Queens dollar stores report that price gouging often stems from the supplier-side

Photo: Max Parrott/QNS

For weeks, hand sanitizer, face masks, Lysol spray, disinfectant wipes and even gallon jugs of water have become scarce across New York City as residents stockpile their apartments for self-quarantine. In response to reports of price gouging on these items, Mayor de Blasio has vowed to get tough on the culprits.

The Department of Consumer and Worker Protection put an emergency rule into effect that makes price gouging illegal for a number of items needed to stem the spread of coronavirus. 

But while the mayor’s announcement took aim at retailers, dollar stores in the Ridgewood area struggling to comply said that they are not often the source of the inflated prices. Price gouging begins higher on the supply chain with wholesalers and distributors that sell to discount stores, they say.

When a customer walked up to the counter of U2 99 Cent Store in Glendale asking for isopropyl alcohol, store manager Steven Ng said that he stopped stocking it because he himself was getting gouged on the wholesale price. 

“We have to make a living, too. Before we sold for $2 and right now the wholesale price is $2. If we sell it for $2.99 people complain. What are we going to do? Sell it for $1.99? We’re losing money. So I’m not going to carry anything,” Ng said.

The mayor’s new law has presented 99-cent stores, who often rely on a competitive market of wholesalers for their stock, with a choice: continue to stock the items at a loss or negligible profit or stop stocking them at all. 

Out of the eight dollar stores that QNS visited, only one had a supply of hand sanitizer that it had saved  from a shipment that the store got before the last week of closures and directives to self-quarantine. Many of the shop owners said they are choosing the latter option and leaving their shelves that once contained wipes and hand sanitizer empty.

“If they’re charging more money, what am I going to do?” said Saleh Hassan, the manager of Glendale 99 Cent on Myrtle Avenue.

Hassan said that he relies on salespeople from wholesalers who typically travel into his shop to update him on their stock. His store has stayed out of wipes and sanitizer for weeks because his wholesaler didn’t have a supply or was inflating prices that he was unwilling to pay.

The problem is unique to stores that rely on a loose network of wholesalers to supply their products. Family Dollar on Broadway and Grove Street in Bushwick, for instance, doesn’t have that problem. A cashier said that they rely on a chain-based distribution system that drops off a limited supply of the sought-after items every few days.

Ng said that he gets his product supply from a number of wholesale warehouses that straddle the Brooklyn-Queens border on Flushing Avenue, but declined to identify which specific outlets are inflating their prices. He said that he’s stopped selling 33-ounce bottles of hand sanitizer at the price point set by the wholesaler because customers were complaining. 

“If we get it for $5 and we sell it for $5.99, they’re going to blame us. They said, ‘It’s price gouging. I’m calling 311,’” Ng said. 

According to DCWP, the agency has received more than 1,000 complaints about price gouging since the first declaration on March 5. The agency’s rule makes it illegal to increase prices by 10 percent or more. It encourages consumers who are overcharged to file a complaint at nyc.gov/dcwp or by contacting 311.

“Now is the time for us to come together, not take advantage of each other for a profit but we continue to hear about and see empty shelves and price gouging,” said DCWP Commissioner Lorelei Salas in a press release.

Asked about the concerns raised by the dollar store owners, a spokesperson DCWP reiterated that the agency is focusing on brick-and-mortar retailers that are price gouging, but conceded that the new rule would apply to suppliers if those retailers can demonstrate that they were only passing along exorbitant price increases from their suppliers.

The spokesperson said that the agencies would consider what its enforcement options may be under these circumstances on a case-by-case basis.