Not all civic infrastructure is public
For 13 years, I boasted a luxury that most Americans do not: a full-service grocery store less than 500 feet from my doorstep. Like many urban grocery stores, it opened in the 2010s in an urban neighborhood with a growing population. In the fall I moved to a neighborhood with many amenities, but which lost a full service grocery store after the pandemic. We adapted by shopping at a walkable Trader Joe’s and ordering delivery from the nearby full-service grocery store. But it has me reflecting on what I lost. No longer do I find myself in a shared space, often with a few quite unique characters, first thing in the morning or last thing at night as I’m grabbing something I need. No longer am I running into neighbors as I pick up eggs or last-minute diapers.
Grocery stores face unforgiving economics
Full-service urban supermarkets declined sharply from the late 1960s through the early 1990s, came back robustly in dense and growing urban cores from the mid-1990s through the 2010s, with an important caveat that they largely did not return to the lower-income neighborhoods they originally left. That resurgence may already be receding after the COVID-19 pandemic, in which the shift in in-person shopping patterns and increased theft have resulted in a decline in stores.
I saw this dynamic first hand when I was in local government. We spent a lot of time on issues of “food deserts” and “food access.” I spent many hours in rooms with grocers trying to coax them to locate or expand in DC. I learned the real challenge, as Errol Schweitzer, a former Whole Foods executive and expert in Big Grocery points out in his fascinatingly niche grocery store newsletter, is that their cost structure is almost entirely operating costs like staff, utilities, and inventory. Rent is a rounding error. You could give them a free building and that wouldn't move the needle on their decisions of whether to locate and run a store in a location.
Federal policy has exacerbated the very challenging economics. In the 1980s, regulators allowed distributors to charge more favorable prices for larger retailers, accelerating a race toward consolidation. Retailers chased lower prices by getting bigger, and found margins to squeeze wherever possible, including closure. A banana is a banana, and in a commodity market where tiny margins are the rule, scale wins. That is one reason we have seen consolidation in the industry, illustrated recently by the failed Kroger-Albertsons merger (which would have seen my previous grocery store sold off.)
Some people have responded to these challenges with ideas like New York Mayor Mamdani’s proposal for government-run stores would provide public ownership or operation or both. Just like giving away a free building, it may not fix the underlying problem of operating economics. And yet I think he got the diagnosis right: grocery stores need to be rethought as something other than private retail in a private real estate market. Already, local policymakers often treat grocery stores with a unique set of policies, with special zoning, federal EBT currency (at least for now), and differential tax treatment that no other retail category receives. This was all put into greater relief during COVID-19, when grocery stores were classified as essential businesses. As I saw firsthand while leading Mayor Bowser’s “ReopenDC” work during the early days of the pandemic, we even created a special category for grocery stores and food access.
Grocery stores as form of private civic infrastructure
If grocery stores are more than market actors, what would that change for how we make policy and investments? It may help reframe the economics. The cooperative model of retail offers one potential path by explicitly valuing grocery stores as civic infrastructure. There is a successful example of small community retail in a large, commodified market through the world’s largest cooperative: Ace Hardware. It is owned by its local retail shop owners, who can both build the buying power to compete with the large national chains like Home Depot while curating, in much smaller footprints, selections that align with its community. I have an affinity for my local Frager's Ace Hardware store, which is a pillar of the Capitol Hill community in a way that I don't feel about Home Depot.
A similar, smaller cooperative exists for groceries in small towns and rural areas through the IGA. The IGA model works in places where small-town identity and limited competition make community loyalty a real economic force. Like with Ace Hardware, this approach matches a distribution model that can keep prices somewhat competitive. People will pay a little more and accept a narrower selection because the store is theirs in a way that a chain never is. In places where food access is also a public health goal, subsidizing a locally owned store with direct community ties is also an easier public case to make than propping up a chain.
To me, the big question is whether we can translate the lessons and infrastructure of Ace and IGA into cities like DC, where a cooperative grocer would compete against Whole Foods, Giant, and same-day delivery. But the framing matters. If we keep treating grocery access as solely a retail problem, we'll keep reaching for retail solutions. If we see it also as a kind of private civic infrastructure, we might start finding new and more durable solutions.
