business news in context, analysis with attitude

As noted above, Friday was a busy day here on MNB, with record traffic responding to the three email alerts we sent out. All this activity was taking place, in fact, on Halloween, which prompted the following email from MNB user and industry wise man Glen Terbeek:

The news and the comments in Friday's "Halloween Edition" are more scary than the ultimate Haunted House. News items such as; 200+ new Wal-Mart's this year (bigger than most chains), California strike over pay and medical benefits ("an investment in the future"?), Penn traffic closing more stores, store employees talking about "a stupid union steward" running the store, and on and on and on.

The neat thing about Halloween is that the make believe only lasts one day each year. Unfortunately the out of date business model that the grocery industry hangs onto, will last until bankruptcy. Yes, even trade dollars can't make up for lack of customers. Now that is scary.

Oh well! The only encouraging parts of the MNB's report were the normal comments about Wegmans, Trader Joe's, and Stater Bros. used in contrast; companies that continue to understand the value of their employees and shoppers and stay relevant to them.

Did you plan to have a scary report Friday as part of your reporting "with an attitude," or was it just reporting the realities of the current and future marketplace?

Keep up the good work!!

Thanks…but for the record, we had no plans for a special, scary edition on MNB on Halloween. Who knew?

And we continue to get email on the labor strife sweeping the country…

One MNB user wrote:

My wife is a 13-year employee of a Kroger's affiliate store in Arizona. They almost went on strike 2 weeks ago, but cooler heads prevailed. They are in a cooling off period right now.

My wife's union, UFCW branch 99, has OK'd double union dues on themselves for the past year. This has been to try and fight the big 800-pound gorilla named Wal-Mart.

The union has been very active here in Arizona, though we are in a "right to work for less state". They say we have to pay for all that sunshine. Yeah, but have you ever cooled a 2000 sq. ft. home for 7 months with AC? Talk about costs.

It is time that Wal-Mart is seen for what it really is: A monster that feeds off the wages of the poorest people in places around the Earth, and sells these goods, on the backs of the Union employees. The unions that have brought this country the 40 hr week, overtime after 40.

I hear, and read the letters to the editor regarding shopping at Wal-Mart for their inexpensive goods. Well, friends, they aren't inexpensive. They have
been paid for by the sweat of the people who made the goods, shipped the goods, etc. And, then they use illegals , undocumented workers from other
countries, to do their dirty work.

The level of animosity in this situation is so clear that it isn't hard to believe that these strikes/lockouts could last a long time…

Another MNB user wrote, specifically about the possibility that Kroger could negotiate a separate contract for its Ralphs division:

I'm led to think that since Kroger has several potential strikes on its hands (Indianapolis, Phoenix, West Virginia, and So. Cal), Kroger is in a very good position to negotiate with the UFCW for a national contract, something Safeway and Albertsons are not able or willing to do.

A national contract would make a lot of sense, and provide for the core of the relations between Kroger and UFCW, allowing Kroger to grow and expand its fairly-successful Fred Meyer division's foray into SuperCenters (which takes on the Bentonville boys) Also, it would make very good business sense for Kroger to negotiate now with the UFCW than face 4 or 5 strikes at once. They don't have enough managers to send to the affected areas.

As for what Vons and Albertsons are stooping to, giving away merchandise like soda, ground beef, and selling dirt cheap beer (based on the ads I've seen), its no wonder shoppers are flocking into Ralphs now that the pickets are down.

In one situation, in my town in the northern edge of the strike, an independent grocer decided the night of the strike to go in and raise all of his prices, in some cases, doubling the cost of merchandise (I will be damned if I pay $6 for a 12 pack of Coke) and lowering the quality of his meat and produce. He felt that since he was basically the only non-disputed, non-warehouse store in town, he could get away with it. He was sadly mistaken. Very sadly mistaken. People have caught onto his dirty tricks, and on Friday afternoon, when Ralphs had the picket lines taken down, cars were flocking into the parking lot (which is incidentally where the local Krispy Kreme (and in-n-out burger) is, making one think the KKD was opening for the first time!). The manager told me he thought Ralphs was on the track to get its market share back. I agreed with him and proceeded to buy the stuff I hadn't in 3 weeks.

I paid $1.99 for that 12 pack of Coke at Ralphs. And it felt darn good to
be home again.

Another MNB user offered a different POV about the possibility of the UFCW splitting up the big three grocers:

The unions or anyone else should not get excited that Ralphs will negotiate separately. NO WAY! These companies are in this together and I am sure if one company breaks the pact there is a heavy penalty. Honestly, I think the companies are going to stick it out until the employees come back to work without the union. I believe within the next 2 weeks the companies will start offering the employees to come back to work or they will be permanently replaced. The thinking of the companies is they are out of business anyway when Wal-Mart comes to town so why not take a shot now. They have nothing to lose. The unions are scrambling.

And another MNB user concurred:

I read that the big three (Safeway, Albertson's and Ralph's) in Southern California will split the cost of the strike. So if Ralph's does make money during this strike, 1/3 of the cost to Safeway and Albertson's will still have to be paid out.

We hadn't read that…thanks.

Another MNB user wrote:

My comment on the strike is simple. Let the union continue to keep abreast of the effect of the strike on the public that they are employed to cater to so that the regular flow of paychecks is re-established. And let the management continue to see that the union is not easily broken . And also that this situation is having and very important long term effect on the value of all of the companies involved.

And, regarding the St. Louis settlement, one MNB user wrote:

In my humble opinion, as a food broker working in the St. Louis market, I think management should have remained steadfast with their original proposal. We all have to pay for the ever-increasing cost of health care. What gives the union the right to think that health care is a free ride. Somebody will pay for it and those increased costs, that the grocers are forced to incur, will ultimately be passed on to the consumer in the cost of goods. So, who wins and who loses.?
KC's View: