this rarely gets mentioned in these articles but it's extremely important. The Chinese food culture is substantially different than the Western food culture, and I don't just mean the items on the menu.
Chinese don't eat raw foods at all, and especially not vegetables, which they correctly (by the standards of Chinatown produce) view as being unsanitary until thoroughly cooked.
They have created a market that is efficient by eschewing the standards of sanitation that Western produce markets use. That's not to say that this is bad. Their food culture is fully adapted to it and it doesn't produce epidemics of food-borne illness in their community because they handle and cook food appropriately. The same approach wouldn't work if it was mostly Westerners buying the food though. A taste for raw baby kale salad makes this entire approach to food marketing non-viable.
Ha! I figured out the reason even before I read the whole article... always a gratifying feeling.
That said, there are tons of food hacks if you want to save 30-40% and have a strong stomach. Buy your cashews, cumin seeds, turmeric, groundnuts, papayas, guavas from the nearby Indian store - there's tons of them in CA. Most of these are sourced from Fiji, Philippines, India etc, whereas Safeway would source cumin from Oregon and charge $5 per ounce. You can literally get a whole pound of cumin for that price - but no, you don't get the "organic certification", or the bar code or the USDA assurance sticker or anything that lets you know where the cumin came from in case you get some food poisoning and want to lodge a complaint. The Indian store lady dips into a giant cumin bottle and pours out a pound of cumin and takes $5 cash and no sales tax ofcourse wink wink. So yeah, depends on your ethics and cash situation. Say you want a little pep in your walk and like some extra endurance - used to be ephedra was legal and you could pop into your Chevron foodmart and buy a pill. Now it's no longer legal, so you go to the Chinese store and get the strongest ephedra tea - free market ftw. Ofcourse if you brew something strong and land up in the hospital, the medic can't really help you since who knows where that tea came from and what else is in it. Literally no American supermarket can compete with an Indian store when it comes to say cashews. Your Target gives you two pounds of cashews for $15. The Indian store gives you two kgs... that's 4.4 pounds! Ofcourse it won't come in a nice airtight jar with feel-good marketing on why you must eat your servings of USDA nuts for optimum health - instead, it's going to be wrapped up in a cone made of newspaper.
If you have a "tropical palate" and a strong stomach, you should definitely try some of these shady joints. It's a trip.
Actually in CA, many groceries are not subject to sales tax, just FYI. I'm not sure where the distinction is drawn, but it seems like the less processed the food the less likely it will be taxed.
also, ethnic grocers often have:
- much fresher product
- more varieties of a given item (e.g. mint)
- stronger flavor / less watered-down varietals
- items you can't find in mainstream grocers (e.g. rau ram)
At least in SF, no "strong stomach" is required - the ethnic grocers source from the central valley, same as everybody, and fruit is peeled and herbs are washed, same as you'd do with stuff from Safeway.
In particular, rau ram ("vietnamese coriander) is simply amazing-- it started showing up in grocers the past few years and my gf introduced me to it (she's from southeast asia) and it's mild and fascinating, and I keep finding new uses, both cooked and raw. 100% of people seem to like it, and if you're not sure, start by using it whole to flavor rice.
But you can only buy it in ethnic grocers.
(SF readers: the civic center farmer's market has one herbs farmer with all the vietnamese herbs: mint, rau ram, vn shiso, etc - $1.50 for two massive bunches, and much fresher than any grocer)
This feels like the proverbial dollar left on the street that economists say should not exist, so I'm racking my brain trying to figure out what's stopping chains from replicating this. I wonder whether this alternate network is as scrupulous about source tracking and food safety regulations. Those costs could be driving up prices on the traditional retail side.
>I'm racking my brain trying to figure out what's stopping chains from replicating this.
Scale.
Anything living has a level of variability and likelihood of failure/damage/spoilage to it that gets harder and harder to manage as your scale gets bigger.
When you're a small shopkeeper who sells about 3 baskets of apples a day, it's both easier to sift through it and throw out the bad ones AND easier to find 3 basket's worth of apples that meet your quality expectations.
