Are Chains More Competitive?

Mar 02, 2004

By George Anderson

The recent grocery strike/lockout in Southern California can hardly be called a victory for either side. If there was a winner, most seem to agree it was the grocery chains.

The president of Ralphs, John Burgon, said in a released statement, “We are pleased to have a new contract in place that balances our associates’ need for competitive wages,
health-care benefits and pension with our company’s need to address the significant economic and competitive threats facing our business.”

A report on the World Socialist Web Site was less kind in its assessment of the negotiation’s outcome. “The United Food & Commercial Workers Union (UFCW) surrendered
to all of the major demands of the supermarket chains after a19-week strike/lockout of 59,000 workers in Southern California. This betrayal of the longest work stoppage in the
history of the US supermarket industry sets the stage for devastating rollbacks in the working conditions and living standards for hundreds of thousands of workers who already
face low wages and brutal exploitation.”

Merrill Lynch analyst, Mark Husson, told CBS MarketWatch the chains would still have higher employee costs than Wal-Mart but that “is not a concern. Their business model
rests on having employees capable of providing high levels of service, and you do not get those by paying minimal wages and benefits.”

Moderator’s Comment: Have the chains in Southern California made themselves more competitive
against non-union retailers such as Wal-Mart?

We know they’d like to think they have but we don’t see it. The one area where the supermarkets had an advantage to leverage in terms of improving performance
was in their people. You don’t get improved performance when you’re striving to reach the lowest common denominator.
Anderson – Moderator

Please practice The RetailWire Golden Rule when submitting your comments.

Join the Discussion!

Be the First to Comment!