Aisles at Rival Chains Swell With Diverted Shoppers

Supermarket owner Jack Brown says no one wins in a grocery strike -- “not the employees, not the companies or the communities.” But in fact, a handful of winners are emerging in the strike and lockout at Southern California supermarkets, and he is one of them.

Brown’s 157-store chain, Stater Bros. Markets, is picking up thousands of customers who don’t want to breach picket lines at Vons, Ralphs and Albertsons stores.

Other markets -- among them Gelson’s, Bristol Farms, Trader Joe’s Co., Smart & Final Inc. and Costco Wholesale Corp., plus ethnic chains like Super A Foods and Superior Super -- also are reporting significant upticks since the strike and lockout began at 859 major supermarkets last weekend.

Business at these rival stores should only get better this weekend “as consumers who have been postponing purchases finally do their weekend shopping,” said New York retail consultant Burt Flickinger.

Brown said he would prefer to get the extra business another way, saying people who shift stores during a strike probably will shift back when the picketing ends.

“We’d prefer to whip our competition in the marketplace without the advantage of a strike,” he said.

Brown and other retail executives won’t say how much business is up, but they’ve given some clues. Warehouse giant Costco, for example, said sales at its 39 Southern California stores jumped 10% on Monday, the second full day of the strike. Jose Romero, the manager of a Gelson’s in Pasadena, said receipts there had doubled.

“As soon as we back up the trucks, we’ve got to unload them and put the stuff out,” Romero said.

To handle the extra traffic, chains including Gelson’s and Stater have hired additional clerks in the last week and upped their orders.

Most stores are not doing anything special to attract customers. One exception is Gelson’s, owned by Compton-based Arden Group Inc., which hung big yellow banners touting its status as a union store untouched by the labor dispute.

Gelson’s and Stater averted a strike by agreeing to abide by whatever deal the three major chains end up cutting with the United Food and Commercial Workers union.

Other alternative stores, including Jons Marketplace, Trader Joe’s and Whole Foods Market Inc., are nonunion, and their ranks have been swelling.

Since the last supermarket strike here 25 years ago, Southern California has seen a profusion of retailers selling food in one way or another, from the giant warehouse stores like Costco and Sam’s Club, to drugstores like Rite-Aid Corp. and discounters like 99 Cents Only Stores.

“There are so many places that sell the same commodities,” said Kevin Davis, a former Ralphs executive who is now president and chief executive of gourmet supermarket Bristol Farms. “It’s one of those things where you could go to Costco once a week and fill in at all these other types of stores.”

Davis said Bristol Farms’ 11 stores from San Diego to Ventura counties posted double-digit growth the last few days. “It’s kind of like an early holiday,” he said.

Unprepared for the surge in business, some Bristol Farms stores ran out of dairy and produce items the first two days.

Monrovia-based specialty food retailer Trader Joe’s, which operates 74 stores in Southern California, also has been scrambling to keep up with demand. People who once shopped there for specialty items now are looking to stock up on staples such as eggs, milk, orange juice and toilet tissue.

“We usually only get the cookies and granola here,” said Elma Guerra, trolling the aisles with her husband at the Trader Joe’s in Eagle Rock. “But now we’re buying everything.”

Will these stores be able to hold on to this business once the strike is over?

Probably not, said Mark Husson, a grocery analyst with Merrill Lynch & Co. in New York. Many don’t offer cheaper private-label goods, double coupons and club card savings that many customers want.

Trader Joe’s, Husson said, “is just not mass market. You can’t buy Tide there.”

If the strike lasts for weeks or a month, he said, “these other stores could make people grow fonder of the store they left.”

Davis, for one, doesn’t think Bristol Farms can keep all of the new customers coming back, saying the mix of expensive prepared meals, deluxe produce and other gourmet items isn’t for everyone. Still, he says, more people are becoming familiar with Bristol Farms stores, and they might come back during the holidays to stock up on turkeys, baked goods and other treats.

That could be a big boost, because the 10-week stretch between Halloween and New Year’s Day can represent as much as 35% of a grocery store’s annual operating profit, retail consultant Flickinger said.

Likewise, the drop in sales at Safeway Inc.’s Vons, Kroger Co.’s Ralphs and Albertsons Inc. stores could be more painful if it extends into the holidays. “After a strike, a chain can lose as much as 5% to 10% of its customer counts for as much as half a year,” Flickinger said.

Safeway saw sales suffer for months after a 2000 distribution strike in Northern California, Flickinger said, and spent millions of dollars in promotions and discounting to lure back customers.

Flo Bennett may be one of those shoppers who will take some persuading to return to her old store. A regular at Vons, she has made two trips to Gelson’s in Pasadena since the strike began. And now that she’s seen what the store has to offer, she says she definitely will be back.

“It’s going to be one of my stores,” she said. “I love the deli.”