Grocery Stores, Union Reach Tentative Agreement

A tentative agreement has been reached between the three big grocery chains and the union representing its workers. We take a look at the economic impacts of a strike in San Diego.

GUEST

Miro Copic, Marketing Professor, SDSU

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CAVANAUGH: I'm Maureen Cavanaugh, it's Monday, September†19th. Our top story in San Diego is about the agreement that may avert a super market strike, KPBS business reporter, Eric Anderson is here with an update. Hi Eric.

ANDERSON: Good morning, Maureen.

CAVANAUGH: What do we know about this tentative agreement?

ANDERSON: We know that the union negotiators and the grocery store negotiators have been working past their deadline last night, which was around 7:00†o'clock or say, presumably because they were making some sort of progress toward a resolution of this issue. And then we heard the announcement in the last hour that there had been a tentative deal. We have to remember that it is a tentative deal at this point because all it means is that negotiators have agreed to a contract package. And the union workers are actually going to get a chance to vote on that some time later this week.

CAVANAUGH: That's the next thing that has to happen then? The entire rank and file votes on this package?

ANDERSON: That is correct. So union membership will have to endorse what their negotiators have bargained for them, and then if, presuming that they do go ahead and say, yes, we want to support this contract deal, then they would sign the new contract with the stores and things would move forward just as they had before the dispute.

CAVANAUGH: Okay. Terrific. I've been speaking with KPBS business reporter, Eric Anderson, and I'm sure we'll learn more about the nuts and bolts of this negotiation and this deal as the day goes on.

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CAVANAUGH: One of the under reported aspects of this threatened strike was the fact that a strike at Ralph's, Albertson's and Vons would not have been just risky for unions. The chain stores have been losing steadily a market share, and a strike might under mine a shrinking customer base. Thousands of strike workers in our community might have a ripple effect making our struggling economy even more precarious. Joining me is my guest, Milo Copic. He's professor of marketing at San Diego state university. And thank you for joining me.

COPIC: Thank you, Maureen.

CAVANAUGH: I want to invite our listeners to join this conversation. , you relieved that there will probably not be a grocery strike? How were you getting ready for one or didn't you care one way or the other? Give us a call at 1-888-895-5727. That's 1-888-895-KPBS. Or comment on twitter at KPBS midday. Do we have any idea, professor, who might have won in these negotiations?

COPIC: I think it's great news for both sides. I think the -- I've spoken to workers in the stores, Ralph's and Vons, in particular, and they don't want a strike. They were anxious about what that might do to impact their families. Many of these folks are -- they make a decent wage, but they're living a little bit ahead of a paycheck to paycheck. So for them, that's a big relief. The chains, being able to do business as usual is also a great thing. The market is extraordinarily competitive. There's a lot of nonunion chains and businesses here. A lot of new entrance since the last strike in 2003. So they would much prefer not to have a disruption.

CAVANAUGH: When we look at this in the larger community, I'm also wondering what the potential the strike had to affect this region that's still pulling itself slowly out of an economic recession.

COPIC: Retail is an important part of the economy in San Diego or LA and Orange County. You're dealing with potentially 62,000 workers in the south land, 10,000 in San Diego. That's a big number. When you have 10% unemployment in San Diego, 12% state wide, the mayor of LA recently said we really cannot afford to have this strike.

CAVANAUGH: I know that we have had previous grocery strikes. How have they affected us economically?

COPIC: Well, the last grocery strike in 2003 was very long. It was nearly four months or over four months. It affected the economy locally to the tune of somewhere between a billion and a half and $2†billion. A lot of people were out of work. And it polarized the community. There were people who had no problem crossing the picket lines, others were very honorable. And the market share for those three big chains, they went from being very dominant at 70% to 60% today, which is still a big market share. But 11%, that's a big revenue loss.

CAVANAUGH: And why is that? Is it because when people find out that they can go somewhere else to get their groceries, they will just do that habitually rather than return?

