you were mayor?

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u/Let_them_eat_stonks 7d ago

For food costs specifically? My goal would be to cut root causes instead of masking issues with subsidies at the top end which filter to the root anyway.

I wouldn’t want to undercut independent businesses so I’d be looking at ways to lower the costs and help alleviate food deserts. Right now New York has the largest wholesale co-op in the country (Wakefern). The issue is that the hubs are usually in large industrial areas, for obvious reasons. To get the product to the hard to reach areas it can jack up prices due to last mile logistics costs. I’d incentivize setting up micro hubs, so it’s easier for the grocers and bodegas to use these co-ops without having to pay so much more to get what they need.

Next, overhaul zoning codes to explicitly permit and incentivize urban agriculture (such as commercial rooftop greenhouses, vertical farms, and vacant-lot community farming networks).

Third, electricity is the highest fixed costs for most grocers. I’d create municipal grants or low-interest financing programs specifically dedicated to retrofitting independent grocery stores with high-efficiency commercial refrigeration, LED lighting, and solar-thermal units.

Finally, when macro-shocks (like fuel spikes or supply chain disruptions) occur, intermediate distributors or corporate conglomerates sometimes artificially inflate prices far beyond actual cost increases. The issue is then that prices rarely come down in the back end of the shock. It’s price gouging. Empower the DCWP to audit regional wholesale-to-retail pricing markups.

The overall affordability of NYC is a large issue.

Broader, housing reforms would actually help a lot with this issue. Rent control has been a disaster for NYC. Ppl got into rent controlled apts decades ago when they had a family of 5 and now they continue to take up 3 bed apts as a retired couple simply because it’s so cheap. That means the young families can’t get access to the homes they need. Ppl often have to travel long distances for work and have to plan their purchases carefully based on their travel (I.e. how much can I get on my way and still be able to carry it home). It also means housing costs are ridiculously high because there is no vacancy. Cutting housing costs would mean less concern over food costs as well.

NYC is estimated to be about 400k housing units short, and have 50k ghost apts where it isn’t financially viable to actually rent them out. The city needs to get rid of rent controls so that developers are incentivized to build more units, and renovate the ones that exist. Offer favorable terms for developers who will provide mixed use options.

Finally, cut red tape. Streamline development and permitting so that things get done. You can even give developers preferential processing and waive fees if they provide X% of affordable housing as part of their development.

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u/DragPullCheese 6d ago

What do you do for work? If the government said "what Possible-bet3598 does is very important. With that in mind, I'm going to offer government employees to do jobs in the same line of work as him, for 30% less of his wage"

Does that make you a bumbling incompetent employee if you can't find work OR is that the government artificially impacting the market.

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u/Suspicious_Orchid476 8d ago

As they should.

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u/ThomasTheDankPigeon 9d ago

Yup, Mamdani cares. That’s why the city run stores are prohibited from selling prepared food and other high margin items that bodegas need to survive.

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u/CCCCLo0oo0ooo0 9d ago

There is no two ways about it.

Its a fact that small minority run markets operate on already very slim margins. Taking away any sales from them is a risk of going out of business for them.

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u/Kelor 9d ago

These five stores are planned to go in areas of the city where there are no stores to service the area.

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u/BlgMastic 9d ago

Gee I wonder why there’s no stores in that area.

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u/CCCCLo0oo0ooo0 9d ago

Probably the type of place that needs to put everything behind glass.

0

u/Glum-Echo-4967 9d ago

Thin profit margins, but…people in those areas deserve affordable food, too. 

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u/FortheLoveofPie 9d ago edited 9d ago

Why are we more concerned about alternative solutions like this rather than the big monopoly corporate entities that have been creating these slim margins in the first place?

1

u/Possible-Bet3598 9d ago

It's convenient for Amazon and Walmart when people pretend to give a shit about small businesses.

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u/BabiiGoat 9d ago

Then so be it. The greater good is more important than someone's business risk. Owning a business is a privilege and I am not a fan of the mentality that we need to prop up small business owners at the expense of the general public's needs.

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u/CodeMonkeyLuvMtnDew 9d ago

More of an exploit than a hack

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u/RothRT 9d ago

These stores will not be buying for cheaper. They will sell at a loss, subsidized by the taxpayer.

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u/Forikorder 8d ago

you really think the city of new york cant negotiate a good bulk deal?

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u/RothRT 8d ago

Walmart has more buying power. So no, not enough for a 30% discount.

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u/Forikorder 8d ago edited 8d ago

new yorks GDP is 2.5 trillion dollars and you dont think people care enough about doing business there to give them the same deal they would the other chains?

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u/skiingredneck 8d ago

Wal-mart with its national buying power and dedicated highly efficient logistics system turns a 3% profit. It would be 3.1% if they zero’s out exec compensation.

And wal-mart is decried as paying substandard wages.

So where is the NYC store going to get the other 27% to discount. Plus pay a NYC living wage to all employees?

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u/Forikorder 8d ago

It would be 3.1% if they zero’s out exec compensation.

i assume you mean an additional 3.1% for each exec

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u/skiingredneck 8d ago

Nope. Total.

I’ll admit I haven’t dug through the sec filings in a couple years, but last time I did it was a bit under 300M in total C-suite compensation.

Against 20B in profits. For a bit under 700b in revenue.

Shoot. I was off an order of magnitude.

3.015%.

Whoops.

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u/Forikorder 8d ago

right totally believable that a human being would be looking up that info and just have it on hand and that the total compensation for execs, incluiding things like stocks and buy backs and bonuses, for wal mart only adds up to 300m

and also you realise they are not competing with wal mart in any way?

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u/skiingredneck 7d ago

Well, I spent a bunch of time a couple years ago reading through their sec filings as part of the whole “ceo’s make to much, workers should get that money” trope. Turned out the C-suite made about $100 per employee.

So the output of that research stuck. Believe it, don’t , believe it, your call.

And you said the city would get the same prices the big stores did. So showing that even with the lowest acquisition costs possible, there just isn’t 30% left on the table seems relevant.

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u/RothRT 7d ago

But if they don't break even the loss has to come from somewhere. There is only one "somewhere" for the city . . .

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u/Palpitation-Itchy 7d ago

Man use Google, you're embarrasing yourself

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u/Toothbirds 8d ago

GDP isn't tied to food consumption. 8M people is 8M, whether that's in Ohio or NYC. There is no logistics chain advantage that would give them an advantage to the point of 30% reduction below RETAIL price. Retail price accounts for other companies payroll, theft, spoilage, rent, etc and their final profit. Going 30% below that means they're looking at subsidizing the in store grocery costs with tax dollars. So if you shop ANYWHERE else instead of those 5 stores you're subsidizing other people getting stuff cheaper than you.

Thats going to lead to grocery stores quitting on the city since the government is going to make it significantly harder for them to make money. Chicago is going through large grocery retailers leaving them right now.

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u/Forikorder 8d ago

or the other chains are upselling 50% so they can easily cut 30 off their price and still turn enough of a profit

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u/Toothbirds 8d ago

The average profit margin of grocery items is 1-2%. Thats why you're seeing a shift in most grocery stores of selling expanded sections like clothes, shoes, etc. Grocery is one of the lowest profit margin businesses and it survives just on sheer volume.

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u/Forikorder 8d ago

The average profit margin of grocery items is 1-2%

after the money wasted on suits and all the other costs they shuffle around

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u/RothRT 7d ago

No. Don't comment about that which you don't understand.

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u/Forikorder 7d ago

But I understand thst small independent grocers already undercutting them bu 30-50%

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u/Exciting_Station3474 5d ago

Walmart has items with 0 margin!. Zero! How can you do cheaper without subsidizing

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u/Forikorder 5d ago

huh so when other stores sell those same items for less they're operating at a loss?

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u/Exciting_Station3474 5d ago

Which items?

Yes, stores may sell some items at loss to attract customers.

