How City-Owned Grocery Stores Can Tackle Food Insecurity

Zohran Mamdani’s surprise win in the Democratic primary for mayor of New York City was powered by a focus on affordability. One of his more innovative proposals to help address the city’s growing cost of living crisis is to open a city-owned grocery store in each borough that expands access to good-quality food for residents at an affordable price.

Contrary to the public outcry from critics, city-owned grocery stores are not a novel or radical idea in the United States. The United States military already operates a network of publicly owned grocery stores; rural communities in Kansas have successfully experimented with municipally owned supermarkets; and big cities are exploring their potential and charting plans. 

City-owned grocery stores are a promising solution for communities who suffer from the hunger and food insecurity that comes from living in food deserts, urban or rural neighborhoods with limited access to healthy and affordable groceries.

Food deserts exist in part because of misaligned profit motives for private sector grocery companies. Large corporate retailers like Kroger and Whole Foods do not bother to invest in certain communities because, despite demand, low-income neighborhoods lack the infrastructure and purchasing power to sustain their for-profit business. Instead, retailers concentrate or relocate their grocery stores to areas where they can expect a higher rate of return, like wealthier suburban neighborhoods.

That profit incentive creates a harmful cycle that perpetuates a phenomenon known as “supermarket redlining” that leaves thousands of communities underserved.

New York City is home to more than two dozen neighborhoods that are classified as food deserts. These localities are predominantly Black and Hispanic and rely on both bodegas and dollar stores for their grocery needs, creating “food swamps” where unhealthy food options vastly outnumber nutritious ones.

Mamdani’s proposal seeks to fill the void left by the market. He is offering city-owned grocery stores as a public option to low-income residents in neighborhoods that the private sector has abandoned. If elected, Mamdani has pledged to allocate $60 million to support his grocery pilot program with a focus on expanding accessibility and guaranteeing affordability rather than turning a profit. Complaints about profitability are overblown given that public sector grocery stores can manage costs with the elimination of price markups via property tax, rent, and licensing fee exemptions.

The projected savings for consumers from this program has resonated with New Yorkers. Food prices in the Big Apple have increased by more than 25 percent since 2019. The same cannot be said for workers’ wages, which have stagnated and failed to keep up with grocery costs.

Mamdani’s detractors point to several challenges of running an effective city-owned grocery store. For example, local governments may lack operational expertise or find it difficult to purchase food from wholesalers at a competitive price. But these challenges are not insurmountable.

The Rural Grocery Initiative at Kansas State University provides one-on-one support to new grocery stores — from initial feasibility studies and market research to employee training and operational management — through a statewide healthy food initiative.

“The grocery industry was once thought of as a multigenerational industry where the business was passed down from parents to their kids,” the program’s director Rial Carver told Inequality.org in a recent interview. But with the increased market concentration by a handful of dominant corporate players, “there are grocers [now] entering the business without generational knowledge. The need for technical assistance is great and we do anything we can to support them.”

State and local governments and institutions can spearhead or partake in programs that assist municipal grocery stores with market expertise, technical support, and state initiatives like Colorado’s Community Food Access Program that help retailers access food at lower prices. 

Military commissaries are an excellent example of how storefront collaboration can keep prices competitive. By having their network of stores share suppliers, they are able to maintain prices 25-30 percent lower than retail stores. 

In North Dakota, three grocery stores along with two other entities came together in 2021 to form the Rural Access Distribution (RAD), a purchasing cooperative. One of the goals of the cooperative is for the businesses to collectively purchase food in bulk in order to reap the benefits of wholesale prices. “There is also a restaurant [and] a school district that has bought into the purchasing co-op,” added Carver. “They see the benefits of buying into that wholesaler. It can serve other business types too.”

Mamdani’s city-owned grocery stores can adopt a similar strategy with other New York grocers, forming or joining a consortium, to pool their resources together to purchase food in high volume to access cheaper wholesale prices.

The St. Paul Supermarket, a grocery store owned and operated by the city of St. Paul in Kansas, is a successful example of a city-owned shop. After the retirement of Joe and Sue Renfro, the city government decided to purchase it. The grocery store is now in its twelfth year of operation as a city-owned enterprise. The secret, according to the city, is broad community support and an effective leadership team, plus a commitment from the city to continue to provide financial support. 

Public groceries do not have to be uniform. They can take on different organizational structures depending on the desires of community stakeholders, the level of support from residents, and local governments. Models range from worker-owned cooperatives and non-profits to public-private partnerships where operations are outsourced.

For example, the city of Atlanta is planning to open two municipally-owned grocery stores in partnership with the organic food market Savi Provisions later this year to tackle food insecurity. The stores will be more than just a place to shop for groceries; they will also be a community and cultural hub with workshops and classes.

Rather than accepting that small rural towns and historically marginalized communities go without proper access to affordable and quality food in the pursuit of corporate profit, public ownership reframes the conversation by directly addressing market failure. City-owned grocery stores also have the potential to generate new debates on the high levels of market concentration in the industry and revive the enforcement of the Robinson-Patman Act to reverse price discrimination of wholesalers towards smaller and municipal grocers.

It is possible that Mamdani’s city-owned grocery stores may run at an economic loss in the first few years, but public options are not designed to make a profit. They are designed to provide adequate access to groceries at an affordable price to customers. 

The real return on investment is improved health outcomes, stronger neighborhoods, greater accountability to your constituents, and the elimination of food deserts for the more than 53 million people who currently live in them. City-owned grocery stores are a step towards transforming food access and full-service groceries from a privilege into a community right.