The slowing economy is spawning store closures and layoffs in Southern California’s typically solid grocery industry.
On Friday, Albertsons will shut the first four of nine stores closing between now and April 9. About a dozen workers are losing their jobs, and the chain is working to reassign hundreds more to other stores.
Ralphs is demoting more than 150 meat cutters to clerks, slashing their pay by more than a third to $13.47 an hour.
Vons has fired 97 workers this year, including 21 last week, and is reclassifying almost 200 full-time workers to part time, a move that could slice their wages as much as 40%.
The moves are an effort by the mainline grocers to retrench and maintain sales as cash-strapped consumers migrate to Wal-Mart and other discounters to save money, said Andrew Wolf, an analyst at BB&T; Capital Markets in Richmond, Va.
“The problem is that people are not buying anything but the basics, and the grocery industry is hurting,” said Rick Icaza, president of United Food and Commercial Workers Local 770 in Los Angeles.
About 1,000 of the region’s more than 70,000 union grocery workers have been hurt by the combination of staff, wage and hourly reductions, estimated Greg Conger, president of UFCW Local 324 in Buena Park.
The Albertsons store closures are part of a strategy by corporate parent Supervalu Inc. of Eden Prairie, Minn., to trim underperforming stores.
“We’re always evaluating our stores to identify opportunities to strengthen our overall business and, when necessary, close stores that are not meeting our goals, to help us operate more efficiently and effectively within this highly competitive retail marketplace,” said spokeswoman Stephanie Martin.
After the closures, Albertsons will have 275 stores and about 26,000 union workers, she said. On Friday, Albertsons stores in Lakewood, Canoga Park, Chula Vista and Encinitas will close. On April 9, Albertsons will also close stores in San Diego, Cathedral City, Lancaster, Rancho Cucamonga and Temple City.
The company also plans to change the nameplate of its South Gate store to Lucky Stores, a brand it acquired in 1998 and then converted to Albertsons. But now it is starting to rebuild Lucky as a low-price chain. This would be just the fourth Lucky store in California. The others are in El Centro, San Ysidro and Alhambra. An Albertsons store in Van Nuys and one in Oxnard also are slated to eventually become Lucky stores.
The move has irritated South Gate shoppers, who say they have a limited selection of grocery stores.
“They are taking the only full-service supermarket in our city of 100,000, getting rid of all the high-end items and turning it into a low-end store,” said Carol Pavon, who protested the change to store managers on a recent shopping trip.
“They assume that we will go to the Downey Albertsons instead, but that’s an inconvenience,” she said.
Nationwide, Supervalu plans to close about 50 stores. It also will open fewer stores and scale back on remodeling stores to save money.
For the quarter ended Nov. 29, Supervalu posted a loss of $2.94 billion compared with a profit of $141 million in the same period a year earlier. Sales fell to $10.17 billion from $10.21 billion.
The company is forecasting that its same-store sales, an important measure of a retailer’s health, will decline 1% during its 2009 fiscal year.
Vons, owned by Safeway Inc. of Pleasanton, is slashing jobs and reducing hours as part of a “right-sizing” program, said spokesman Daymond Rice.
“It is very common to reexamine your labor needs in the post-holiday season and staff accordingly,” Rice said.
Besides the 97 layoffs, Rice said, Vons has reduced 171 full-time employees to part-time status.
Vons has 297 stores and about 21,000 union employees.
“We believe it is possible that many of those employees may regain hours throughout the course of the year,” Rice said.
Full-time workers are guaranteed 40 hours a week, but part-timers can be sliced back to 24 hours, which union official Conger called a “significant” earnings cut.
At Ralphs, all but a few of the demoted meat cutters decided to accept the lower pay to stay employed, said Kendra Doyel, spokeswoman for Ralphs Grocery Co., which has 260 stores and about 22,000 workers. It is part of Kroger Co., the nation’s largest grocer.
“We have closed a number of stores over the last few years and absorbed the employees, but we were heavy in the meat department, and because of the economy, we haven’t had the attrition that could have balanced out the staffing,” Doyel said. She said the demotions were based on seniority.
Of the three, Kroger is doing the best job of navigating the recession, said Wolf, the analyst. Its same-store sales are running slightly ahead of the inflation rate, whereas Safeway and Supervalu are either lagging behind inflation or have turned negative, he said.
“Nationally, Kroger has been more aggressive with prices and promotions,” Wolf said, “and that is what works in this economy.”
(BEGIN TEXT OF INFOBOX)
Supermarket chain Albertsons will close four stores Friday and five more by April 9. The company also plans to change the nameplate of its South Gate store at 4155 Tweedy Blvd. to Lucky Stores.
Canoga Park, Mason Avenue at Sherman Way
Chula Vista, Calif., East Orange Avenue at Melrose Avenue
Encinitas, Calif., North El Camino Real at Encinitas Boulevard
Lakewood, East South Street at Downey Avenue
BY APRIL 9
Cathedral City, Date Palm Drive at Gerald Ford Drive
Lancaster, East Avenue J at Challenger Way
Rancho Cucamonga, Baseline Road at Archibald Avenue
San Diego, Balboa Avenue at Clairemont Drive
Temple City, Rosemead Boulevard at Las Tunas Drive