Did the Chains Strike Out in SoCal?

Oct 11, 2004
George Anderson

By George Anderson

When the Southern California grocery workers’ strike/lockout finally ended earlier this year, it was generally agreed that the chains (Albertsons, Kroger and Safeway) had won
the fight after squeezing wage and health benefit concessions from the United Food and Commercial Workers union.

Today, coming up on the anniversary of the beginning of that strike/lockout, it’s clear that neither side won in Southern California. Whether the parties will ever be able to
reclaim what they lost is a subject for debate.

The chains have lost an estimated $2 billion in revenues, according to The Press-Enterprise, and have spent millions trying to get customers to come back and shop.

“I think the companies knew it would be a struggle to get their customers back, but it’s surprised them they haven’t gotten more of them back,” said Mitchell Corwin, a grocery
industry analyst for Morningstar. “It surprised us, and investors, how much they’ve spent on promotions, and it hasn’t worked as well as they thought it would.”

George Whalin, president of Retail Management Consultants, told the San Diego Union-Tribune, “My original prediction was it was going to take at least a year, and in some
cases, they’re not ever going to get those customers back. There are those customers who have found they can go to Costco and buy everything they need. What do they need a grocery
store for?”

Gary Giblen, senior vice president and director of research for CL King & Associates supports this view. “The main barrier for people going to Costco is the membership,”
he said. “But during the strike if people shelled out the $45 for the membership, they’re in. They’ve overcome the barrier. Now you can buy almost everything you need at Costco.”

Moderator’s Comments: What is your 20/20 hindsight view of the Southern California grocery workers strike/lockout? What lessons should the chains and
union have learned to avoid similar results elsewhere?

Costco is just one of the retail competitors that have seen an increase in business since the strike began last year. Trader Joe’s and Stater Bros. are
often mentioned as the biggest recipients of customer disaffection with the chains.

Stater Bros. may have been the biggest winner of all in the Southern California strike/lockout. The chain’s friendly relationship with the United Food and
Commercial Workers enabled it to make a deal with the union that it would sign on to any deal negotiated with the other chains. The UFCW agreed not to strike any of Stater Bros.

Jack Brown, chief executive officer and chairman of Stater Bros., estimates the chain has been able to hold on to 20 percent of the shoppers who came to
its stores during the strike/lockout.

George Anderson – Moderator

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