Reuters reports that because tough competition has made it more difficult than ever for supermarkets to deal with tough economic times, they currently are looking at labor costs as a way they can trim expenses and achieve greater cost parity with the likes of Wal-Mart - which, of course, has a non-union and less expensive labor force.
While Wal-Mart is facing numerous labor complaints in a number of states and is working hard to fend off unionization movements wherever they crop up, traditional supermarkets need to "close the gap between their labor costs per hour and those of nonunion competitors like Wal-Mart," according to Mark Husson, a Merrill Lynch supermarket industry analyst.
The Food Marketing Institute (FMI) estimates that while the supermarket business employs 3.5 million workers in the United States, these workers account for 15.7 percent of the average supermarket's sales. The average hourly wage at supermarkets is about $10.35, compared to Wal-Mart's average $8.
Some experts believe that this discrepancy suggests the likelihood of labor strife at a number of chains in the near future, as companies take a hard line against wage increases and unions fight back.
While Wal-Mart is facing numerous labor complaints in a number of states and is working hard to fend off unionization movements wherever they crop up, traditional supermarkets need to "close the gap between their labor costs per hour and those of nonunion competitors like Wal-Mart," according to Mark Husson, a Merrill Lynch supermarket industry analyst.
The Food Marketing Institute (FMI) estimates that while the supermarket business employs 3.5 million workers in the United States, these workers account for 15.7 percent of the average supermarket's sales. The average hourly wage at supermarkets is about $10.35, compared to Wal-Mart's average $8.
Some experts believe that this discrepancy suggests the likelihood of labor strife at a number of chains in the near future, as companies take a hard line against wage increases and unions fight back.
- KC's View:
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Of course, that's exactly what Safeway did in Chicago with its Dominick's employees, and we know how well that all turned out.
While we certainly are cognizant of these labor cost issues, we also think that chains need to think long and hard about how labor is deployed, and the relationship that their people have with their customers. By and large, there is no relationship, which is a shame when you consider how often people go into supermarkets.
The human connection has been lost. It must be rediscovered if traditional supermarkets are going to have a chance of being competitive.
