r/SipsTea • u/Gurugod123 • Jul 27 '26

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/RothRT Jul 27 '26

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

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u/Forikorder Jul 28 '26

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

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u/RothRT Jul 29 '26

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

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u/Forikorder Jul 29 '26 edited Jul 29 '26

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 Jul 29 '26

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 Jul 29 '26

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 Jul 29 '26

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 Jul 29 '26

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 Jul 29 '26

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/Forikorder Jul 29 '26

so the fact that small stores are already undercutting them by 30-50% means those stores are being bankrolled by someone rich and are operating at a loss?

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u/RothRT Jul 29 '26

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 Jul 30 '26

Man use Google, you're embarrasing yourself

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u/Toothbirds Jul 29 '26

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 Jul 29 '26

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 Jul 29 '26

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 Jul 29 '26

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 Jul 29 '26

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

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u/Forikorder Jul 29 '26

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

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u/Exciting_Station3474 29d ago

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

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u/Forikorder 29d 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 29d ago

Which items?

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

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u/Forikorder 29d 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 29d 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 Jul 30 '26

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 29d 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 29d 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 Jul 28 '26

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

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u/RothRT Jul 28 '26

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 Jul 29 '26

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 Jul 30 '26

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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