Grocers’ Losses Amid Strike Mount
Just as pressure builds on the grocery workers, the toll on the supermarkets keeps climbing by millions of dollars a day, especially now that Thanksgiving has arrived and Christmas is approaching.
The holiday period represents about 10% of annual sales for the three chains in the labor dispute.
The companies -- Albertsons Inc., Kroger Co.’s Ralphs and Safeway Inc.’s Vons and Pavilions -- are together losing $40 million a week in sales to a group of eight smaller chains, including Stater Bros. Holdings Inc., Trader Joe’s Co. and Whole Foods Market Inc., Mark Husson of Merrill Lynch & Co. said in a recent report.
Albertsons, Kroger and Safeway have refused to discuss their losses, but with more than $30 billion apiece in annual sales, they have considerable staying power.
They’re also motivated to hang tough. The supermarkets want to use the Southern California contract as a template that will lower their labor expenses elsewhere as other employee contracts come up for renewal.
Most analysts support the supermarkets’ stance, saying the stores must reduce employee health-care costs to compete with Wal-Mart Stores Inc., Costco Wholesale Corp. and other nonunion stores taking a bigger slice of the grocery business.
Even so, the strike’s long duration is now sorely testing managements, the union and the workers, some analysts said.
“The thoughts of lost profits and strained bank accounts could be overshadowing some holiday spirits, providing both sides incentive to come to an agreement,” analyst Robert Campagnino of Prudential Equity Group Inc. said in a recent report.
