Sunday, September 03, 2006

More on groceries

This post started out as a response to Kim, who wrote:

Why would it look like that and not like your local Farmer's Market? Lots of places have farmers markets that are a lot of little concerns

We would need quite the confluence of factors for farmers markets to work for that:

Your local farmers market would need to be:

1. Open when you can get there (I have to got to the farmer's market in the next town over that's on Saturdays. My town's Farmer's Market is only open Wednesday mornings.)

2. Willing to accept food stamps. (Some do, most don't.)

3. Willing to grow and sell some stuff out of season, unless everyone's willing to give up eating out -of-season foods. (Lettuce is a cool season vegetable. At my local farmers' market, the only lettuce available right now is from a boutique lettuce grower who sells fancy brands groen hydroponically at five dollars a bunch.)
This may not apply in parts of California where the seasons are more even.

4. Open year-round with stuff to sell. Because if it's not, we don't get vegetables between mid-December and early May.

5. Accessible to public transportation. (Though even then, if you have a large family and no car, getting your stuff home will still be an issue. It's less of one at grocery stores where you can stop by every other day and don't need to buy a week's worth of groceries at one time.)

6. Willing to open in less desirable neighborhoods. Not that low-income areas have an overabundance of grocery options now, but occaisionally a big grocery store will open up there and Walmart keeps trying. Ideally, the poor should have access to fresh vegetables, too.

Now, I'm not saying that it's impossible that Farmer's Markets could get there, but at least in my neck of the woods they have a long way to go.

As for the picture in the post below, which is of the local Mom-and-Pop grocery and butcher in Bowling Green, Ohio, the point is that we romanticize small grocery stores because they are cute and we like the idea of knowing our grocer, but the truth is, I think most of us like being able to buy tostadas and thai peanut sauce and guava juice and pectin and leeks and all the weird stuff we like. Small grocers can only stock the basics.

I had a headache yesterday afternoon and we discovered that the little market doesn't even sell ibuprofen. (OK, they don't sell bottles of Ibuprofin. They had little travel packets of Motrin available for 50 cents, but that wasn't practical.) Making an extra run out to a drug store was no big deal, but imagine having to run to an extra store or two every time you needed something that a place with a produce section that looks like this doesn't sell.

I can't help but think that the day of Mom-And-Pop grocery stores was the day when women mostly didn't work and could be expected to have the time to go seven different places to buy everything their families needed.

That said, I don't want every store to go to the Walmart method. I like buying clothes in a store that sells mostly clothes where the salespeople like clothes and can help me pick out something. But for groceries? Viva la Kroger.

CC

17 comments:

fausto said...

Here's a mom-and-pop grocery that satisfies all your numbered conditions. It also sells tostadas and thai peanut sauce and guava juice and pectin and leeks and probably most of the other weird stuff you like. The competing Whole Foods Market a few blocks away can't even hold a candle.

They do exist. Here's another. When Hannaford built a competing superstore, they kept right on chugging as if nothing had happened. And here's another. They expanded when A&P went out of business, even though the A&P locations were taken over by the much stronger Stop & Shop chain.

All it takes is an owner with pride and imagination, and a trade area that will support it. Or maybe even only a decent produce manager.

fausto said...

Oops. I gave a bad link to that third mom-and-pop grocery. Here's a better one.

fausto said...

By the way, here's yet another small grocer with flair. There's even a photo of their produce aisle to compare with Bowling Green.

(In case anybody's wondering, a lot of what I do in my day job is writing mortgages on neighborhood shopping centers.)

Joel Monka said...

You make another of my points- that Walmart does not drive good stores of any kind out of business. With or without Walmart, well-run businesses succeed, and badly or unimaginatively run businesses fail.

Chalicechick said...

If all Mom and Pops were like that and affordable, Walmart wouldn't have a chance. (The numbered conditions were technically for farmer's markets, but a grocery store would need to satisfy them, too.)

While my primary interest in defending Walmart is trying to get people to support letting them build stores in inner cities, I have to say that I share Joel's skepticism that Walmart is as deadly to surrounding businesses as the more hysterical of its detractors claim.

(e.g. The New York Times' John Tierney wrote about the town featured in the "Wal-mart:The High Cost of Low Prices" documentary. H+H Hardware, the business featured in the movie, did indeed go out of business. It went out of business three months BEFORE Walmart opened. The owner of the NEW Hardware store that opened in the old one's old building says business is booming even with Walmart in town and that the hardware store in the documentary had been mismanaged.)

CC

fausto said...

Walmart does not drive good stores of any kind out of business.

Never in a million years would I try to argue that. None of the stores I gave as examples faces direct competition from Wal-Mart.