When you have to move 3 pallet-loads of apples, though, not only does QC become a more complicated endeavor, but you have to find 3 pallet-loads of apples to sell at a competitive price, so you may not have the luxury of being so choosy. When pallet-loads scale up to shipping-containers. . . you can see where I'm going with this.
And then there are logistics issues. If you're a large retailer you have to bring everything into centralized warehouses and then send them out. This means things need to travel longer distances and/or have longer shelf-lives. The upshot of that is they have a higher chance of either being past their prime by the time they get to you, or that had to get picked before they were properly ripened on the vine.
When you're smaller, have smaller scale suppliers, and less complicated distribution networks a lot of that extra burden falls away. Starbucks had this problem when they first started to get big too. A lot of people give them flack for over-roasting their beans and giving everything a charred/muddied flavor. When they were small they were able to be choosier about the beans. As they grew the scuttlebutt is that there just weren’t enough beans of that quality level on the market, so they had to lower the quality threshold and move to darker roasts. They still sell better beans, but only in select locations.
> Markets also cut costs by eschewing extra technology and certain aesthetic choices—the Journal points out that shelves “are typically made of plywood and lined with newsprint,” prices are scrawled on cardboard instead of printed on stickers, and credit cards are not always accepted.
Some people don't want to buy food with cardboard signs and cash.
Hell, I've heard California even has people who are fans of convenience so much they will pay for other people to do the grocery shopping.
Probably volume. Chinatown is extremely dense and has such high foot traffic that it makes sense to operate without refrigeration, with goods stocked from neighborhood warehouses.
Most parts of the country don't have anywhere near that level of density, so the economies of scale wont work out like they do in Chinatown.
I don't think produce prices are all that competitive. For one thing, it's terribly difficult to comparison shop them. The prices change all the time and you pretty much have to visit the store in person to find out what they are on any given week, so it's either waste a lot of time shopping around, or go with what you find in the store you usually visit anyway.
The fact that the prices are usually round numbers (e.g. when I buy apples they're almost always $0.99, $1.49, or $1.99/pound) seems to support the idea that stores aren't trying hard to wring out every last bit of competitiveness from this stuff.
Maybe its just because there isn't enough competition after corporate consolidation. For the most part I see the same brands and items in stores in Virginia as in stores in California...even in the organic food stores.
There are not enough people in an American metro area to distribute this variety across stores across the area. The produce departments sell what the computers report as margin friendly.
There are enough people in a metro area who want this and are willing to go to the asian district to get it. The five or 20 families in a subdivision who want this are not enough for all the Safeways and Krogers in the subdivision to stock this food. But enough handfuls of those families across the area are willing to go to the few stores concentrated "in the asian district" to make it viable for those few stores.
This is also capitalism at work. Huge markets and niches both have ways to operate.
As for tracking and safety, as others on this page have noted, knowledgeable (and alert) shoppers and proper preparation go a long way to promoting food safety at the end-use end of the chain.
> I wonder whether this alternate network is as scrupulous about source tracking and food safety regulations.
If you think there are some regulations that Jetro or whoever is enforcing that these other wholesalers aren't then post that. Otherwise this just comes off as a subtly racist comment.
From what I understand, these networks are both small and very local. That makes them undesirable to large chains.
This is also the reason that Whole Foods has gone downhill, they used to use similar networks but as they've expanded they've been forced to use larger more mainstream suppliers.
Well on the retail side, we do have retailers like Aldi's. You bag your own grocery and they have no workers focused on presenting the store in an ideal way. It's an IKEA maze full of warehouse goods like Costco.
I feel like the reason Safeway can't replicate this is because they have regional distributors. Having each and every store work independently requires very shrewd buyers on the retailer side. Furthermore, there's the expectation of having certain items for sale, regardless of demand or price fluctuation. There's no expectation for the Chinatown retailers.
My understanding was that a lot of the produce sold in Chinatown markets was near expiration dates and often had already been rotated off of the shelves of normal supermarkets, often for cosmetic reasons or as a way of segmenting the market.
