Wednesday, May 28, 2008

Supermarket Showdown

Today on the steps of City Hall at 1:00 PM, a city wide coalition of business, labor, community groups and food advocates, will join with a wide range of elected officials in a call for action on behalf of supermarket preservation. The call for action is stimulated by the fact that, according to a City Planning report, New York has lost over 1/3 of its supermarkets over the past five years. Community residents from many of the impacted neighborhoods that have, or will be, losing markets, will be present to dramatize just what kind of hardship is created when the local supermarket disappears.

Scheduled to appear at tomorrow's press conference, co-sponsored by UFCW Local 1500 and the Alliance, are Public Advocate Betsy Gotbaum, Congressman Anthony Weiner and Brooklyn Borough President Marty Markowitz. In addition, council members scheduled to join us will be Anabel Palma, Jimmy Vacca, Eric Gioia, Tish James, Vinnie Gentile, Hiram Monseratte, Melissa Mark-Viterito and Charles Barron. Joel Berg from the NYC Coalition against Hunger and Triada Stampas from the Food Bank will highlight the issue of rising food prices and the need for greater access to food stamps.

This call for action is, to some extent, prompted by Mayor Bloomberg's emphasis on the correlation of supermarket preservation and the public health of the the city's neighborhoods. This concern was underscored recently by Deputy Mayor Linda Gibbs in a NY Daily News editorial: " "We are looking at a variety of strategies to tackle the challenge, including using city-owned land for the development of new food markets and examining zoning in certain areas to ensure that we are not precluding the location of new food stores. In addition, the city's food coordinator will play a leadership role on the newly formed Supermarket Commission, a public/private partnership that will provide recommendations about how the city can get new supermarkets into neighborhoods."

Our goal today is to continue to push the city to act quickly before more and more supermarkets bite the dust. In this push we will be calling on the administration to begin to examine lowering the cost of doing business-high taxes and over-regulation being key variables in the disappearance of so many of our neighborhood food stores, something that is featured in the current issue of Crain's.

As Crain's points out: "Anyone who wants to know why the number of supermarkets in the city is rapidly declining only needs to ask the people who own them. In the past five years, about 100 grocery store owners have either left the city entirely or focused their expansion efforts outside the Big Apple. In response to recent reports detailing the situation, a special commission is now struggling to come up with recommendations that might help turn the tide. The experiences of many of the grocers leaving town show, however, that it won't be easy."

The situation has been particularly hard on those immigrant entrepreneurs that have, until very recently, invested so much in the neighborhoods of the city: "The cost of operating supermarkets in New York City was impossible," says Eligio Peña, who closed the last of his six Associated supermarkets here in 2000 after 30 years in business. Today he co-owns 26 Compare Foods markets in the Carolinas. Mr. Peña's complaint and his response are common. The National Supermarket Association, a Queens-based group that represents independent chains including Associated, Key Food, Pioneer and C-Town, reports that a quarter of its 400 members have shifted their focus elsewhere, opening stores along the East Coast from Florida and Georgia to as far north as Massachusetts.

The main culprit? "The industry's main beefs with the city center on high taxes and rent. Veteran grocer Cesar Ramirez is a prime example. Although he still owns three C-Town markets in upper Manhattan and the Bronx, in recent years he has focused his energies on Florida, where he has opened five Freshco stores. "I definitely wouldn't expand in New York unless there were tax rebates and subsidized rent," says Mr. Ramirez. He notes that he has been able to hold on in New York largely because he owns the real estate at two of his locations."

Mayor Bloomberg's huge commercial real estate tax increase in 2002 was a knife in the heart of all neighborhood retailers, but particularly supermarkets that operate on very narrow margins: "Life in other states is far easier, as Mr. Peña has discovered. In just seven years, he has built a supermarket empire in North Carolina more than four times as large as his former holdings in New York. He notes that he paid between $3 and $5 in real estate taxes per square foot here, a multiple of North Carolina's rate of 40 cents to $1. One of his biggest savings is on insurance, which now costs him $7,000 a year in North Carolina, compared with $100,000 in New York."

This supermarket issue is going to be a big part of the 2009 election cycle if we have anything to say about it. The cavalier Bloomberg attitude that taxes don't have any impact on business health must be replaced by a healthy awareness of the correlation of low taxes, less regulation and business growth. Today's press conference is just the start of this campaign.

Thanks for the link Liz.