Wal-Mart does drive good stores out of business. The question is not whether they do, but whether it is appropriate that they do. Do they do it only because of their truly superior operating efficiency and selection, or also because of their truly abusive and exploitative buying strategies and employment policies?

FWIW, I won't finance a Wal-Mart lease. They include very tough covenants in their leases, including clauses that allow them to close the store without the landlord's consent, and if the landlord wants the space back, they have to be bought out. A shopping center needs a large store to act as an "anchor" to draw the traffic for the smaller tenants. If the anchor tenant "goes dark", as we say, the landlord needs to recover control of the space to be able lease it to another anchor. To a mortgage lender betting that the future rents from a property will be certain enough to pay off your loan, a clause that prevents the landlord from recovering a vacant anchor space is not financeable. The exurban landscape is littered with vacant former Wal-Marts where the ancillary tenants are struggling or have failed.

My company won't even finance shopping centers in small markets that Wal-Mart might enter, because a given population in a given trade area has only so many dollars to spend on discretionary retail purchases, and the volume of sales that Wal-Mart typically draws when it enters a trade area saps the sales of all other merchants in the market. We typically only lends on shopping centers in smaller population centers if Wal-Mart has a general-merchandise-plus-groceries supercenter already established in the area, the market has fully adjusted to Wal-Mart's entry, and the competing retailers have demonstrated their ability to survive.

kim said...

Fausto -- thank you for giving us information from someone who actually knows what's going on.
cc-- You're right, I'm in California and our Farmer's Market is open all year. It's only two days a week though, and sparser in the winter. (though winter here is December and January.)

Chalicechick said...

I can see wanting to keep small businesses alive, though I've never really understood the "But if Walmart comes in, we could lose 'Shopper's Food Warehouse!" arguments about preserving chain stores.

If you don't want Walmart in your small town, fine. Let some other small town have the tax revenue and let some other small town's poor dress and feed their kids a little better.

But, again, I really wish hatred of Wal-mart wasn't so politically popular that politicians kept it out of poor areas of major cities where it could do some good.

Again, when Wal-mart was forced out of Chicago and opened a store in the suburbs, 20,000 people applied for 500 jobs. Presumably, people see these jobs as the best jobs they can get, even though Wal-mart is indeed famous for mistreating workers. (And let's not kid ourselves, we are already paying for the health insurance of the people who go to work at Walmart. Walmart hires poor people. Anybody who can get a better job at the moment probably does.)

I absolutely support going after Walmart when it breaks an existing law. What I don't like is writing laws that apply only to Walmart* because we feel we know what's best for the poor and we're keeping it away from them.

Are we so sure we know what's best for the poor that we should be doing this?

CC

*Marlyand's new wage law was written to only apply to very large businesses. So large that only Wal-Mart and the University of Maryland were affected.

So they exempted the University from having to follow the law.

If you believe in a living wage, pass a law that applies to everybody.

kim said...

If you believe in a living wage, pass a law that applies to everybody.


I would go for that. I think it would stimulate the economy far more than tax cuts for the rich do.

fausto said...

If you believe in a living wage, pass a law that applies to everybody.

It's not only wages. Let's not overlook effective tariffs and other controls on imports from developing countries to discourage exploitative working conditions, a more aggressive currency and trade posture toward China, fair acces to the workplace for union organizers, health care reform to assure equitable avaiability of insurance for all without significant differences in cost or coverage from one employer to another, and tighter restrictions on treating part-time employees as "independent" contractors ineligible for benefits.

Fix a lot of those structural problems in the economy, and other retailers would truly be able to compete with Wal-Mart on their own merits on a level playing field. But at the moment, a good portion of Wal-Mart's competitive advantage comes not from its own superior management, but from corporate policies that deliberately exploit weaknesses in the present economic structure in ways that many (and not only wild-eyed, left-wing UUs) consider immoral or at least inequitable.

PeaceBang said...

The current issue of The Nation will definitely appeal to you all. It's all about food and Wal-Mart and organic and labor issues, etc.
Really excellent.

Chalicechick said...

If the root of the problem isn't Wal-Mart but these economic issues Wal-Mart is exploiting, what good will legislatively punishing Wal-Mart do? Put a band-aid over a gaping wound? Make us feel better about ourselves while other businesses step up to take Wal-Mart's place using their tactics, still legal for any business that isn't Wal-Mart?

If those are the real problems, why not focus a little more on them?

fausto said...

Who's legislatively punishing Wal-Mart?

Are you referring to local opposition on thngs like zoning and building permit issues? If so, I hate to be the one to have to break it to you, but in lots of jurisdictions local real estate development is a really dirty business, and always has been. There are no Marquess of Queensbury rules, just some localities where tyrannical power is held by the inflamed mob, and others where it's held by corrupt plutocrats. There's nothing unique about Wal-Mart compared to anyone else in that regard, and they give as good as they get when they play the game.

