Supermarkets have to operate at scale, and their inventory has to be a relative mirror image across all locations, as well as match prices they plan and advertise in advance. To enable that standardization, there's a lot of central planning, and I imagine also a lot of centralized logistics.

These farmer market-style operations are much more fluid and flexible.

How does El Super do it because they appear to operate at scale. A friend said it could be cheaper labor cost and I just saw this- http://elsupermarkets.com/supply-chain-act

They reference slavery and human trafficking, and say they investigate reports of it but don't audit their suppliers.

I don't have specifics but I think you could buy apples for 80 cents a pound, and everything else is just unbelievably cheap.

I'd buy a shopping cart full of vegetables and fruits for $30 which at Gelson's would easily cost 3-4 times as much.

They appear to operate at scale but they dont, at least not when compared to the major national chains. El Super has 40 stores in California and a few hundred more in Latin America whereas Safeway and Kroger have about 2500 stores each, in a market that is more picky about the appearance of produce and other factors not relevant to most other markets.

El Super, Superior, Superking, etc also source their products differently and there can be huge variation between stores depending on the neighborhood socioeconomics.l

Demand. Chinatown can do it because it's ethnic residents don't just want a great selection of produce, they demand it. They want it bad enough to fuel an entire alternative supply chain. If the people buying Chinatown's produce were replaced by less-discerning customers, the produce markets would disappear overnight and the farmers would have to unload their current crops at cut-rate prices.

Normal customers don't want it that badly. So supermarkets can't rely on being able to continually turn a profit on such a risky endeavor.

A service doesn't just have to be ten times better than the alternatives to drive mainstream adoption. It also has to be something people want bad enough to pay to create an entire industry around delivering it.

This still doesn't explain why it is cheap -- it's cheap likely because there are not too many steps between the consumer and the producer? And not too much money spent on infrastructure...

I bet the produce wasn't so cheap at first. Economies of scale had to get wrung out over decades. This is where the "China" in Chinatown becomes important, the Chinese really value the sort of long-term thinking that makes this kind of endeavor profitable.

Mostly, because there’s competition.

Most normal supermarkets act like a cartel instead.

I've looked into this a bit and it seems to be a problem of distributors. Essentially there are very few distributors in North America. In some cases there is only one distributor. If you need volume, you must buy from those distributors.

The retail price for unprocessed vegetables is somewhere around 4 or 5 times the price paid to the farmer. The big exception is milk where in most countries there are laws on the retail price. Milk is about twice the farm price. This gives you an understanding of how much the distributors are shaving off.

If you are running a small shop and you have connections to non-traditional distributors, you can probably cut the price in half. Which is what the article is claiming. But they will never be able to scale it because they just don't have access to most of the food.

> So what's stopping the mainstream supermarkets from doing the same thing, undercutting their competition while simultaneously increasing their profit margins?

you need to provide carrots/bananas/apples whole year while each is exactly the same as the other.

It's not worth the time/effort of negotiating low volume deals. Whereas local, small businesses try to maximize return on income (ROI) on low volume, bigger businesses try to maximize overall profit.