WASHINGTON, Aug. 20 /PRNewswire/ -- The Bush Administration will launch dramatic changes in Overtime pay policies, which will impact millions of workers across a broad range of job categories on Monday, August 23rd. Independent analyses from organizations across the country and here in Ohio indicate that -- at least -- 6 million workers are subject to lose overtime protection including -- assistant managers at retail stores and fast food restaurants, financial service industry workers, registered nurses and law enforcement personnel.
A press conference will be held in downtown Cleveland at 9th St. & Euclid Avenue at 1:00pm, Monday, August 23rd to highlight the significant impact of these changes. Workers, community leaders, as well as labor leaders including John Ryan, Cleveland Labor Council Executive Secretary, will be on hand.
"At a time when families are struggling to make ends meet, the Bush Administration delivers yet another potentially devastating blow to America's working people," says Congresswoman Stephanie Tubbs Jones. Rep. Tubbs Jones continues by pointing out that according to independent analysis (Policy Matters) "Ohioans have already felt the devastating loss of 200,000 jobs since March of 2001 ... these losses are now compounded with over 260,000 workers effectively having their salaries reduced by this new Bush Administration policy."
Policy Matters ( http://www.policymattersohio.org ) is an independent organization funded by the George Gund Foundation, the Saint Ann Foundation, the Nord Family Foundation and the Economic Policy Institute.
CHICAGO (Dow Jones)--It bodes well for Kroger Co. (KR) that some of its workers ratified a four-year agreement without a work stoppage, but any cost savings the supermarket chain giant gets likely won't reach its bottom line.
The Cincinnati grocery chain announced Wednesday that a new, four-year agreement between it and the United Food and Commercial Workers Local 227 had been ratified. The new agreement covers about 10,000 employees in parts of Kentucky and southern Indiana. Nearly 80 stores are affected by the agreement.
The agreement is retroactive to April 11 and it expires March 29, 2008, Kroger spokesman Gary Rhodes said.
Wages for department heads and assistant department heads will increase 40 cents an hour in 2005, 35 cents an hour in 2006 and 45 cents an hour in 2007, said Gary Best, president of Local 227. Wages for other full-time workers will increase 40 cents an hour in 2005, 30 cents an hour in 2006 and 40 cents an hour in 2007. Wages for part-time workers will rise 25 cents an hour in each of the three years.
"In this day and age with the current economy, it was a fair and decent settlement that we could live with," Best said.
Kroger declined to comment on wage and benefits details.
It's good for Kroger that it was able to reach an agreement while also avoiding a bitter battle with the union, such as the one that took place earlier this year in Southern California, Sheila McNeely, analyst with credit rating agency Fitch Ratings, said. The Southern California market was unique in that wages and benefits in the stores there were above where they were in the rest of California, as well as the rest of the country, she said.
UFCW workers at stores run by Kroger, Albertsons Inc. (ABS) and Safeway Inc. ( SWY) in Southern California went on a nearly 20-week strike that ended in late February when workers ratified a new contract. That contract covers about 70,000 workers at 859 stores.
Other negotiations between supermarket chains and unions haven't been as contentious as those in Southern California for several reasons, including that the markets have been smaller, McNeely said. Also, the retail environment and job market in general "doesn't bode well for a fight" for either side, she said.
Still, any cost savings that Kroger realizes from the agreement "will really be designated to maintaining their business," McNeely said.
"So it's not like they're going to make a lot of money" from the new agreement, she said.
McNeely doesn't own shares of Kroger, and Fitch doesn't do investment banking work.
It's hard to tell which side got more of what it wanted in the latest agreement because so few details have been made public, C.L. King & Associates Inc. analyst Gary Giblen said.
The labor agreements between unions and supermarket chains that were negotiated during and after the strike in Southern California were "quite favorable to the union," Giblen said. Kroger works hard to get the best possible results but, in all likelihood, the supermarket chains aren't getting significant reductions in their health care costs, he said.
"Maybe the (supermarket chains) are gaining some small ground, but it's capturing grains of sand on a long beach of disparity," Giblen said.
The effects of the agreements don't show up in earnings results in one lump sum, Giblen said. That's because there are several contracts that the supermarket chains have to negotiate at any given time. Also, the chains can offset the negative effects from an agreement in a quarter by raising prices or taking other measures, Giblen said.
Giblen doesn't own shares of Kroger, and C.L. King & Associates doesn't do investment banking work for the company.
Several agreements are set to expire this year between the UFCW and Kroger, UFCW International spokeswoman Jill Cashen said. Those agreements cover 7,000 workers in Cincinnati, 1,000 workers in Myrtle Beach, S.C., 950 people in West Virginia and Ohio, and employees in several other locations.
