Fallacies in "Going to Market"

In the recently certified city planning proposal that would incentivize the building of new supermarkets in "underserved" areas, the stated rationale was that these areas were lacking in a requisite number of food markets and, as a result, these neighborhoods were also lacking access to healthier products such as fresh fruits and vegetables. Therefore, the argument goes, we need to find ways to attract new markets into the underserved communities.

The rationale is pretty clear: "Three quarters of a million New Yorkers within high need neighborhoods do not have supermarkets within a comfortable walking distance (5 city blocks), making food shopping particularly problematic for households with no car. Low income households may be further adversely affected without competitively-priced fresh food available at the neighborhood level. The consequences include more time and money being budgeted for grocery shopping."

But what is missing, and we have been highlighting this deficiency for a while, is the acknowledgement that the absence of needed supermarkets in certain neighborhoods has been a result of the disappearance of existing stores from the areas in question. Examining the reasons for the egress of supermarkets, and evaluating policies that would counteract this trend, is noticeably missing from the DCP study and zoning proposal.

This is, as the Marxists might say, no accident. Because, to evaluate this aspect of the policy equation would force the Bloomberg administration to take a look at how some of their own policies-to the extent that they greatly increase the cost of doing business in the city-are a major contributing factor in the creation of the supermarket gap.

Which brings us to another important deficiency of the current supermarket policy proposal: the extent to which incentivizing new stores will exacerbate the loss of existing markets through the creation of an unlevel playing field-whereby new markets would be lavishly subsidized, while the older markets would be forced to do business without any public support.

This situation is worsened because the DCP analysis of underserved areas isn't a finely tuned instrument. The potential for cannibalizing existing stores by siting newcomers in the parts of the targeted districts that do have a decent complement of markets. Which brings us to the case of the development of the Kingsbridge Armory.

As we have already pointed out, the Related Company has examined the feasibility of putting a new 60,000 sq. ft. supermarket in the new development-a store that would be three times larger than its nearest competitor, and ten times bigger that most of the 20 or so other supermarkets that do business in this allegedly underserved neighborhood. Related, however, knows a good argument when it hits it right in the gob.

So the mega developer argues in its EIS, cribbing the rationale underlying the DCP report, that the area is insufficiently blessed by existing markets-and since it is so seriously "understored," the new market-one that is labeled incongruously a, "neighborhood supermarket," would not negatively impact the other 20 or so competitors in the trade area.

This is not an argument that could withstand even the most benignly independent analysis; not when you consider that the new market could gross up to $1,000,000 a week in sales. Certainly, not all of this business would be simply diverted from the efflux of shoppers to Westchester!

Which is why this project is going to be a major political battle, as Crain's pointed out last week: "The owners of Morton Williams Supermarkets are crying foul over a plan submitted to city officials by Related Cos. to open a 60,000-square-foot supermarket in the Northwest Bronx, right across the street from one of their grocery stores and a block away from another...Morton Williams, which owns 11 stores in the city, says it will be forced to close the two Bronx stores if Related is allowed to go forward with its plan. One of the stores also serves as Morton Williams’ headquarters, where it hires most of its 750-plus workers, the majority of whom live in the Bronx."

And co-owner Avi Kaner hits right at the central issue of subsidies: "“It’s hypocritical of the city to offer tax breaks to developers to expel supermarkets that have been in the city for decades,” said Avi Kaner, co-owner of Morton Williams. Related is expected to receive $13 million in tax breaks to build the $323 million shopping center."

So it's not only the Armory fight that's important by itself. It's also the flaws in the city's supermarket development plan that this fight illuminates in rather sharp detail. We need a policy that nurtures existing stores. The defeat of a supermarket for the Kingsbridge Armory is a necessary first step toward the development of a truly comprehensive supermarket retention and development policy for New York City.