Grocery Bills: Why So High?

Some people in the Heights shop in New Jersey. Some buy from six different places. Some just stand in the checkout line and sigh when the register crosses $100 and they still have items on the belt.

The grocery prices here feel high. So I decided to do a little experiment. I drew up a shopping list of 15 items, then comparison-shopped around the area.

For the wonks among you, there’s some fine print below on how I did this. For everyone else, let’s get to the results.

The Results

The short version: Life is cheaper in New Jersey.

I shopped at Ozzie's Fresh Market on Fort Washington, the Key Food at 187th and Broadway, and the Shop Fair at 186th and St. Nicholas. I'm not going to call out individual stores, but they all came in fairly close to each other. Key Food was the lowest by several bucks. Among those three stores, the average price for my basket was $76.05.

According to in-store pricing information posted online, the same basket would have cost $67.66 at a Wegmans in lower Manhattan and $60.36 at a Wegmans in Harrison, a wealthy Westchester suburb. Across the bridge at the ShopRite in Palisades Park, New Jersey, it would cost just $55.45.

In other words, a family that spends $7,000 per year on groceries at the Palisades Park ShopRite would spend roughly $9,600 per year for the same food in the Heights.

Is this price gouging? I haven’t analyzed anyone’s books. But grocery stores tend to run on very tight margins, and there are real reasons the prices might be higher here.  

NYC Is Expensive

You know this one already. Rent is more. The minimum wage is more. Electricity — a major expense for supermarkets because of all the refrigeration — is more.

Shoppers in the city also tend to buy smaller amounts at a time. One uptown grocer told me this raises his expenses, because his store has to handle more customer interactions per dollar than a place where people just do one big weekly shop.

And suppliers tack on extra charges to haul products into the city, according to Steven Almonte, the manager at Ozzie’s. “The upcharges that they put on the products, the fuel charges, the tolls and all that — all that stuff is in the pricing,” he said. 

More is Less

Another factor is scale.

Most of the supermarket brands in the Heights — including Key Food, Associated, and Shop Fair — are actually cooperatives made up of smaller, independent stores. A family might own a single Key Food or a couple Shop Fair markets. These smaller stores have banded together to share branding and to negotiate as a group with wholesalers, bringing down costs.

Still, they’re smaller stores, and they struggle to match major retailers such as Walmart, said Joseph Welsh, a consultant based in Las Vegas who describes himself as a “global supermarket expert.”

“Typically,” Welsh said, “chains operate more efficiently than independents do.” (ShopRite is also a cooperative, but it benefits from scale: “The stores are monsters, so they can algebraically operate on a lesser margin,” Welsh said.)  

Many cooperatives also accuse wholesalers of giving better prices to the major chains, making it hard for them to compete.

The City is Rich

Nevin Cohen, who runs the CUNY Urban Food Policy Institute, said that grocery stores can charge what they think people will pay. In places where many people are wealthy and willing to shell out, some might price with those customers in mind — which isn’t necessarily great for everyone.

Cohen and his colleagues have found a lot of price variation across the city, even among stores that are near each other and part of the same cooperative. They've also worked with data from 2019 that compares prices at 163 supermarkets across the city. The ones in upper Manhattan were slightly cheaper than the median.

Reforms?

To address high prices, Mayor Zohran Mamdani has proposed opening city-owned grocery stores. Some people love the idea; others think it sounds like a Soviet plot.

Some people want to change zoning codes and welcome more big chain supermarkets to the city. “It is simply not realistic for New York City to fight the trend toward more consolidated chains, and consumers will keep suffering as long as we keep trying,” one urban policy expert argued in a recent essay for Vital City.  

Our state senator, Robert Jackson, is part of a group of lawmakers who are trying to make suppliers charge independent grocers prices that are closer to what the big chains get. Their bill has the backing of the National Supermarket Association, whose members include Associated, CTown, Key Food, and Shop Fair.

“Families in Washington Heights, Inwood, and the Bronx should not pay more for groceries simply because the stores serving their communities are being charged more by suppliers,” Jackson wrote in an email sent via a spokesperson.

Some people think the bill would be hard to enforce, or predict it would raise grocery prices for everyone.

At the Shop Fair on St. Nicholas, I asked front manager Linden Diaz whether people complain to him about prices. “People complain about everything, not only about prices,” he said. Customers from the Bronx sometimes shop there, he added. They say they get better deals in the Heights.