(basically, supermakets sell produce to Chinatown vendors for a lower price, who then move it to a segment of the market which is willing to buy non-aesthetic food which needs to be eaten in a day or two)
Amazing how they manage to stay so cheap while hiring people at at least minimum wage, with valid work contracts, while paying all relevant taxes and not having any ethnically discriminatory hiring practices.
Does the article handle ethnically discriminatory hiring practices? Neither "Divers-" and "ethnic"show up in the article, and if it's like Boston's Chinatown, workers are overwhelmingly Chinese.
Fascinating. I'm wondering if there's an opportunity for a tech startup to replicate this network more generally. I could see the network connecting the sellers with the farmers directly, plus coordinating delivery of the veggies... it's an easier problem than ubereats delivery as you've got fewer nodes. Maybe you even skip the sellers entirely, which basically gets you to CSA boxes but those always felt expensive to me (I'm not sure why)
I think another reason chinatown markets (and mexican mercados) are cheaper is also because they tend to buy up a wider grade selection of produce. When I walk traditional markets every tomato, onion, cucumber is roughly the same size and shape. In a Chinese market they often have a wide variety of sizes and shapes. This is way closer to what actually gets grown. Not every vegetable grows the same size and shape though you may think that going into a normal supermarket.
In other words, ultra-small ultra-low-overhead businesses are good for consumers.
Problem is, most places in America there's a certain baseline red tape cost that exceeds the budget of these types of operations.
In an unrestrained market environment, people can make money by eating up little inefficiencies like a swarm of ants. When you make the baseline energy cost of existence too high (e.g. with onerous incorporation or registration or licensing requirements), you kill off all the ants. Now those small but myriad inefficiencies go unconsumed, and society loses.
And the big businesses who are supposedly "anti regulation" back lobbyists who put those regulations in place, so that new competitors have a harder time entering the market
Agreed. I was surprised that many supermarket chains are union shops with good wages, paid time off and healthcare. Trouble is they're having trouble competing with non-union competitors and are closing down eg A&P. Chinatown I'd expect a lot of employees aren't even legal.
One thing this article doesn't assert too strongly is simply that many western supermarkets just don't have veggies that are quite common in other countries. e.g. Gherkins is quite common in India (fresh ones, not the pickled variety), tender young Okra (without the coarse threads that make it hard to chew) and something which is apparently called "Chinese Green Beans" but which is pretty commonly used in my native cuisine.
Maybe this is true in New York, but the produce at the local Chinese markets where I live is not particularly fresh and in some cases you can tell from the packaging that it was intended for sale at a different supermarket (I assume this indicates it wasn't fresh enough for the original place of sale because it always looks just short of rotten in these cases).
I moved to lower Lower Eastside just a few blocks away from Chinatown two years ago. I can't really say the article is on the money. I was really excited when I moved here first and thought the grocery shopping would be the one of the pro's. While I don't cook home (so not much veggie), but I used to buy a lot of ready-to-eat fruits and snacks. Perhaps it's that particular supermarket I visit in Chinatown, but they cut corners and the quality is fairly low. I learned to never to buy anything packaged by the supermarket themselves. Perhaps, I should travel a bit further into Chinatown to enjoy the benefit of such supply network. But for now now, I go shop at the Whole Foods or Eastside Market for all my needs. I no longer want to mess with what I eat.
Ah yes, the efficient markets theory - never before debunked ;-)
Jokes aside, the truth is that with the original definition, there are so many barriers to markets being efficient and behaving in that idealized way that in reality I think it's a unicorn that can't exist, or at least rare enough to take with a huge grain of salt. It's a simplified model of how things might work, and perhaps if you squint a little it does seem to work that way, but not when you look closer. People behave irrationally all the time, there are all sorts of factors and incentives, social, political, and game-theoretic, that prevent actors from operating in certain desirable ways.
I think it's hilarious that Chinatown may have out-capitalisted the capitalists, and cut out many middlemen to deliver better product for cheaper. Sad that they probably won't get much recognition for it, perhaps only some lobbying to block it.
