Friday, June 13, 2008

Drug Dealing and Supermarkets

Yesterday Attorney General Andrew Coumo announced the results of his office's investigation into the state's drug chains, stores that are apparently flouting the laws on selling expired goods. As the NY Post reports this morning: "Attorney General Andrew Cuomo is going after CVS and Rite Aid - saying the drugstore chains sold expired milk, eggs, over-the-counter drugs and baby formula. Over the last four months, his investigators were able to buy more than 600 expired items at 142 CVS and 112 Rite Aid pharmacies in 41 counties in New York, Cuomo said yesterday."

This is more than just a simple problem for the city's neighborhood retailers, particularly bodegas and supermarkets that are being forced to compete against the drug chains for food sales and other goods that these markets have relied upon for their slim profit margins. What the Cuomo investigation reveals, however, is the extent to which the drug stores have been competing without the same regulatory oversight that food stores must endure.

Which says to us that the AG's investigation should just be the beginning of a serious evaluation of the proliferation of these drug dealers throughout the neighborhoods of NYC. As the Post tells us: "In the Big Apple, they found expired items at 28 - or 24 percent - of the city's 116 CVS stores and at 22 (13 percent) of the 175 Rite Aid stores." That's 391 drug stores, many of whom are occupying precious neighborhood selling space that used to be reserved for the local supermarket-and that's not including Walgreens, another proliferating druggie that's pushing out local retailers.

A lot of this came out in our discussions yesterday at a supermarket meeting with Brooklyn BP Marty Markowitz. As Marty said in response to the drug chain proliferation: "Are New Yorkers getting sicker? Why do we need a drug store on every block? Why indeed?

There is a pressing need for a full zoning review of chain drug stores; and a remedy whereby the number and locations of these stores is restricted may well be in order. In any event it's high time that the city and state begin to inspect these stores with the same vigor heretofore reserved for the supermarkets. If they're going to act as if they were food stores than they should be held to the same regulatory standards.

And the first place too start would be with the bottle law. It's bad enough that the CVSs of the world rip you off with high beer and soda prices, but show me one that actually redeems a can or bottle. Do the druggies reserve any of their precious selling space for redemption? It's time that the state and city cracked down and created a level competitive playing field-and if the chain drug stores don't comply they shouldn't be allowed to sell beverages.

Which brings us to the larger issue of supermarket disappearance. Our Markowitz meeting underscored one thing: the city and state need to stop using the stores as a tax and regulatory pinata. You can't, as one wholesaler at the meeting lamented, decry the loss of supermarkets, while at the same time devising any number of new regulatory schemes (plastic bag recycling and veggie peddling anyone?) that make it more costly for the markets to operate.

One idea thrown out yesterday that we particularly liked was the reclassification of supermarkets as "community facilities." This would create a zoning category that would allow developers and landlords to discount space for supermarkets and thereby reduce rental costs (the big expense that all of the retailers and their supplier mentioned as the main reason for the loss of the markets).

We'll have more on this at a later time, but we need to emphasize that every one's gotta realize that regulations that purportedly protect the consumer also threaten the health of the stores-in effect leading to a "throw the baby out with the bathwater phenomenon." The cost of doing business needs to be lowered if supermarkets are to thrive in NYC.