Dominick’s and UFCW Play Let’s Make a Deal
By George Anderson
Employees at Dominick’s Finer Foods have been working under contract extensions since 2003. That may finally come to an end as Locals 1546 and 881 of the United Food and Commercial
Workers (UFCW) has reached an agreement, pending ratification by members, on a new three year contract with the chain.
Terms of the deal were not made public, but the parent company of Dominick’s has been seeking wage and benefit concessions from the union as it seeks to bring its costs more
in line with non-union competitors.
The union has maintained throughout negotiations that it was not the workers and their compensation packages that resulted in Dominick’s being less competitive in the Chicagoland
market.
The UFCW said Safeway replaced popular brand-name and Dominick’s private label products with its own retail brand. It also eliminated ethnic products that were popular in many
of the neighborhoods in which the chain has stores.
The grocer’s market share declined from 23 percent in 2001 to 15 percent last year, according to research from the Gale Group cited in a Chicago Sun-Times report.
In previous deals with the UFCW made in other markets, Safeway has been successful in getting the union to agree to a two-tier systems of wages and also require contributions
by employees to the company’s health plan.
Dominick’s spokesperson, Wynona Redmond, said the company was pleased with the agreement, adding, “Both sides worked very hard.”
Moderator’s Comment: What will a new labor contract, assuming members ratify, mean for Dominick’s and Safeway? –
George Anderson – Moderator
For those who haven’t yet figured it out, Safeway is in Chicago – and Dominick’s – for the long haul. Safeway is basically bi-coastal, getting their rear-ends handed to them in Houston, Oklahoma, and Kansas. To grow, they’ve got to penetrate the red states successfully as Kroger has. And, never underestimate the intensity of discussions regarding Kroger in the Safeway boardroom. Further, bi-coastalism significantly limits transportation and supply economies. Since Safeway shed their production facilities some years ago, they no longer have the significant back-haul advantages they once enjoyed.
A new labor contract at Dominick’s is but a step in Safeway’s measured plan to re-establish themselves in fly-over country.
Labor will be a factor wherever they go to play. The problem is they don’t know how to play where they are. That’s important…far more important than the labor contract. It’s crucial that you meet the needs of those where you are. Offering them what worked elsewhere isn’t something that will fly in the ‘red states’ – not to mention Chicago.
Now Dominick’s either needs to sell out to Robert Mariano at Roundy’s or remodel every single one of their stores to look like the Mission Bay Safeway Lifestyle store in San Francisco as shown on this website…
www.groceteria.net/safeway/1990.html
The store’s current decor from the mid 90’s looks very outdated compared to nice newer styled designs that Albertsons have been doing with Jewel and not to mention other progressive chains here in Chicagoland….Meijer, Whole Foods, Wild Oats and Strack, and Van Til in Northwest Indiana. Man you guys should see how Strack and Van Til remodeled a shuttered Dominick’s in Schereville, IN….it looks beautiful inside!
I do know that the person at Dominick’s doing their Interior Design is very forward thinking and progressive, so maybe now that there is a labor settlement, they will do some remodeling.
I think it might buy Safeway some time but they really need to think seriously about selling Dominick’s to a company that is experienced in operating well run supermarkets, such as Roundy’s. I know it must be humiliating for Steve Burd to have to run to a company like Roundy’s with his tail between his legs, however he needs to put his ego behind the interest of the stockholders and employees. I really doubt we will see any meaningful improvement in long run at Dominick’s as long as accountants are making marketing decisions. Mariano is probably grinning knowing that no matter how much lipstick Safeway puts on these stores, he probably isn’t going to have to pay extra for it.
Sorry to say the damage has already been done. Chicago residents are very proud of their roots and since Safeway has taken over, the local image has been cast aside. A new union contract may help Safeway find a buyer but it will do little to help them find a customer….
The most constructive contract for both the union and the company would build incentives for the union to organize the nonunion competition. Even two-tier compensation is more expensive than most nonunion firms pay. In supermarkets, airlines, and auto factories, unionized legacy firms are getting beaten by nonunion new firms. The legacy firms and the unions should share a common goal and strategy to get the upstart firms organized as quickly as possible. Instead, in all 3 industries, the unions and legacy firms just cry the blues and let their benefits, compensation, and profits erode.
Hey, people, let’s dream that Safeway buys Albertsons to cover more of the US markets; AND IMPORTANTLY, Safeway just may give up the past upscale operations – Dominick’s, Randall’s, and Geunardis (or did Geunardi’s get lucky and was sold?)!!!!!
Then, Safeway can continue to play its grocery tactics; and be happy. Hmmmmmmmmm
At this date, the future looks bleak for Dominick’s growth as a major grocer in Chicagoland. Store closings and layoffs may look good to Safeway shareholders. But what happened to Safeway’s original plans to show Dominick’s how to run a retail grocery store in Chicagoland? It never happened.