Posted on 10/21/2003 12:35:40 AM PDT by ChemistCat
CROSS LANES, W.Va. — To find the cause of the nation's three supermarket strikes, just follow Judy Ranson's shopping cart.
An inveterate bargain hunter, Ranson used to chase down the best grocery deals at three stores: her local Kroger in Cross Lanes or down the road at a Fas Check in Dunbar and at a Poca Supermarket in Poca.
Now she makes one trip a week, to the Wal-Mart Supercenter, which opened five years ago a mile and a half down the road and across Interstate 64 from Kroger.
Ranson, who is 57, spends about $90 for herself and her husband. She estimates that she saves $40 to $50 off what she'd pay at the supermarket. "Kroger's prices are too high on a lot of stuff," she said. "I figure $100 ought to be enough to feed anyone for a week."
Officials at Kroger and the nation's other dominant supermarket chains — Ahold, Albertsons Inc. and Safeway Inc. — cite competition from Wal-Mart Stores Inc. and other box stores moving into the grocery business as a reason to hold the line on labor costs.
Those costs include health-care benefits that are the sticking point in United Food and Commercial Workers strikes of 3,300 workers at 44 Kroger stores in West Virginia, Kentucky and Ohio; 70,000 workers at three Southern California chains; and 10,000 workers at three chains in Missouri.
Similar struggles are expected within the next six months as UFCW contracts expire in the Phoenix and Washington, D.C., areas.
"Box stores are a very real threat," said Archie Fralin, a Kroger spokesman in Roanoke, Va. "Their lower labor costs make it imperative for us to manage costs. That's just a reality."
Wal-Mart doesn't break out earnings by division, so it's hard to calculate how much food it sells. But analysts say in just 10 years it has become the biggest player in the grocery business, last year capturing anywhere from 5 percent to 15 percent of the industry's $680 billion pie.
Traditional supermarket sales have dropped about 3 percent in the past year, estimates The Food Institute, a New Jersey-based trade group.
"The supermarket chains are still profitable, but executives see their market share down more than 5 percent over five years, and they're frightened," said George Whalin, president of Retail Management Consultants in San Marcos, Calif.
Lower labor costs for nonunion workers make up part of the advantage of box stores like Wal-Mart.
Including pension and health benefits, Kroger estimates it pays workers on average $6 an hour more in West Virginia than Wal-Mart. Burt Flickinger, managing partner of Strategic Resource Group in New York, says the difference in other parts of the country runs as high as $10 to $14 an hour for full-time workers.
At the Cross Lanes Kroger, striking UFCW workers say Wal-Mart's opening five years ago cost their store $100,000 in weekly receipts — between a third and a half of the store's income.
In response, workers say, Kroger has slashed the store's payroll from 86 to 45 full- and part-time workers.
"All we hear from management is 'Do more,' " said Kay Underwood, 49, a 29-year Kroger employee. "We did an employee survey, and the number of us on Paxil, Prozac, blood pressure medicines, you name it, has gone sky high. We're killing ourselves for this company."
Fralin wouldn't comment on individual Kroger store sales.
But he said industry studies show that Wal-Mart often takes as much as $100,000 a week from existing supermarkets, and he hypothesized that a store losing that much would see labor costs cut similarly.
Wal-Mart insists labor costs are just one part of a low-price formula that includes better purchasing logistics and information systems.
Analysts agree that the Arkansas chain's famously efficient ordering and distribution systems give it an edge, as does its clout in pushing for low wholesale prices. They also say supermarkets have room to improve.
"Most big chains went on a buying binge of smaller chains in the 1990s, and many of those acquisitions have not been fully integrated," said Mark Hamstra, editor of Supermarket News. "They still have costs to wring out from those buys."
Jim Lowthers is president of UFCW Local 400, which represents 30,000 food-industry workers in six states including West Virginia. He says his local has lost 5 percent of its members in five years.
"All these companies make billions of dollars, and all they want to say is 'Wal-Mart, Wal-Mart, Wal-Mart,' " he said. "They've joined together to say the only way to save is by reducing worker benefits. There's no reason they can't compete, profit and still take care of their employees."
Neil Stern, a partner with Chicago retail analyst firm McMillan/Doolittle, said he sympathizes with both management and workers.
"No one can say these retail workers are making too much money," Stern said. "At the same time, these companies are operating on an uneven playing field in terms of labor costs, and that can't continue."
Whalin calls the grocery industry invasion by box stores like Wal-Mart and Target, warehouse clubs like Costco and even drugstore chains like Longs a "sea change."
"Supermarkets have to do better at wringing the costs out of everything," he said. "But no matter what they do, in the long run they can't compete. Ultimately we're going to see fewer chains operating in each region — two, not three or four."
After that, with their market share, they just kind of forgot that, and only roll it out occassionally when they need to boost share.
That being said, I have to say that the WalMart merchandise seems to have improved. I just got a desk lamp, clock radio, and exercise outfit there. The quality is as good as specialty stores, and the selection was better.
Wal-mart pays employees low (very low) wages.
Wal-mart forces it's suppliers to pay low (very low) scale wages.
Wal-mart suppliers move thier manurfacturing to low wage countries. So that they can beat the price of American (high wage) made goods.
Now the end result of the Wal-marting of the USA is that just about everyone has a low wage job and barely afford food and a roof. Just like the rest of the third world. So yea, keep shopping at wal-mart and keep sending those green backs to the chicoms. The PLA is putting them to good use.
Whoever said a capitalist will sell you the rope to hang him with was right.
Back in the "Made In America" phase, most of the brand names carried by SamWal DID make their products in the USA. I still fail to see how it's Wally's fault that these companies have moved their assembly off-shore.
Michael
They were, and still are, in a position to simply look for other manufacturers who employ US citizens.
At least with WalMart, I don't get the feeling I do in other stores that the stuff is being manufactured cheaply out of the country, but the middleman is pocketing huge profits or the money is going to celebrity advertising.
And, I do like those ads where they feature employees and their families. I would really, really, like it if there were more "made in the USA" merchandise there.
And, I'm not going to trash WalMart as an employer. I've seen them do a good job with students who opted to the workforce instead of college. Some got good full time jobs, benefits, 401Ks with information, and help with education, plus quick advancement.
I just really don't like buying unpackaged clothing and unpackaged food at the same store.
They won't. Here in rural Missouri, Wal-Mart comes into a town, undercuts the other businesses until they go under and then raises their prices. Also, Wal-Mart doesn't have a good reputation as an employer either. The only reason we still have two grocery stores in our small town is that our Wal-Mart isn't a Supercenter and doesn't sell groceries (yet).
Carolyn
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