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The Sacramento Bee reports that the Raley’s supermarket chain has decided to stop providing health coverage to its retired hourly employees age 65 and older, saying that its current financial situation makes it impossible to offer it as a continuing benefit.

"Unfortunately, due to the economic downturn and increased competition we are struggling to sustain our business," said CEO Michael Teel in a letter to employees. "We have … determined that Raley's can no longer cover the cost of this benefit."

Teel said that “the chain is struggling to maintain profitability,” according to the Bee.

A subsequent statement from the company said that Raley’s will continue “to provide generous medical coverage for our retirees under the age of 65, which is the most expensive time for individuals to purchase their own plans ... but retired hourly workers...will have to pay for the coverage out of pocket starting July 1, 2012, carving out cash from a fixed income.”
KC's View:
The question that this raises for me is what it does to the way that Raley’s is perceived by its existing employee base. Does it suggest a company in trouble, to the extent that people start writing their resumes? Or does it suggest a company that is making the hard decisions so it can be assured some level of sustainability?

The way that Raley’s is seen by the people on the front lines will affect how the people on the front lines interact with shoppers. And remember...there is nobody more important to a retailer than the people on the front lines.