Could it be that they just don't have the cruft & boilerplate & inefficiencies that traditional retail has? Having been in several types of workforce, I've seen plenty of missed opportunities that continued indefinitely because of management incompetence, so I wouldn't doubt it if they're able to have high quality & cheap produce just by cutting out the middleman and by being competent.
This resonates with HN article this week end talking about a lot of recent startups simply being centralizing rent seekers. The Saveur article shows that an "end to end" model can be cheaper, at least for a specific solution point (to whit: get it fresh, cook, don't worry so much about the cleanliness of the rind). While the centralized solution that serves most grocery stores costs more and promotes boring sameness.
Sometimes I want that sameness, but as the economy, or the Internet architecture for that matter, centralizes around a few corporations you end up with a bland world.
Chinatown sources from local small producers and are able to get big discounts. They also reduce cost by skimping on things like good furniture, printed labels, credit cards etc and keep their margins to 10-12% over wholesale.
I live in northern Virginia, and we have a lot of great Korean markets to shop at, and they're always slammed with people. It's rare that you go into the produce section and see less than two dozen people browsing. The local chain store might have 2 at any given time. And the prices and selection are incredible. The only downside is you have to do a little bit more picking to get ripe/fresh/good looking produce.
Is there a browser plugin that lets you vote on how annoying a site's ads are, so it can warn you before you go to the site? I have a feeling that kind of pressure could change the way ads are displayed, but without it we're going to keep getting our screens engulfed by an ad with no idea how to close it.
> Chinatown’s 80-plus produce markets are cheap because they are connected to a web of small farms and wholesalers that operate independently of the network supplying most mainstream supermarkets.
I don't get it.
Why can this web of small farms and wholesalers sell produce for less than normal suppliers can?
If Chinatown's suppliers are so much cheaper, why don't the other supermarkets use them too?
If Chinatown is consuming the entire output of these suppliers (explaining why the other supermarkets can't use the same source) then why don't the suppliers raise their prices? Even if some of the chinatown vendors could no longer afford the food, surely someone else would buy it.
Do plywood shelves at a grocery really make a noticeable difference in food prices?
A lot of Asian supermarkets have great fish at low prices. I'd like to think its because of informal network of small independent local producers but I suspect its illegally caught by sketchy fishing fleets. Can anyone put my mind at ease?
[+] [-] metaphorm|9 years ago|reply
Chinese don't eat raw foods at all, and especially not vegetables, which they correctly (by the standards of Chinatown produce) view as being unsanitary until thoroughly cooked.
They have created a market that is efficient by eschewing the standards of sanitation that Western produce markets use. That's not to say that this is bad. Their food culture is fully adapted to it and it doesn't produce epidemics of food-borne illness in their community because they handle and cook food appropriately. The same approach wouldn't work if it was mostly Westerners buying the food though. A taste for raw baby kale salad makes this entire approach to food marketing non-viable.
[+] [-] dxbydt|9 years ago|reply
If you have a "tropical palate" and a strong stomach, you should definitely try some of these shady joints. It's a trip.
[+] [-] Indy_Dh|9 years ago|reply
Actually in CA, many groceries are not subject to sales tax, just FYI. I'm not sure where the distinction is drawn, but it seems like the less processed the food the less likely it will be taxed.
[+] [-] asah|9 years ago|reply
At least in SF, no "strong stomach" is required - the ethnic grocers source from the central valley, same as everybody, and fruit is peeled and herbs are washed, same as you'd do with stuff from Safeway.
In particular, rau ram ("vietnamese coriander) is simply amazing-- it started showing up in grocers the past few years and my gf introduced me to it (she's from southeast asia) and it's mild and fascinating, and I keep finding new uses, both cooked and raw. 100% of people seem to like it, and if you're not sure, start by using it whole to flavor rice.
But you can only buy it in ethnic grocers.
