Mamdani’s Co-ops

The planned first store in the Bronx

On May 19th, New York City’s Democratic Socialist Mayor, Zohran Mamdani, announced that “the first city-run grocery store is coming to the Bronx”.

In the interest of full disclosure, I had (mis-)remembered that the first store was soon to open when I heard the mayor’s announcement on C-Span, rather than the first store will open in the Bronx in late 2027.  This error will not undermine my argument, but it will move back the test of its predictions by more than a year.

First, not a prediction but a quibble.  Socialism is not a monolithic set of ideas.  For example, under socialism, 1) a store can be government (federal, state, or city) owned and operated, or 2) a store can be owned and operated by its workers.  The mayor made a mistake making it city owned and operated.  IMHO.

Second, the predictions.

1. On opening day, the line to get in and shop will be miles long.  Many would-be customers will choose not to wait, some will choose to come back the next day, some the next week, and some never to return (“the savings ain’t worth my time”).  
2. Will the store management limit the number of customers in the store at one time?  If yes, many won’t be willing to wait (outside, in the cold); if no, the shopping experience will be so dreadful that many, if not most, customers will never return.  Some will return, many will not.
3. Few first-time customers will bring a short shopping list, as they showed up to look for bargains, and they will take much longer to shop than otherwise.  Many who save lots of money will become repeat customers; but the over-crowded shopping experience will keep many, if not most, from repeating, at least until they learn that the lines are worth the wait.
4. Some privately owned and operated grocery stores are abandoning New York City already and more will in the coming months.  These decisions will not be economic ones, they will be political decisions.  Anyone who thinks that they know how this competitive (capitalistic) situation will shake out is a fool.
5. Let’s imagine Opening Day.  The mayor boasts of the store’s size – 20,000 square feet, 10% of the size of a typical Walmart.  The population of the Bronx is some 1,900,000 souls and 495,000 households.  Let’s assume that 10% of Bronx households – 50,000 shoppers – decide to shop on day one.  How many customers can be accommodated at one time?  ¾ of the store’s floor space is merchandise and administrative space, ¼ is customer floor space, so 5,000 square feet is available for customers.  How much space does a customer need to feel comfortable shopping?  Let’s go with 15 square feet.  So, the number of customers the store can accommodate at one time is 5,000 square feet / 15 square feet per customer = 333.  How long will an average customer need to shop?  30 minutes.  Total customers per (12 hour) day = 333 * (60/30) * 12 = 8,000.  Out of 50,000 who show up.  One sixth of the potential customers who show up will be lucky enough to shop that day, and that assumes that everyone will wait as long as it takes to get in, an egregiously wrong assumption.  My best estimate, 1 in 20 who show up that day will get to shop.  If you don’t like any of my assumptions, use your own and re-do the math.  Is this a recipe for success?
6. New Yorkers are not known for their patience; shopping at Mamdani’s co-ops will test their patience.  If I were the owner of a chain grocery store in New York City, I wouldn’t sweat it.  You don’t have to be an economist to think like one.  Mayor Mamdani doesn’t think like an economist!

These words are NOT an attack on a politician, these words are NOT an attack on (Democratic) Socialism, these words are the glue that makes the numbers make some sense!  It will not surprise me if this (well-meaning) project is called off well before the first store opens.  Because an economist spoke up and was heard. I could be wrong!  Wanna bet?