Sunflower State blues

In my last post I discussed blue laws. Some would like to change the Sunflower State’s liquor laws – here below are some thoughts sent from a supporter.

The video above is of an interview with Mike Moon, who owns a few grocery stores in Kansas. Mike and his employees are on the front lines of the small town economies. As the Topeka Capital-Journal reported last year, rural Kansas is losing its grocery stores. The story offers this thought:

“Fifty-one percent of the 675 Kansas cities and towns do not have a grocery store,” said David Procter, director of the K-State Center for Engagement and Community Development. “Since 2007, 82 of the 213 grocery stores in Kansas communities of less than 2,500 have closed their doors.”

The reason? Grocery stores have high overhead: not only the facility rent, but energy use such as lighting and refrigeration, employee salary and benefits, and advertising. As energy prices go up and shoppers take-home pay is going down, grocery stores seem to be the first ones to go. Added to the insult is that Kansas law does not permit grocery stores to sell liquor or full strength beer. As a result, business that could be there either goes to other stores (who have their own overhead) or across the border to states where stores face no such limitations.

As Mike Moon states, if grocery stores could sell full-strength beer wine and liquor, they would have an increase in sales without the same increase in overhead. As Mike concludes, people new to Kansas are shocked to learn that such blue laws prevent him from selling them what they expect to find.

The consumers are ready for this to change. Now we hope legislators take action on this piece of legislation for the benefit of Mike Moon and his follow shop owners across Kansas.

[Note, at around 9m, 2/2/11, I edited this post to embed the newspaper link rather than spell it out, and make an edit for clarity in my introductory, italicized remark - BTJ].

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5 Comments

Filed under Kansas

5 responses to “Sunflower State blues

  1. Keith Porter

    Spencer your post reads like a polititians answer to everything. The bottom line is that dollars are lost to Missouri all along State Line and I have know people to travel all the way from Manhatten KS to buy liquor for charity events. Keep the dollarts in KS and make KS on equall footing with surrounding states.

  2. Brian:

    I find it fascinating that you are concerned with Mr. Moon’s construction costs related to putting in a liquor department, as he can do now, but are not concerned about the construction or moving costs current liquor stores would face if the law is changed. Mr. Moon’s costs to put in a liquor department are significantly less compared to a liquor stores. Mr. Moon has the space, but most liquor store owners are “landlocked” in small buildings or strip centers. Adding a food department for a liquor store is significantly more costly than a grocer adding a liquor department. In many cases, a liquor store owner does not have the space to add such inventory. And banks are still not handing out money to cash-strapped small-business owners. As for the cost of various legal regulations, those are not going anywhere even if this law is passed so those will always be a cost for everyone.

    You write: “Moon and other supporters are of course going to point to the facts they feel best support their cause, presented through the lens of their own perspective.” The problem with that is it ignores the conclusions of the study and most others released on this issue. Anyone can take out the parts they like and use them to their advantage, but it is disingenuous when the conclusions of what they are borrowing from are in direct conflict with the point they are trying to make. The study can be viewed at http://www.ruralgrocery.org/survey/.

    I strongly disagree with your supposition that blogs are not supposed to be a place to engage in extended analysis. Are you are making an argument that blogs are intended for people to make half-arguments and present only the facts that feed their agenda, not places for honest dialogue and factual discussion? I don’t think you believe that – and your blog posts indicate otherwise – but your comment makes it seems as if blogs are for lazy people with agendas, not intelligent people analyzing and discussing issues.

    I do dispute that liquor sales provide more revenue to help with increased overhead. First, every business with brick and mortar has high overhead, regardless of the industry. It is not unique to grocers. Second, ask a rural grocer how much their profit margin will increase if they can sell alcohol….I bet they have no idea! In business and economics everything is proportional. Increasing product by its very nature leads to an increase in overhead. Selling liquor brings with it higher insurance, additional licenses, additional electricity usage, etc. Being able to sell alcohol does not mean overhead stays the same while profits go up. There is no data to suggest a grocers’ sale of alcohol in Kansas will be so significant that it will solve overhead problems. Alcohol is a low margin product. Adding a low margin item does not increase profit enough to offset the increased overhead that comes selling that low-margin product.