The union also has multiemployer agreements expiring with Kroger, Albertsons and Safeway this year, Cashen said. Those agreements cover stores in Denver, Northern California and Las Vegas, Cashen said.
SEATTLE - Grocery workers in the metropolitan area have approved three-year contracts with four supermarket chains, accepting health care payments but avoiding a two-tier pay plan sought by employers.
Meeting late Sunday at Key Arena, members of four United Food and Commercial Workers locals voted by a combined 83 percent to ratify all 10 contracts as recommended by the union, said Sharon McCann, president of Local 1105. In Teamsters Local 38, the deal was approved by a 92 percent margin, secretary-treasurer Barry Lund said
"This agreement does exactly what we set out to do — protect affordable health care benefits," McCann said in a statement.
"We seemed to have come to an agreement on something that works for everyone," said Melinda Merrill, a spokeswoman for Safeway, Albertsons and two Kroger subsidiaries, QFC and Fred Meyer.
Some other grocers, including Metropolitan Markets, Thriftway and Red Apple, previously signed agreements to offer their employees whatever emerged from the talks covering the four larger chains.
Employers have said the deal, which run through 2007 and cover about 12,000 employees, also should be a model for negotiations covering 11,000 other grocery workers around Western Washington.
The deal requires workers to begin paying part of their health insurance premiums, $7 a week for individuals and $18 a week for families, as well as higher deductibles and copays for doctor visits, employees and officials familiar with the deal told the Seattle Post-Intelligencer.
New employees will be covered by a separate health maintenance organization for 35 months before qualifying for the established health care plan, and premium pay for Sunday shifts will be cut from time-and-a-half to time-and-a-third.
A union announcement of the terms was planned for Monday. Some workers said they were resigned to the changes.
"Times have changed in the medical world," Terri Skeen said after casting her ballot. "I think this contract was better than I heard rumors of."
The agreement includes raises of 30 cents an hour in the first year, a bonus worth 30 cents an hour for those who stay through the second year and 30 cents an hour in the final year, employees said. Workers now start at $7.72 an hour.
Debbie Thomsen, 46, a Fred Meyer employee, said the changes probably will cost her more than $100 a month.
"I think it's a terrible contract. I think it's the best terrible contract in the country," said Andy Heyman, a Fred Meyer meat cutter in suburban Mill Creek. "All things considered, it was the best deal we could get without a strike."
The old contract expired May 2, and strike deadlines were postponed repeatedly as both sides sought to avoid a reply of a bitter five-month supermarket strike and lockout in Southern California, where workers wound up accepting higher health payments and lower pay scales for new hires.
A strike in Seattle would have been the first since a three-month walkout in 1989.
In a statement issued late Sunday, Gov. Gary Locke applauded the union and employers for averting a strike "that would have hurt workers, their families, the grocery store chains and the area's economy."
"It was imperative to avoid the disastrous strike that happened in California, which severely affected both sides," Locke said.
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Workers at most Kroger stores in Kentucky and Southern Indiana agreed to a new contract last night, but five stores in rural Kentucky rejected it.
Under the contract, some workers could pay some of their own health-insurance premiums for the first time beginning in 2007.
Members of UFCW Local 227 voted by a four-to-one margin to ratify a four-year deal with 79 stores in the grocer's Louisville division.
The health-insurance plan will remain the same for the next two-plus years. But in 2007 workers will choose between a premium plan that requires them to pay a weekly premium or a no-premium option with reduced benefits, including higher deductibles and reduced sick leave.
The new premiums will be $5 a week for individuals, $10 for a worker and spouse or worker and children, and $15 a week for both spouse and children. The copayment for a doctor's visit will rise to $25 from $20.
"It was a good agreement," said Local 227 President Gary K. Best. "We always want more, but with what's going on in this country in health care we came out better than most."
The contract also calls for an 8 percent pay raise over three years and what Best called "major improvements" in language covering seniority and store transfer rights.
Top pay for department heads will reach $17.50 an hour at the end of the contract. Full-time workers will top out at $12.55 an hour and part-timers at $9.75. Workers with seniority will be able to bid on higher-paying jobs or in stores closer to home.
Most union members yesterday ratified a four-year contract under which they'll contribute to their health-insurance premiums for the first time.
"We maintained pensions with no reduction, which has been a big issue," Best said.
A spokesman for Kroger in Louisville called the contract fair but deferred other comment to corporate offices in Cincinnati. A representative there did not return a call.
