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It's a question of volume. If they're really going to sell things at a loss, then it should create real demand. If you have that demand, then you're going to st
by scoofy 6mo ago
It's a question of volume. If they're really going to sell things at a loss, then it should create real demand. If you have that demand, then you're going to start running out of groceries mid-day. At that point, the business sucks because you either have to show up at 10 AM to buy anything, or they start some ridiculous rationing program to prevent people and businesses effectively reselling at market rates, or they make up for their negative margins by increasing their volume and losing even more money.
It's a low margin, high volume business. I'm extremely skeptical that this plan works beyond just being a politically popular way to light money on fire. I say that as someone who actually like Mamdani.
- ceejayoz 6mo agoWhat if it was possible to stock products during the day?
- scoofy 6mo agoIt sort of doesn't matter. The point is that if the goods are being sold below market value then you will either have shortages, rationing, or accelerating losses. This has always been a problem in non-market socialism.
- ceejayoz 6mo agoCostco sells chickens as loss-leaders. They don't run out, and Walmart doesn't go buy all of them to resell.
- junofan 6mo agoI mean Costco’s a membership club. This is NYC. Of course somebody’s gonna show up with a truck and arb any profitable grocery item if there isn’t rationing.
- scarecrowbob 6mo agoNot being able to get stuff on a pallet or in a 5 gallon bucket or whatever has its own cost. Hell, not being able to invoice on NET30 or have a supplier or even not having to pick and pack stuff has a cost.
- scoofy 6mo agoA loss leader isn’t a business model when everything is being sold at a loss. The idea that Mamdani is going to undercut a low margin business with higher labor costs is just silly.
- ceejayoz 6mo ago> The idea that Mamdani is going to undercut a low margin business with higher labor costs is just silly. Why? Stock store/generic brands. Don't stock 40 variants of Colgate toothpaste that all have the same ingredients and are described separately as "fresh mint", "cool mint", and "mint". Stock more staples than sushi.
- scoofy 6mo agoI don’t think you understand what I mean when I say “low margin.” The types of products you are describing are the extremely low margin products. People pay more for the 16 flavors of Colgate because they want to pay more for Colgate… that higher price means more margin for the retailer. By eliminating the higher margin products in an already low margin business, you are basically making the situation even worse. The only reason why generic brands at stores can end up being high margin for the retailer is because the retailer has literally used their market position to start manufacturing cheaper versions of high margin products on their shelves. Unless NYC want to start manufacturing dryer sheets and toothpaste, that’s not an option for them.
- ceejayoz 6mo ago> the retailer has literally used their market position to start manufacturing cheaper versions of high margin products on their shelves And we don't think a city of 8M people can use their market position to do such a thing?
- scoofy 6mo agoNo! That’s ridiculous. New York City is full of businesses (services) that can barely survive and constantly need to get bailed out by the state. The idea that somehow NYC is going to start operating a for-profit toothpaste company to prop up a grocery store is genuinely absurd. There likely isn't even enough people in NYC to justify the costs of production! We're talking about national and international retailers engaged in these practices... selling to hundreds of millions of customers. These are very risky endeavors that have bankrupted multiple grocery chains. NYC should not be operating something with that risk profile to simple get cheap consumer packaged goods on the shelves... especially when the business is already extremely competitive and low margin!