South state strike's bitterness weighs on both sides locally.
By Dale Kasler -- Bee Staff Writer
Published 2:15 am PDT Wednesday, July 14, 2004
SAN DIMAS - The big Southern California supermarket strike changed Bob and Beverly Lindenmayer's shopping habits forever. They used to buy groceries at Vons, a Safeway subsidiary, but now take their business to Stater Bros., a chain that wasn't struck.
We used to shop at Vons faithfully," Bob Lindenmayer said earlier this week as he loaded his car trunk with groceries from Stater's San Dimas store, east of Los Angeles. Describing himself as angry at both the stores and labor unions, he added: "Ever since they pulled that crap, we haven't been back."
The lingering bitterness of Southern California's epic supermarket strike could prove critical in contract negotiations that might reach a climax this week in the Sacramento area.
More than four months after the end of the south state strike, Safeway, Ralphs and Albertsons are still toting up their losses and struggling to recapture lost customers. Although many shoppers have come back since the walkout and lockout ended Feb. 29, quite a few have stayed away - out of anger or because they became accustomed to shopping elsewhere.
Labor union members are licking their wounds, too, having coughed up contract concessions after enduring a walkout of nearly five months.
Store employees say morale is low and tension high.
"Both sides lost, really," said Gus Freire, a veteran clerk at a Vons store in Glendora.
The economic aftershock from Southern California could foster a spirit of compromise in the Sacramento area, where a contract covering more than 15,000 grocery workers is due to expire Saturday. Sacramento-area talks include the same three grocery operators involved in Southern California, plus West Sacramento-based Raley's.
"I don't think (a strike) is a foregone conclusion. Both sides have learned from the Southern California experience, and no one is eager to repeat it," said Kent Wong, director of UCLA's Center for Labor Research and Education.
Officials with Local 588 of the United Food and Commercial Workers, which represents thousands of grocery workers from Modesto to the Oregon border, didn't return calls for this story. But in a memo posted on the local's Web site, President Jack Loveall indicated that the strike could nudge the parties to a peaceful resolution in Northern California.
"It is clear to us that employers want deep cuts in our contract," he wrote. "However, to date we have not been faced with a showdown mentality.
"Because of the bravery and sacrifice of the heroic Southern California members, the employers may not be as hard-nosed as they were before the strike."
However, Safeway Vice President Kevin Herglotz said each contract is "completely different" and the strike fallout wouldn't necessarily influence the Sacramento-area talks.
He added that Safeway and other traditional grocers are facing the same issues in Northern California as they did in the south: spiraling health-care costs and increasing competition from the likes of nonunion Wal-Mart Stores Inc., which is making inroads into the California grocery market.
The grocery chains say they're confident that customers are returning to the fold in Southern California.
"We continue to see steady progress, our sales improving," said Herglotz.
Since the strike ended, an uneasy truce has taken hold in the nation's supermarket industry. Labor and management have signed new contracts, usually bringing some sort of concessions from labor. The specter of Southern California has been everywhere.
"Neither side wants to go through that again," said Jim McLaughlin, president of a UFCW local in Arizona that just signed a contract with Safeway and Kroger.
Yet there's no guarantee of peace in Sacramento. The Wal-Mart presence and the richness of Local 588's contract - considered one of the most generous for grocery workers in the nation - mean the possibility of a strike remains high. Workers in the Sacramento area make $8 to $22 an hour. For health insurance, they pay no monthly premiums and make co-payments of no more than $10.
Grocers achieved many of their cost-reduction goals in Southern California by implementing a two-tiered contract that means lower pay and less-generous health benefits for new hires, said investment analysts. Although the chains didn't eliminate the cost gap with their competition, "they got a lot of help," said analyst Andrew Wolf of BB&T Capital Markets in Richmond, Va.
Yet Wolf said the grocers didn't have an easy time of it. "The price was very high," he said.
The stores stayed open during the strike, staffed by managers and replacement workers. But the strike wiped out hundreds of millions of dollars in profits - $224 million at Safeway alone - as consumers headed to stores that weren't being struck. Those included stores like Stater Bros. and Gelson's, which signed "me-too" contracts with the union. The stores weren't struck, and management agreed to go along with whatever contract was signed. UFCW leader Loveall has said he doesn't plan to sign any "me-too" deals in the Sacramento area.
Retail industry consultant Burt Flickinger III said Safeway subsidiaries Vons and Pavilions are struggling the most to regain customers because the union targeted Safeway as the villain of the strike.
For Southern California shoppers, staying out of the strike stores was often a simple choice. "I didn't want to cross a picket line," said Adriana Cuevas of Covina, a former steadfast Albertsons shopper who was buying groceries at the San Dimas Stater Bros. the other day.
Cuevas, like many shoppers, has resumed shopping at Albertsons but now also does business at Stater Bros., Costco, and Smart & Final.
A Field Poll, conducted in association with Whittier College's Consumer Activism Project, suggested that thousands of Southern Californians haven't come back to their old stores.
The survey, taken in late May, said the percentage of Southern Californians shopping "very frequently" at the strike stores had fallen from 47 percent before the walkout to 32 percent.
Their competitors have reaped a huge windfall. In the six months ending March 28, Stater Bros.' profits went to $30.3 million from $3.8 million a year earlier. Gains also were reported by Whole Foods Market, Trader Joe's, Costco, ethnic markets and the upscale Gelson's.
How long it will last isn't clear. Stater Bros., for example, said in a Securities and Exchange Commission filing that it has no way of knowing how many of the new customers will stay with the chain. But Costco spokesman Richard Galanti said his company seems to have retained roughly half of the new business it won during the strike.
The stores involved in the labor dispute have gone out of their way to win back shoppers; analysts say Albertsons in particular has been aggressively discounting. But random interviews with Southern Californians suggest that the stores have a ways to go.
A few said anger with management is keeping them away. Others said they've forgiven management but have gotten used to new stores. And some said they're motivated by anger against the workers.
Joe Kongaika, shopping at Island Pacific, an Asian supermarket in West Covina, said he had considered long-term employees at his neighborhood Albertsons as his friends. But when he crossed a picket line to get cash out of the in-store bank, the verbal abuse from those picketing made him swear off the friendships.
"After the strike, it was over - we stopped going," he said.
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