With the door now open for a strike, and management and the labor unions at Ralphs, Vons and Albertsons preparing for another potential work stoppage, one thing is clear: The true winners would be competing grocery stores.As I posted yesterday, the main sticking point seems to be whether union employees will be required to pay for some of their own health care coverage - $9 a week for singles or $23 a week for families. Seems like a dumb thing to risk their jobs over, and those amounts are not going to bring them sympathy from non-union members, many who are paying many times that for their health coverage.
Since the last strike and lockout in 2003-04, which lasted 141 days, the three big grocers have hemorrhaged market share. As of 2004, the chains held nearly 60% of the Southern California grocery trade, according to the research firm Strategic Resource Group in New York. The share of Ralphs, Albertsons and Vons/Pavilions today: about 23%.
Farmers markets, discount shops, high-end specialty stores, small independents and big warehouse clubs have eaten into their business. New rivals such as Target Corp. are coming on strong. The discounter known for its hip fashions and home decor is attacking the grocery business with a vengeance. In Southern California, 140 of its stores now carry fresh groceries, a change that's happened in just 15 months.
"That's the fastest conversion rate in a retailer in that region that we've ever seen in U.S. history," said Burt P. Flickinger III, managing director of Strategic Resource Group.
Management of Target and other non-union grocery companies declined to comment about a possible walkout. But analysts say it could be a boon for them, sending thousands of new customers through their doors, perhaps for good.
That's because grocery shopping is a routine. Consumers tend to stick with what they know. Reluctant to cross picket lines during the 2003-04 strike, many shoppers fled to the competition — and stayed there.
If they end up on strike Ralphs has promised to close all 250 stores, and there's no guarantee they'll ever open again. Albertsons will close 100. The industry took a beating after the last strike:
Today, Ralphs, Vons and Albertsons have fewer stores in Southern California, and fewer employees. Albertsons has closed 67 locations since the 2003-04 strike and worker lockout. Ralphs has closed 48 stores, and Vons and Pavilions are down 47.It's just going to get worse for them if they walk out. And Trader Joe's is going to get really crowded.
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1 comment:
I do most of our family's grocery shopping at WinCo. They are far less expensive than Albertsons/Ralphs/Vons. In addition, they are employee-owned. I found it telling that the union picketed against WinCo when it opened. I guess they really aren't for employees rights when the employees are the owners of the firm and think like shareholders.
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