COPIC: That's a wonderful question, Maureen. Interestingly in super market shopping, and my career started at the Pepsi cos of the world, and I'm familiar with this channel upon, shoppers for super markets tend to shop within a roughly five-mile radius of their homes. That's why there's over 35,000 super markets in the United States amongst these big chains for the most part. And to go outside of that, people would love to go and do some unique shopping. So let's say a Costco for some very big purchases or trader Joe's for the unique purchases. People will go outside of that. But when they don't have something five-mile away, they're going to look at alternatives, and it may not change their behavior, but if they go to a store once a week, they may go to that store now when it reopens three times, and then the fourth time they may go to trader Joe's or Costco on a permanent basis. And that's one less shopping trip not directed at big three chain it is.

CAVANAUGH: Listeners, we're inviting your phone calls. We're going to find out the nuts and bolts of the laborer dispute agreement as time goes on. It looks as if the rank and file approved of this later this week, there will be no super market strike among the big three super market chains here in San Diego. We're taking your calls at 1-888-895-5727. And my guest is professor Milo Copic, professor of marketing at San Diego state university. Steven is calling us from Mission Hills. Hello.

NEW SPEAKER: No, it's Sarina.

CAVANAUGH: Oh, Sarina, I'm so sorry.

NEW SPEAKER: That's okay. No worries. Thank you for taking my calls. As I told your screener, I'm hoping that the negotiations are good for both sides. And to avoid a strike. However, if there was one, I'm very loyal to my local chain food store. I would never cross the picket lineup. I would shop elsewhere. Will trader Joe's, food for less, because I believe that our workers deserve the best from their employers. And the healthcare issue is supreme.

CAVANAUGH: Well, I appreciate it, Sarina, and I'm sorry I got your name wrong. Thank you so much for the call.

NEW SPEAKER: No worries.

CAVANAUGH: Was there a big, professor, swell of people who, like Sarina, perhaps would not have crossed the picket lines? Or was the general feeling that because of this economic climate and because people are really, really leery about -- basically unions in general, at this point, I think, that this strike may not have been effective for union workers?

COPIC: Unlike 2003 where unemployment was 5%, and the -- reason the strike was a lot bit better 'cause the benefits were -- it was a bigger issue because it was the first time that the grocery chains were requiring workers to potential he pay for healthcare. Healthcare is a major issue, and I certainly empathize with Sarina. One of the challenges this time around with 10% unemployment in San Diego, there was an interesting article in the Union Tribune this weekend, that talked about how individuals reacted. And reaction was very unsympathetic. What it boiled down to is once people have to make a decision to cross that picket line, their behavior might change. They may not feel that it's -- that there shouldn't be a strike, and they're quibbling over little things. Once they're facing those employees that they see every week or every other day, they may have second thought it is. They'll have to see them after the strike is over.

CAVANAUGH: I see. Now, you were -- worked at a super market here, right? And went out on strike in the 70s?

COPIC: I kid did. Of the previous strike to 2003 was in 1978 or 1979. It was a four-week strike. And I had just been hired on in safe way. I grew up in San Diego. And it was in Imperial Beach, and we were out on strike fair month. And it was a very disconcerting experience because not everybody on the union side was treated equally. The journey men checkers, the checkers with the more seniority received full compensation from the strike fund. And as a courtesy clerk, I lost 95% of my compensation. So I didn't think it was fair to me personally, but it was very disconcerting because people were out there, there was a lot of uncertainty as to when the strike would be resolved. We had the management team out during the strike, and would talk to individual workers to see if they could bring us back into the store, and that was very -- I was on the job for less than a month. I'm 16, 17†years old, and here's the store manager asking me to come back, and you feel he's the boss and he's hired you. And you're look looking at your colleagues on the picket line. And office I tough thick to do. But I stayed on the picket line. And the stress that I knew my colleagues felt was fairly palpable.

CAVANAUGH: And you talked about the fact that most of the grocery workers that you spoke with recently really did not want to go out to strike; is that right?

