Governments Should Not Open Grocery Stores, Analyst Argues
In recent decades, governments have increasingly intervened in markets, and the latest trend in municipal politics—proposing public grocery stores—is a prime example. Cities like Toronto and New York, along with the federal NDP, have embraced this idea, claiming it could save Canadian families 30-40% on grocery bills. However, Gabriel Giguère, a senior policy analyst at the Montreal Economic Institute, argues that such claims are unfounded.
Grocery stores operate on thin profit margins of 3-5%, according to industry norms. Even if these margins were eliminated, savings would amount to only $11 to $18 per person per month, based on calculations from Toronto’s Daily Bread Food Bank. A University of Guelph study shows that a Canadian family of four spends about $17,571 annually on groceries, or $370 per person per month—far from the promised 30-40% reduction.
For these modest savings to materialize, government-run stores would need to match private grocers' efficiency in supply negotiations and inventory management—a highly unlikely scenario. Running a grocery store involves coordinating thousands of perishable products through complex supply chains while negotiating hard with suppliers to avoid losses. Governments are ill-equipped for such tasks, and any failures would burden taxpayers. Legal risks, such as food safety incidents, could also lead to costly lawsuits.
The track record of public grocery initiatives is poor. According to food economist Sylvain Charlebois, the failure or restructuring rate exceeds 50% in North America. For instance, Sun Fresh Market in Kansas City received $29 million in public funds over seven years before closing in August 2025 due to empty shelves, financial losses, and safety issues.
The real driver of high food prices is not grocer profits but government policies. Interprovincial trade barriers act as a 9% internal tariff, as noted by the International Monetary Fund, while taxes and transport costs further inflate prices. To reduce grocery bills, governments should focus on reforming fiscal and regulatory environments rather than entering the grocery business. Such reforms would lower prices across all stores, benefiting all consumers, not just those in subsidized outlets.