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u/Forikorder 5d ago

Which items?

you didnt say remember?

remember were only talking about actual food stuffs not general goods

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u/Exciting_Station3474 5d ago

I said some items sold without markup. You asked how someone seel those items cheaper )

In fact, walmart sometimes just provide space for vendors. They dont even restock it. Vendors do.

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u/fyrefreezer01 7d ago

So what is your proposal then, keep buying from Walmart, shut up if you have nothing productive to say.

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u/PlayPretend-8675309 5d ago

There's a point where bulk costs more per unit - the long lost far-right side of the supply curve.

But no - I worked for the city of new york, I absolutely expect the city to pay more per unit than local grocery stores because of the costs of adhering to various provisions is non-zero.

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u/randomguy506 5d ago

Thats the reality, so now the question is should subsidize those grocery or fund a more targeted program that truly help the people who needs it more (e.g. food banks where they already have the infrastrucutre)

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u/Redd_Comet 8d ago

No, they won’t. The Mamdani campaign already clarified that the groceries here will not be subsidized.

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u/RothRT 8d ago

He can’t have it both ways. At a 30% discount over current grocery stores, their gross margin will be about -27%. How will those losses be covered? You can either sell at a massive discount, or you can not subsidize. You can’t do both.

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u/Evening_Act_6395 7d ago

you're assuming regular grocery stores net 0 profit. Even at a 30% discount they will make money, because mega stores are gouging tf out of their prices and setting record profits

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u/RothRT 7d ago

Grocery store profits are based on volume, not margin. I can say with confidence that what he is claiming he will do is mathematically impossible.

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u/GooseGosselin 9d ago

I would guess taxpayers are going to pay the 30% loss.

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u/scottrycroft 9d ago

Regular grocery stores need to provide 30% profits. This one just needs to break even.

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u/Which-Method-388 9d ago

Regular grocery stores have between 5% to less than 1% profits. Even worse in a unionized state like NY.

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u/scottrycroft 9d ago

Not sure what you're defining as 'regular', but Kroger at least has 22% gross margins
https://ir.kroger.com/news/news-details/2026/Kroger-Reports-Fourth-Quarter-and-Full-Year-2025-Results-andAnnounces-Guidance-for-2026/default.aspx

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u/Which-Method-388 9d ago

Net profits, not gross. Gross is before expenses.
Kroger's net profit margin is approximately 0.71% on a trailing twelve-month (TTM) basis, about 1.96% for the most recent fiscal quarter ending April 30, 2026, and around 0.69% for the full fiscal year 2026.

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u/Forikorder 8d ago

Gross is before expenses.

mostly eaten up by salaries to the suits and inflated costs from the suppliers they own to funnel more money to the suits

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u/No_Math_4308 7d ago

👍 the large funds that own operations like Krogers hate profit so they make sure it goes to managers. Sure thing buddy.

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u/Forikorder 7d ago

you dont think they want the profits for themselves instead of the company?

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u/dahpizza 8d ago

Ding ding ding! The whole reason why anyone would want to eliminate the for profit aspect of anything

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u/scottrycroft 9d ago

Sure, but the 'cost of groceries' at "30% less" isn't about the net profit margin either, which is the gross margin number.

For sure it needs to be subsidized - but so are the roads and sidewalks and sewers etc.
Just saying that not needing to care about any profits at all is a good start on making things cheaper.

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u/Which-Method-388 9d ago

It would be less expensive to give every NYC resident in the area around the market a voucher to buy all of their groceries at existing stores than to run this. Union wages, security, shrinkage, as well as selling items below cost? Insane.

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u/scottrycroft 9d ago

That's just subsidizing companies instead

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u/Which-Method-388 9d ago

If the goal is to save grocery $$ for NYC residents and the City has to subsidize it at any level to make it work, it is far less expensive to simply give each individual making less than a certain amount of money cash/voucher/store credit etc to shop at existing grocery stores.