(SF readers: the civic center farmer's market has one herbs farmer with all the vietnamese herbs: mint, rau ram, vn shiso, etc - $1.50 for two massive bunches, and much fresher than any grocer)
[+] [-] and0|9 years ago|reply
[+] [-] bjt|9 years ago|reply
[+] [-] naravara|9 years ago|reply
Scale.
Anything living has a level of variability and likelihood of failure/damage/spoilage to it that gets harder and harder to manage as your scale gets bigger.
When you're a small shopkeeper who sells about 3 baskets of apples a day, it's both easier to sift through it and throw out the bad ones AND easier to find 3 basket's worth of apples that meet your quality expectations.
When you have to move 3 pallet-loads of apples, though, not only does QC become a more complicated endeavor, but you have to find 3 pallet-loads of apples to sell at a competitive price, so you may not have the luxury of being so choosy. When pallet-loads scale up to shipping-containers. . . you can see where I'm going with this.
And then there are logistics issues. If you're a large retailer you have to bring everything into centralized warehouses and then send them out. This means things need to travel longer distances and/or have longer shelf-lives. The upshot of that is they have a higher chance of either being past their prime by the time they get to you, or that had to get picked before they were properly ripened on the vine.
When you're smaller, have smaller scale suppliers, and less complicated distribution networks a lot of that extra burden falls away. Starbucks had this problem when they first started to get big too. A lot of people give them flack for over-roasting their beans and giving everything a charred/muddied flavor. When they were small they were able to be choosier about the beans. As they grew the scuttlebutt is that there just weren’t enough beans of that quality level on the market, so they had to lower the quality threshold and move to darker roasts. They still sell better beans, but only in select locations.
[+] [-] paulddraper|9 years ago|reply
Some people don't want to buy food with cardboard signs and cash.
Hell, I've heard California even has people who are fans of convenience so much they will pay for other people to do the grocery shopping.
[+] [-] Nav_Panel|9 years ago|reply
Probably volume. Chinatown is extremely dense and has such high foot traffic that it makes sense to operate without refrigeration, with goods stocked from neighborhood warehouses.
Most parts of the country don't have anywhere near that level of density, so the economies of scale wont work out like they do in Chinatown.
[+] [-] mikeash|9 years ago|reply
The fact that the prices are usually round numbers (e.g. when I buy apples they're almost always $0.99, $1.49, or $1.99/pound) seems to support the idea that stores aren't trying hard to wring out every last bit of competitiveness from this stuff.
[+] [-] SubiculumCode|9 years ago|reply
[+] [-] a3n|9 years ago|reply
There are enough people in a metro area who want this and are willing to go to the asian district to get it. The five or 20 families in a subdivision who want this are not enough for all the Safeways and Krogers in the subdivision to stock this food. But enough handfuls of those families across the area are willing to go to the few stores concentrated "in the asian district" to make it viable for those few stores.
This is also capitalism at work. Huge markets and niches both have ways to operate.
As for tracking and safety, as others on this page have noted, knowledgeable (and alert) shoppers and proper preparation go a long way to promoting food safety at the end-use end of the chain.
[+] [-] Alex3917|9 years ago|reply
If you think there are some regulations that Jetro or whoever is enforcing that these other wholesalers aren't then post that. Otherwise this just comes off as a subtly racist comment.
[+] [-] bryanlarsen|9 years ago|reply
This is also the reason that Whole Foods has gone downhill, they used to use similar networks but as they've expanded they've been forced to use larger more mainstream suppliers.
[+] [-] sushid|9 years ago|reply
I feel like the reason Safeway can't replicate this is because they have regional distributors. Having each and every store work independently requires very shrewd buyers on the retailer side. Furthermore, there's the expectation of having certain items for sale, regardless of demand or price fluctuation. There's no expectation for the Chinatown retailers.
[+] [-] NwmG|9 years ago|reply
[+] [-] bpodgursky|9 years ago|reply
(basically, supermakets sell produce to Chinatown vendors for a lower price, who then move it to a segment of the market which is willing to buy non-aesthetic food which needs to be eaten in a day or two)
[+] [-] lacampbell|9 years ago|reply
That's the real miracle.
