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SHOULD CITIES OPEN THEIR OWN GROCERY STORES?  
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Jule Pattison-Gordon
January 10, 2025
Governing
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_ Forty million Americans live in food deserts. Can government-owned
grocery stores fix this? _

Lidl Food Market opens at Paxton Towne Centre in Lower Paxton
Township., DAN GLEITER/TNS

 

In Brief:

* Groceries are about 20 percent
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more expensive than they were pre-pandemic. Residents who’ve seen
their community grocery stores close must trek long distances for
fresh food.
* A New York Assembly member and Chicago’s mayor have proposed
creating city-owned grocery stores to bring residents affordable,
fresh food.
* Government-owned groceries may be a new idea for big cities, but
not for rural America. A handful of small towns and cities have tried
similar ideas, but with mixed success.

By now, most people are familiar with the concept of food deserts —
areas where residents lack ready access to fresh foods. Should local
governments step in to operate grocery stores in neighborhoods that
don’t have them? Aside from ideological questions over whether
governments should get involved with operating retail establishments,
there are a number of practical hurdles that are difficult to
overcome.

Zohran Mamdani, a member of the state Assembly who is running for
mayor of New York, calls for a network of city-owned grocery stores.
He promises to bring such stores to every one of the city’s five
boroughs. “Without having to pay rent or property taxes, they reduce
overhead and pass on savings to shoppers,” according to a campaign
statement [[link removed]].

In Chicago, Mayor Brandon Johnson has been exploring a similar idea,
following multiple grocery closures in historically underserved
neighborhoods. A disproportionate share of Chicago’s Black and
Latino residents are food insecure. “All Chicagoans deserve to live
near convenient, affordable, healthy grocery options,” Johnson said
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“We know access to grocery stores is already a challenge for many
residents.”

This is an idea that has already been put into play in a handful of
rural communities that have lost their last grocers. Having a local
store not only improves food access but makes residents more likely to
stay or move there. But getting such businesses off the ground and
sustaining them has not been easy. The city-owned store in Erie, Kan.,
simply didn’t attract enough customers — or, at least, not enough
customers willing to do most of their shopping there. Last year, Mayor
Butch Klingenberg
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said the grocery store would break even if each customer spent an
average of $50 per month — but customers were only averaging $14.

Last fall, the city revised its approach: It began leasing out the
building to a private operator that would take over
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operations and management, while the city retained ownership. “When
you're a municipality and you own a business like that, there's a lot
of overhead. And so it was costing the city quite a bit of money and
the city funds," Erie City Clerk Jamie Janssen
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said in September.  "And so we started to look at different avenues
of what we could do to alleviate that, but still keep a grocery store
in town.”

 
Given the clear need for better food access, many jurisdictions are
exploring their options. Not all governments go as far as opening
their own stores. Some instead look to other tools like tax incentives
and grants to encourage private operators. Pennsylvania
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for example, offers funding to help supermarkets open in underserved
communities. Washington, D.C., and Prince George’s County
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Md., both offer tax incentives for grocery stores sited in communities
in need. Jacksonville, Fla., launched a free shuttle program
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to bring residents from food deserts to grocery stores outside their
neighborhoods.
 
The Case for Municipal Groceries

Running independent groceries isn't an easy business for anybody. A
2010-2019 study
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found that when Dollar Tree and Dollar General stores opened in a
neighborhood, independent grocery stores were more likely to close and
residents were more likely to be left without fresh produce options.
Dollar stores often carry shelf-stable, nonperishable items — the
goods that grocery stores make their highest profits on — making
this competition especially difficult, says Kennedy Smith, senior
researcher with the Institute for Local Self-Reliance (ILSR), a
progressive advocacy and research group.

Groceries are about 20 percent
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more expensive than they were pre-pandemic, with prices driven up by
everything from droughts
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to bird flu to market dominance by just a handful of grocers,
meatpackers and seed producers. Prices on imported foods such as
coffee and fruits are expected to rise further, should President-elect
Donald Trump carry through on promises to impose tariffs on major
trading partners. Domestically produced food could also become more
expensive due to Trump’s mass deportation plans, because the
agricultural sector depends on immigrant workers.

According to ILSR, ever since the 1980s, the government has declined
to enforce
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an antitrust law that had put independent grocers and major chains on
equal footing when negotiating prices from food suppliers. Without
this enforcement, chains are able to demand preferential pricing and
treatment from suppliers.

Still, proponents of city-owned groceries argue that governments can
open stores in areas that private supermarkets deem economically
unfeasible. After all, governments are trying to serve residents, not
turn a big profit. Plus, a grocery store can bolster a neighborhood
economy by providing jobs, spurring other commercial activities and
allowing residents to reinvest in their communities by spending
locally. In 2024, a consulting firm studying Chicago’s proposal
concluded
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that a city-owned supermarket is “necessary, feasible and
implementable.” Yet the Johnson administration has passed on
applying for support from the state’s $20 million grocery initiative
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Although Chicago and New York City are just now considering
government-owned stores, a handful of rural cities and towns have
already launched their own, but with mixed results. When the city of
Erie, Kan., polled residents on whether it should buy the store, most
said “yes.” The city hired an experienced manager to run it and
considered slightly raising residents’ utility bills, if needed, to
pay for any increases in store operating costs. But, as noted earlier,
the city was unable to make a go of it. “The city can play a very
important role in catalyzing the development of supermarkets, but it
has a lot of options about how to do that, and some pose more risks
and challenges,” said Andrew Lamas
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an urban studies professor at the University of Pennsylvania.

The town-owned grocery store in Baldwin, Fla., ran into similar
challenges. The 1,400-person town opened its market in 2019, after the
local for-profit grocer closed. It was truly not-for-profit — the
market often operated at a loss. Because it was a single store,
Baldwin Market couldn’t buy wholesale, making it hard to sell
groceries at competitive prices. The store closed
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last March.

But not every municipal grocery is doomed to failure. Not far from
Erie, St. Paul, Kan., a city of 600 people, acquired
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its own store in 2013. The impetus for the project began decades
earlier. The city lost its grocery store in 1985, leaving residents at
the time with just a café and convenience store, or a 34-mile
roundtrip journey to the nearest grocery. That changed in the
mid-2000s, when the city, local community development corporation and
rural electric cooperative collaborated to build a grocery store.

Initially, the city owned just the property and building and recruited
a husband-and-wife duo to purchase the inventory and manage the store.
When that couple decided to retire in 2013, the city bought out other
partners, making the supermarket fully government-owned, and hired new
managers to run it. Six years later, the St. Paul Supermarket was
bringing in a profit
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slightly above average for a rural grocery store.

 

Jule Pattison-Gordon is a senior staff writer for _Governing. _ Jule
previously wrote for _Government Technology, PYMNTS _and _The Bay
State Banner_ and holds a B.A. in creative writing from Carnegie
Mellon.

* Food Prices; Grocery Chains; Food Justice;
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