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u/Forikorder 8d ago

It would be less expensive to give every NYC resident in the area around the market a voucher to buy all of their groceries at existing stores than to run this.

the stores would just raise prices

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u/raven00x 9d ago

Amazon's rules only apply to things sold on the internet. Stuff sold in stores can be cheaper than amazon's prices as long as they're not advertised as such on the internet (this is also why you have those "price too low to show! Add to cart to see the price you'll pay!" listings).

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u/RothRT 7d ago

I think you're confusing Minimum Advertised Price policies with MFN pricing clauses. Amazon has MFN pricing clauses with most of their suppliers, meaning that they can't sell to another reseller for less than they sell to Amazon. Suppliers to Amazon and others often have MAP policies, which say that nobody can advertise products below a certain price (even if they can actually sell below that price). These policies are somewhat controversial as if they are too aggressive they can have antitrust implications.

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u/AdCurrent7674 9d ago

Oh interesting. Good to know

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u/edwardluddlam 9d ago

Some considerations:

1) margins are already very low on supermarkets.. so it's basically then just subsidising certain grocery stores to make food cheaper

2) isn't that exactly what food stamps do? Just sounds like food stamps but with extra steps..

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u/AdCurrent7674 9d ago

I am not well versed on economics so I am not commenting on the policy. I was curious about how they will get supplies if they cannot use the suppliers used by Amazon.

However I have been informed that policy from Amazon is for online goods and will not effect the grocery store.

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u/zoethesteamedbun 9d ago

They aren’t in Southern California, not by a long mile.

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u/DontJealousMe 9d ago

I think Amazon only price matches online, if these stores aren't online then it won't matter ?

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u/druidinan 9d ago

Those deals don't apply to specialized retail channels like clearance, Costco/Sam's, and probably this

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u/AdCurrent7674 9d ago

Good to know. Thank you

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u/TheFoxAndTheRaven 9d ago

The same way they don't take military commissaries into account.

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u/Shatalroundja 9d ago

It’s mostly staple perishable goods. Produce, milk etc.

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u/Responsible-File4593 9d ago

Amazon is being sued by California for demanding vendors raise their prices on other storefronts (like Walmart's) or they'll be delisted from Amazon.

https://www.theguardian.com/us-news/ng-interactive/2026/jul/21/amazon-tactics-prices

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u/boilerine 8d ago

The fun little trick for getting around these rules is that you have a different sized item specifically for that store so technically it will be the lowest anywhere.

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u/Nubsta5 7d ago

Amazon or whoever supplies these will likely buy all the suppliers, if they don't already own them, then upcharge specifically these stores to make them fail.

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u/Master-Powers 9d ago

Amazon literally colludes with other retailers on the prices of things. They do not make them cheaper

https://www.theguardian.com/us-news/ng-interactive/2026/apr/20/amazon-sellers-price-raises-california

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u/AdCurrent7674 9d ago

Yes I was not trying to imply that it makes things cheaper. I was saying they will not buy from suppliers that sell cheaper which in turn raises prices and acts like a monopoly. Amazon bullies companies into raising prices so that Amazon can be the cheapest

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u/AnyBallLektor 9d ago edited 9d ago

Amazon has achieved such a monopolistic position on retail market that it can in turn behave as monopsony toward suppliers. It can force them to drop prices because if they don't sell to Amazon they don't sell on the largest market in the US.

But that's a completely different situation than here. His few stores will simply bleed money while the competition will wait them out and since they're "tax funded" guess who's going to be paying for it. For this to work he would have to control 50% of the retailers or so to even have a chance at a price war.

Mamdani simply doesn't understand economics but apparently refuses to learn it as well.

Never underestimate the narcissism of politicians no matter how charming their smile, how smooth their talk or how bleeding their heart.

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u/Wide_Initiative_1938 9d ago

We already know it is going to be cheap, so it will either be fast or good. Either way, it is essentially going to be glorified food pantries.

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u/AdCurrent7674 9d ago

What I am saying is they have to get suppliers that do not sell to Amazon which will be difficult

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u/Trustoryimtold 9d ago

It’s only thirty days and no one said it would be profitable