Joel Monka said...

Fausto, CC wasn't speakinbg of zoning laws, (and yes, WalMart is a master player of those), but of laws such as: any employer of more than 50,000 employees must provide full coverage health insurance for all employees, full or part time. (PURE coincidence that the only employer within a decimal point of that many employees is WalMart) Or how about any store with more than 25,000 square feet must pay a living wage of $11.00 an hour instead of the minimum wage of $5.15? (same PURE COINCIDENCE involved here)

Chalicechick said...

Yes, Joel is right. Again, I don't mind if Wal-Mart is forced to follow existing laws, zoning or otherwise. Again, my issue is when legislatures write laws that literally only apply to Walmart and are aimed not at giving a fair shake to the poor, but are at keeping Walmart out as to appeal to middle-class voters.

The Baltimore Sun on Maryland's version:

The law, the first of its kind in the nation, requires companies with more than 10,000 employees in Maryland to spend at least 8 percent of payroll on health insurance or pay the difference into the state Medicaid fund to help pay for health care for low-income Marylanders.

Bentonville, Ark.-based Wal-Mart is the only company in the state that currently would be affected by the law, which will take effect Jan. 1, 2007. It has about 17,000 employees at 53 stores and two distribution centers in Maryland and was planning on building a distribution center on the Eastern Shore, which the governor said may now be in jeopardy.



That law was struck down by a federal judge, mind you, but 13 states have proposed similar legislation.

Make Wal-Mart follow zoning laws that apply to everyone if you want. That's fine.

But don't write laws aimed at only Wal-Mart. If the fact that writing laws aimed only at one company is really unfair doesn't faze you, consider that the cost of this healthcare will be passed on to Wal-Mart's customers, who are disproportionately really poor.

If poor people deserve benefits, let's make every business pay for them.

CC

fausto said...

any employer of more than 50,000 employees must provide full coverage health insurance for all employees, full or part time. (PURE coincidence that the only employer within a decimal point of that many employees is WalMart) Or how about any store with more than 25,000 square feet must pay a living wage of $11.00 an hour instead of the minimum wage of $5.15? (same PURE COINCIDENCE involved here)

Sorry, but your facts are simply wrong. I'm not aware of these particular legislative proposals, so I don't want to try ot address the merits of them here, except to say that any such proposals would certainly not be discriminatory toward only Wal-Mart.

There are plenty of employers larger than 50,000, including a great many retailers, and even dinky little Food Lion grocery stores are larger than 25,000 sf. A typical new supermarket these days is at least 35,000 sf, and the standard format is 50,000 to 65,000 sf. I'm currently negotiating a transaction where a 65,000 sf chain grocery is going to be torn down and replaced with an 85,000 sf store operated by the same chain. Discount department stores like Kohl's and Target are typically larger than supermarkets.

As for the specific example of Maryland, in the first quarter of 2002 (the most recent tally I could find) there were nine private employers larger than Wal-Mart, including retailers Giant Food of Maryland, Hope Depot, and May Department Stores.

Even if similar proposals in Maryland or elsewhere were directed only at Wal-Mart, IMHO if they served a public purpose they would not necessarily be objectionable because they are also narrowly targeted. My understanding of the situation in Maryland is that Wal-Mart's employment policies (particularly in the area of health benefits) are far more burdensome to the public treasury than those of other large employers.

fausto said...

Make Wal-Mart follow zoning laws

Or not, as is often the case.

that apply to everyone

A fine principle in theory, but one that is honored far more frequently in the breach than the application, and not only by Wal-Mart. Everyone eventually wants a zoning variance for something.

But don't write laws aimed at only Wal-Mart. If the fact that writing laws aimed only at one company is really unfair doesn't faze you,

Not if only the one company is the really bad actor, it doesn't.

consider that the cost of this healthcare will be passed on to Wal-Mart's customers, who are disproportionately really poor.

If Wal-Mart can't sell stuff cheaper than the competition does, without exploiting its workers, it would be an exceptionally bad social policy to subsidize the poor through discounted prices at the expense of the employees. A better social policy would be for the entire society to bear the cost of giving such subsidies directly -- as it does, in the form of housing vouchers, food stamps, school lunches, etc. -- rather than allowing the cost of indirect price subsidies to fall inequitably on Wal-Mart employees alone, who are themselves not particularly well off.

However, it's probably more accurate to argue that increased operating costs would be passed on to Wal-Mart's shareholders, not its customers, at least at first. It's up to the shareholders and management at that point whether to protect their market share by holding prices low (in which case therer would be no impact to customers), or protect their profit margins by raising prices (in which case Wal-Mart would simply be offering fair rather than subsidized prices, just as other retailers with less exploitative employment policies already do).