From the Wall Street Journal, November 25:
Goal is for the store to become profitable without any government subsidy within three years
When the Azalea Fresh Market opened this summer, it became the only supermarket to operate in this city’s downtown in two decades. To make that happen, the city contributed $8 million in cash, grants and loans.
Now, this 20,000-square-foot store is the beginning of what officials hope will be more publicly funded, but privately run supermarkets to come. The goal is for the store to become profitable without any government subsidy within three years. With the same funding, the city is already aiding the construction of a second planned store 6 miles away, expected to open next year.
Atlanta officials spent years trying to lure major chain grocery stores to neighborhoods that don’t offer residents big supermarkets with fresh, healthy food. City officials said the partnership was necessary because large private operators have been reluctant to open a store in poorer neighborhoods.
“That totally burned me up,” said Andre Dickens, Atlanta’s mayor. “And I was like, screw it. We’re gonna do it ourselves.”
Atlanta joins a growing number of cities testing publicly funded options for affordable fresh food, in areas where businesses are put off by the risks.
In New York City, mayor-elect Zohran Mamdani campaigned on starting government-backed grocery stores. He aims to beat the chains on price, he has said, by allowing stores to operate free of rent and property taxes at city-owned sites.
Madison, Wis., is slated to soon begin construction on a publicly owned supermarket. Other towns across the U.S. have experimented with similar stores with varying levels of success.
Publicly funded and government-run grocery stores haven’t always succeeded. A city-funded grocery store in Kansas City, Mo., closed recently after 10 years and $18 million in public investment, with its nonprofit operators citing crime and a dwindling number of customers.
Atlanta officials think that with for-profit supermarket management they can avoid the failures of some other government grocery experiments.
Savi Provisions, the city’s private-sector partner, runs a chain of high-end small stores with organic foods. It has joined a wholesale network that Savi says allows it to buy more groceries in bulk than small grocers typically can, so it can offer lower prices on staples like milk and eggs.
Products at the new store should be less—or at least no more—expensive than at the chain stores, city officials say. It offers a familiar array of fresh produce, baked goods, two-for-one deals and signs promoting “Everyday Essentials, Priced Right!”
Any profit lost from cheaper staples is partly made up upstairs, where there is a sandwich and sushi counter, and wine and beer sold at typical prices.
In this way the store operates like most supermarkets, with higher-margin items making up for others sold closer to cost. Savi said it typically takes a new grocery store up to three years to turn a profit. The subsidy from the city will help fund its operating costs in the meantime.
Sales are rising since the store first opened in September, according to the operators, and produce makes up a greater share of sales than at the average supermarket.
The store doesn’t have everything found at other supermarkets. There isn’t a seafood counter, and a small “Georgia Grown” section offered mostly potatoes, onions and peanuts, though it will carry more items in the summer months....
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