[+] [-] purity_resigns|9 years ago|reply
[+] [-] technotony|9 years ago|reply
[+] [-] elsherbini|9 years ago|reply
previous discussion of the WSJ article mentioned in the text: https://news.ycombinator.com/item?id=11981063
[+] [-] applecrazy|9 years ago|reply
[+] [-] jtchang|9 years ago|reply
[+] [-] wyager|9 years ago|reply
Problem is, most places in America there's a certain baseline red tape cost that exceeds the budget of these types of operations.
In an unrestrained market environment, people can make money by eating up little inefficiencies like a swarm of ants. When you make the baseline energy cost of existence too high (e.g. with onerous incorporation or registration or licensing requirements), you kill off all the ants. Now those small but myriad inefficiencies go unconsumed, and society loses.
[+] [-] armenarmen|9 years ago|reply
[+] [-] bruceb|9 years ago|reply
Many regular supermarkets pay a living wage.
[+] [-] rb808|9 years ago|reply
> Grocery clerks with service of five years or more generally earn the maximum rate allowable under the contracts, between $18.71 and $19.80 per hour. http://work.chron.com/union-pay-journeyman-grocery-clerk-281...
[+] [-] peteretep|9 years ago|reply
[+] [-] pm90|9 years ago|reply
[+] [-] vram22|9 years ago|reply
I've rarely seen fresh gherkins in India. Which cities do you mean? Pickled ones are available in shops though.
[+] [-] emodendroket|9 years ago|reply
[+] [-] tooltalk|9 years ago|reply
[+] [-] bcaulfield|9 years ago|reply
[+] [-] makmanalp|9 years ago|reply
Jokes aside, the truth is that with the original definition, there are so many barriers to markets being efficient and behaving in that idealized way that in reality I think it's a unicorn that can't exist, or at least rare enough to take with a huge grain of salt. It's a simplified model of how things might work, and perhaps if you squint a little it does seem to work that way, but not when you look closer. People behave irrationally all the time, there are all sorts of factors and incentives, social, political, and game-theoretic, that prevent actors from operating in certain desirable ways.
I think it's hilarious that Chinatown may have out-capitalisted the capitalists, and cut out many middlemen to deliver better product for cheaper. Sad that they probably won't get much recognition for it, perhaps only some lobbying to block it.
[+] [-] penpapersw|9 years ago|reply
[+] [-] drabiega|9 years ago|reply
[+] [-] Spooky23|9 years ago|reply
Why do you think Amazon is sort of price competitive with delivery?
[+] [-] jandrese|9 years ago|reply
[+] [-] gumby|9 years ago|reply
Sometimes I want that sameness, but as the economy, or the Internet architecture for that matter, centralizes around a few corporations you end up with a bland world.
[+] [-] sytelus|9 years ago|reply
Chinatown sources from local small producers and are able to get big discounts. They also reduce cost by skimping on things like good furniture, printed labels, credit cards etc and keep their margins to 10-12% over wholesale.
[+] [-] empath75|9 years ago|reply
[+] [-] peterwwillis|9 years ago|reply
Is there a browser plugin that lets you vote on how annoying a site's ads are, so it can warn you before you go to the site? I have a feeling that kind of pressure could change the way ads are displayed, but without it we're going to keep getting our screens engulfed by an ad with no idea how to close it.
[+] [-] mac01021|9 years ago|reply
I don't get it.
Why can this web of small farms and wholesalers sell produce for less than normal suppliers can?
If Chinatown's suppliers are so much cheaper, why don't the other supermarkets use them too?
If Chinatown is consuming the entire output of these suppliers (explaining why the other supermarkets can't use the same source) then why don't the suppliers raise their prices? Even if some of the chinatown vendors could no longer afford the food, surely someone else would buy it.
Do plywood shelves at a grocery really make a noticeable difference in food prices?
[+] [-] rb808|9 years ago|reply
[+] [-] molloy|9 years ago|reply
[+] [-] dogruck|9 years ago|reply