COPIC: That's correct. It was funny, this has been a hot topic the last month, and I've been fortunate enough to have some comments, and I've always said that I feel that in this particular instance, there would be an agreement. I was very glad to hear that, because I went formally on the record last night in particular. And the -- I think the -- it's going to be a win-win for both sides in this instance. And it's not going to -- the workers are going to have a reasonable agreement. And as Eric stated earlier, they're going to have to ratify it. Hopefully if there was some agreement on the negotiation, it's gonna be brought back to the workers. But the workers themselves were very nervous. They were anxious. They -- I had a comment last night of an individual at the Vons they shop at that said, you know what? I'm really afraid. I really would like them to get it done of the and I want to work. And that's, I think, what most people are thinking about.

CAVANAUGH: We're taking your calls at 1-888-895-5727. Sandra is calling us from Fallbrook. Welcome to Midday Edition.

NEW SPEAKER: Hi. I wanted to mention that I read the ad in the New York Times the other day from the Ralph's store, and their ad said that due to the inconvenience of their customer, they would be closing the store in the event of a strike. Which was a brilliant thing to do on their part because it would inconvenience people and take away the audience that the strikers are depending upon. The other thing was they had said -- they showed a big sign in front of the store that said in the event of the strike, we are hiring at competitive prices, hourly salary was 12 to $16 an hour inform this economy, there must have been a thousand people lined up to get those jobs. And I'm not sure what the union was thinking about even considering a strike in this economy. I've felt pretty unsympathetic to the employees.

CAVANAUGH: Uh-huh.

COPIC: And I -- just that was just a gut reaction. And I'm imagining a lot of people would feel. That you've got a job. Please, you know? Come on.

CAVANAUGH: Sandra, thank you so much for the call. And I think some people who have called in to our program have felt that way. You know, you have a job, a lot of people don't have a job, this is not the time. But on the other hand, if Ralph's and Albertson's had closed their stores during that strike, wouldn't they have lost a huge amount of money?

COPIC: They would have lost the revenue every day they're closed, plus logistically, one of the challenge it is they had is the perishable items in the stores, the milk, the produce, the dairy the meat: They'd have to reallocate it to some of the other network of stores they have outside of the Southern California region, and the logistic enforce that would be very expensive. To Sandra's point, the brilliance of the marketing strategy that Ralph's did is it really takes away the emotion. If there's picketers in front of an empty parking lot, the newsworthiness of it other than the first day diminishing completely, and it was a good counter move. Because from a union point of view, threatening the risk of a strike with this environment as she stated is a risky move. It's kind of a last resort item. And at the end of the day, it's -- if they vacate the contract, that opens up a lot of space for the chains to relook at that union relationship.

CAVANAUGH: Exactly. And that's how I want to end our discussion here. Because there was a lot of -- there was something in the LA Times today, and there's been a lot of talk that the super market chains themselves were not in the strongest position for this negotiation because of the kind of market share that they have been losing steadily over the years. Tell us a little bit about that.

COPIC: It's way worse in Los Angeles and Orange County. If they roughly have a 40 share in Southern California, and if you have close to a 60 share in San Diego, obviously in LA and Orange County they're in the high 20, low thirties. And there, you have a lot of independent groceries, and in LA in particular, you have very aggressive set of Hispanic chains like north gate Gonzalez or Vallarta. Those formats for those chains are incredible. They can rifle a Vons or Ralph's they've got great meat department, bakery sections. So people who are not used to going to those chains may go there and go, that's not a bad place to go. And those chains really are hurting the big three there in LA. And so from a broader perspective, they really wanted to get this strike resolved.

CAVANAUGH: Right. And as I've told everyone, let me update, we have had word that a tentative agreement has been reached in the San Diego super market laborer dispute. The rank and file are going to have to take a look at that agreement and ratify it at the end of the week before we can say for sure that there will not be a super market strike. But right now, it looks as though there will not be a super market strike in San Diego. I want to thank my guest very much. Milo Copic is professor of Marketing at San Diego state university. Thanks for being with us.

COPIC: Thanks Maureen.