The Attack of the Stealth Ralphs

Was Ralphs trying to tell us something?

Normally, I don’t brood on possible messages being sent by supermarkets. But last Sunday the question hit me as I cruised into the parking lot of the Hughes in Studio City.

That’s right, the Hughes. Not the Ralphs. You could tell because the big blue and white sign outside said “Hughes.”

Besides, I’ve gone to this store for 10 years. Studio City has three types of supermarket shoppers: Ralphs people, Gelson’s people and Hughes people. For reasons I can’t quite articulate, I have always been one of the Hughes people.

So I parked the car, walked inside--and found myself in a Ralphs.

The meat labels said “Ralphs.” The shelves were stocked with Ralphs products. The clerks wore Ralphs uniforms.

This store walked like a Ralphs and quacked like a Ralphs.

When I got to the checkout counter, the clerk looked at me sheepishly. “You got a Ralphs card?” he asked.

Now I’m not exactly a babe in the woods. I read the newspapers. I knew that Ralphs bought up the Hughes chain last year and that eventually Hughes--as a brand of supermarket--would be obliterated.

But what’s with the sign outside, lit up 24 hours a day, that says the store is still a Hughes?

Therein lies a tale. You may recall that the snuffing of Hughes set off an insurrection in Studio City. After the takeover announcement, people counted supermarkets and discovered that the swallowing would leave only one brand of groceries along Ventura Boulevard from Universal City to Van Nuys--Ralphs.

Pretty soon they were marching in the streets. They were writing to the attorney general. They were handing out leaflets. The whole thing felt touchingly like one of those scenes out of the movie “Network” in which people screamed their rage from the fire escapes.

I live in Studio City and I knew about the insurrection, but I didn’t know about the clever, almost devilish response from Ralphs. The company decided, in effect, to create stealth Ralphs.

The outsides would keep their old appearance, suggesting that nothing had changed. The insides would reveal that everything had changed.

I remember walking out of the store, standing in the sunshine and thinking that Ralphs had hit on something important. After all, we live in an age in which the big fish swallow the small fish on a weekly basis. Many of these gobblings change our lives in one way or another, leaving us--the little people--unsettled. Rage-filled, even. Eager to shout from the fire escape.

And here was the Ralphs answer to the dilemma!

Imagine, for example, that Bank of America--excuse me, Bank of America/NationsBank--gobbles up Wells Fargo. People might whine about this development, claiming California would be dominated by one mega-bank.

No problem. Just keep the “Wells Fargo” moniker on the outside of the gobbled-up branches, and transfer the accounts to Bank of America.

Or say MCI slurps down AT & T. Or Rupert Murdoch buys CBS and NBC. . . .

You get the idea. I called the Ralphs people to ask about the strategy. As you might expect, there was a good bit of talking in code.

“Obviously,” said Tom Dahlen, marketing vice president of Ralphs, “Hughes is a great franchise, and it has had a long-established name in the community. We feel there is a tremendous value to the Hughes name with the Hughes customer.”

Or as Ari Swiller, vice president for external affairs, described the Studio City situation: “It’s a great community, with dedicated customers, and we didn’t want to shove [the takeover] down their throats.”

Exactly. So the Hughes name hovers over the parking lot as a reassuring illusion to the customer that the store still exists. When, in fact, it doesn’t.

Eventually, the Ralphs executives say, the Hughes name may be removed from the stores when present structures are torn down or remodeled. But, as one executive said, “that could be a lengthy process.”

Will this strategy work? It’s hard to say. The sleight-of-hand message conveyed by the stealth Ralphs may provoke a backlash from those who feel they’ve been, say, manipulated.

Tony Lucente, president of the Studio City Residents Assn. and the leader of the insurrection last year, has asked the group’s members to send in their reactions now that the conversion has taken place.

“I have been shocked at how deep this issue runs in people,” said Lucente. “It runs across the board from young, single people to retirees. Somehow the Hughes store got wrapped up in the sense of community here. I don’t think people will be comforted by the idea of a corporate giant posing as a community market.”

Richard Close, Lucente’s counterpart in Sherman Oaks, was more blunt: “Ralphs is deceiving their customers. They are trying to substitute make-believe competition for real competition. They want the community to accept one brand--their brand--by pretending there’s two brands.”

For what it’s worth, Southern California pretty much invented the modern supermarket. And that invention came through competition.

Charles Von der Ahe, the founder of Vons, was the first grocer to experiment with cash-and-carry rather than home delivery of goods. Later on, he also introduced self-service meat and produce sections.

His main competitor in those days was Albert George Ralphs, a bricklayer who went into the grocery business after his left arm was shattered in a hunting accident. Ralphs understood the meaning of the automobile to the grocery business and built the first chain of stores along major thoroughfares.

Volume buying, the big store, the open refrigerated case, the food coupon all came out of Southern California in the days when Von der Ahe, Ralphs and others were trying to cut each other’s throats.

In 1960, Von der Ahe tried to get a step on the competition by buying a smaller local chain known as Shopping Bag Food Stores. If the sale had gone through, Von der Ahe would have controlled a total of 66 stores.

But it did not go through. The Federal Trade Commission challenged the acquisition on antitrust grounds and won its case before the U.S. Supreme Court.

After the Hughes acquisition, Ralphs controlled 399 stores in Southern California. The FTC did not challenge the deal.

Lucente and the Studio City Residents Assn. did, however, and took their appeal to California Atty. Gen. Dan Lungren. After a period of negotiation, Ralphs agreed to divest itself of 19 stores, leaving it with 380.

You could argue that Ralphs’ huge presence in Southern California, and the decline of many competitors, has not stopped its innovation. The company did just invent the stealth Ralphs, no? Or, to borrow from a certain rock ‘n’ roll star, the Stores Formerly Known as Hughes.

Of course, that rock ‘n’ roll star is not what he used to be. And neither are those stores.