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."
I've never been to Crest, but it sounds like many of the (remaining) Kmarts up here. Most of the clientele looks like it just got out of Sing Sing or rehab.
Yes, and now NETFLIX is doing it to Crockbusters. You rent DVD's online, they show up in your mailbox, you watch them as many times as you like, then mail 'em back. One flat fee per month for as many DVD's as you'd like to view. No late fees, postage paid both directions. We've used them since right after they started up. Fabulous service. You even get an email notification when they ship so you know when to expect movies.
Michael
We stumbled upon the store after taking a little stroll through the shopping center after eating lunch at one of the many Vietnamese restaurants in the area. When we cruised in the first time, we couldn't believe our eyes: a huge full service butcher shop that probably had 100+ kinds of fish (including tanks with live crabs, lobsters, fish, etc), beef, poultry, pork, etc with about 20 butchers working behind the counter.
We were the only white people in the store; while the vast majority were Asian, there was a number of Hispanic guys loading up what looked like restaurant supplies as well ie buying caseloads of produce, etc.
But what really caught our attention were the prices: $3/lb for fresh (farm bred) salmon, $5.29/lb for 5-7 pound rolls of filet mignon (we don't bother with hamburger anymore), $1.59/lb for 5 lb racks of ribs, etc.
We have lunch parties now and then and people always think we spent a fortune, when actually we spent less money than buying hotdogs & hamburgers at the local Vons.
Keep your dog locked up in the car. :-)
(Just kidding... Sounds like a great place with great prices... Especially those filet mignon prices.)
Wally World has crowded aisles because they carry more products so more shoppers show up and clog the aisles. Target carries fewer items per sq ft, so it can have wider aisles and fewer customers.
Here is Nashville, we have a local grocery chain named HG Hills, which runs lots of TV spots claiming (and showing) wide aisles and PRACTICALLY NO CUSTOMERS! They claim you can come right in and check right out, and they're right. Because they have almost NO CUSTOMERS.
It's been my experience that crowded aisles and "zoo-like atmospheres" are the product of the CUSTOMERS, not the store. If customers come in dragging 9 pre-school churldrin with them, that is the customer's fault, not the store. You go to an area where the houses and the people in them are low-rent, you're going to find those low-rent shoppers at that Wally World. You go to a nice area, and you find things a little better in that area's Wal-Mart.
Michael
We've got a large influx-Asian population here in Nashville, and they are extremely enterprising. They've open up an exhaustive greengrocery and butcher/seafood market in what was once the ORIGINAL Service Merchandise store on Nolensville Road. Excellent produce, huge seafood selection, every noodle known to man and womankind. Prices can only be beat by the great Farmer's Market, but you have to go all the way downtown for that. Fortunately, it's worth the trip because Farmer's also has a wonderful international market (the owner is a co-owner of the place on Nolensville) where you can get fab stuff from ANYWHERE at very low prices. Like a gallon of Sultan extry-virge olivia oyl from Turkeiye for 11 bucks. Best in the world.
Most people don't even realize the choices they have.
Michael
LOL! That was my first reaction until I saw that the beef loins (filets) were still in their original packing from the slaughterhouse (ie 3 foot long casings).
The only drawback is that I have to cut the individual 2" medallions. My wife can't watch.
Wal-mart understands that it is crazy to pay it's employees a decent wage. The USA is becomming a thrid world nation and Wal-mart wants to be the food distribution center.
Yall who say Krogers should carry the finer stuff. Who can aford the "finer stuff" when we are all getting third world paycheck?
Try buying the "Chi-Com crap" at any Sears, Jacque C. Pennay, or any other store for that matter. Wally World carries many major name brands. The manufacturers of those major name brands may have chosen to have their products assembled in China. You're faulting Wally World for the decisions of Westclox or Sunbeam or some other brand?
Michael
Is it the clientele or the store setup itself? Here in flyover country, the experience seems to be pretty much dictated by the clientele.
Speaking of clientele, one thing I've never understood is why someone would want to steal stuff from a Wally World. If you're not going to pay for it, why not steal something BETTER from a place with more upscale merchandise? Is it perhaps they think that by blending in with all the other sleazeballs they're less likely to be noticed?
Michael
Hooray for free enterprise and market pricing!!!!!!
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