    To your final point: the government regulates commerce constantly when the product being sold has significant negative economic costs to its citizens. Alcohol is legal, but it comes with it social costs to our economy. Everyone likes to talk about how our system should be like Missouri, so let’s use that as the example. Because they have an all-access alcohol system, compared to Kansas, they have more DUI’s, more minor’s in possession, more assaults directly related to retail alcohol sales and increased problems relating to alcoholism. Study after study after study shows the more access a state allows to alcohol, the more these problems increase. These problems cost the state, and by extension the taxpayers, more money. It leads to increased funding from the state general fund for law enforcement, alcohol treatment programs, prison beds, etc. It is in the best economic interest of Kansas to not allow this to happen. How do you think they will pay for these programs? Increasing taxes on businesses and citizens.

    The rational thing is to have some regulation among commercial exchanges. Under your voluntary commercial exchange: the mentally unstable could purchase guns; we would not ban lead based toys; grocers could sell expired foods, and the list goes on.

    Adam Smith, the founder of economics, noted that “in analyzing economic models, people face tradeoffs.” The tradeoff for Kansans is we have decided to support Kansans – our neighbors in our communities – over the Board of Director’s of out-of-state entities. We have decided to support an economic model which keeps more dollars in Kansas, keeps social costs low and strengthens our communities, over a system which will close hundreds of businesses, cause thousands to lose their jobs and jeopardize millions for the Kansas economy. Those consequences outweigh convenience.

  3. Brian T. Johnson

    Spencer, thanks for your comments. Some thoughts in reply:

    Yes, Mr. Moon can sell alcohol today under Kansas law. However, the steps you describe come at a cost (construction costs, for instance, and the time and effort of navigating the various legal regulations, etc). If he can do so already, as you say, then why would you object to modifying the statutes to remove the cost barriers associated with doing so? If you read my personal thoughts on this issue in my last post, you may have noted its clear (if implicit, rather than explicit) acknowledgment of grocers’ abilities to sell light beer and wine. This blog does not run from the facts.

    Regarding the study, no, the supporter who wrote in with comments did not discuss the entire study. Blog posts are not often the best place to engage in that kind of extended analysis. Moreover, Moon and other supporters are of course going to point to the facts they feel best support their cause, presented through the lens of their own perspective. If you send me a link to the study I will publish it, or you can post it as a comment. An open, informed debate is a good thing.

    You bring up a good point about the competitive pressures in the food retailing industry. Profit margins are historically very tight among groceries and related businesses. Obviously, large discount chains like Wal-Mart are formidable players in this market. This post points out that grocers have high overhead, and that additional revenue from liquor sales could improve profit margins for owners. You haven’t disputed that. Would you like to?

    More importantly, you have not explained or defended the rationale of the government’s actions to regulate free people from engaging in mutual, voluntary commercial exchange. That’s the ultimate issue here.

  4. I have no problem with you having an opinion on this matter, and respect if even though I have a different view. What I would appreciate is that you present the facts as they are. Two important points about this post:

    First, Mr. Moon can sell alcohol today under Kansas law. He could put a connected liquor department with an individual entrance in his grocery store right now if he wanted. Kansas law allows it. I would be happy to show him how to do it. If alcohol would save his business, and he can sell it now under Kansas law, why isn’t he?

    Second, you have not presented Mr. Procter’s complete study. As someone who has read the whole study and spoken personally with Mr. Procter about it, you leave out his conclusion as to why rural grocery stores are going out of business which is that the entities pushing to change current liquor laws in Kansas- out of state grocers like Wal Mart – are putting rural grocers out of business.

    I have no problem with your opinion, but stating the facts as they are instead of bending them to fit the argument is essential in discussions such as this.

  5. Pingback: Op-ed, Mike Moon from Osawatomie, Kansas: Let Grocery Stores Sell Liquor | The Kansas Progress

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