The contract rejected by workers in stores in Brandenburg, Russell Springs, Monticello, Stanton and Whitley City was the same, Best said, and called for those stores to merge with the Louisville master contract. Best said last night he didn't know why they rejected it.
Workers in three Paducah-area stores approved a similar contract Saturday.
CINCINNATI, Aug. 11 /PRNewswire-FirstCall/ -- The Kroger Co. (NYSE: KR - News) and UFCW Local 227 today announced that a new four-year labor agreement has been ratified. The new agreement, which covers approximately 10,000 Kroger employees in parts of Kentucky and southern Indiana, provides wages and benefits that will allow Kroger to compete with other retailers in the market.
"This agreement represents a balanced solution that provides Kroger associates with the high-quality health care and competitive wages they need, at a cost that is fair to everyone involved, including our customers," said John Hackett, president of Kroger's Mid-South Division. "Our associates are the best in the business, and we look forward to building a successful, secure future together."
"In these tough economic times, the UFCW and Kroger were able to work together on a contract that improves wages for our members and preserves affordable, quality health care for all our members," said Gary Best, president of UFCW Local 227. "I am particularly proud of UFCW members, especially the twenty-five members on the Bargaining Committee and 140 workers on our Retail Advisory Board, for showing their solidarity and determination that helped us reach an agreement."
Headquartered in Cincinnati, Ohio, Kroger is one of the nation's largest retail grocery chains. At the end of the first quarter of fiscal 2004, the Company operated (either directly or through its subsidiaries) 2,536 supermarkets and multi-department stores in 32 states under two dozen banners including Kroger, Ralphs, Fred Meyer, Food 4 Less, King Soopers, Smith's, Fry's, Fry's Marketplace, Dillons, QFC and City Market. Kroger also operated (either directly, through its subsidiaries, franchise agreements, or operating agreements) 794 convenience stores, 439 fine jewelry stores, and 42 food processing plants. For more information about Kroger, please visit our web site at http://www.kroger.com .
UFCW Local 227 represents 18,000 members in Kentucky and southern Indiana. Local 227 is the largest local union in Kentucky. Its website is http://www.ufcw227.org .
Low pay pushes costs to taxpayers, new study says
Inadequate wages and benefits force workers at Wal-Mart stores in California to seek $86 million a year in state aid, according to a report released Monday by the University of California-Berkeley Labor Center.
Moreover, if other retailers cut their wages and benefits to the levels offered by Wal-Mart Stores, the cost to California's public-assistance programs would rise by $410 million annually, the study said.
In their report, Berkeley researchers Arindrajit Dube and Ken Jacobs contend that more than other retail workers, Wal-Mart employees rely on a variety of public-aid programs, including food stamps, Medicare and subsidized housing.
"In effect, Wal-Mart is shifting part of its labor costs onto the public," the researchers wrote. "Wal-Mart's long-term impact on compensation in the retail industry has the potential to place a significant strain on the state's already heavily burdened social safety net."
Bentonville, Ark.-based Wal-Mart, the world's largest company, maintains that it pays competitive wages and relieves public assistance burdens by giving jobs to many people who otherwise would not be employed.
"It's unfortunate that these UC-Berkeley researchers would release a study whose findings are questionable," Wal-Mart spokeswoman Cynthia Lin said. The company employs 60,000 people in California.
Debate grows louder
The public debate about whether Wal-Mart benefits or hurts local communities has grown considerably louder over the past few years, particularly in California, where some communities have opposed the company's expansion plans.
The company's wage-and-benefit structure was also cited as a reason behind last year's strike and lockout of unionized grocery workers in Southern California, as the largest supermarket chains said they needed to revamp costs to compete with the retail giant.
Dube and Jacobs' study took into account statewide data on wages paid by large retailers, the numbers of workers throughout the retail industry who use state assistance programs and information gleaned from lawsuits about Wal-Mart's pay and benefits.
Dube, of Berkeley's Institute of Industrial Relations, and Jacobs, of the school's Center for Labor Research and Education, said they did not contact Wal-Mart in preparing their report.
The report found that Wal-Mart's wages on average were 31 percent below those of the broader group of large retailers — $9.70 an hour versus $14.01 an hour.
And with less earning power, Wal-Mart workers rely more heavily on state resources, Dube and Jacobs found, costing the state $32 million in health-related expenses and $54 million in other assistance.
1,952 in public aid
The study contends that the average non-management Wal-Mart employee receives $1,952 in public assistance compared with $1,401 for workers in large retailers in general.
"The disproportionate use by Wal-Mart workers of the various health care and social safety net programs, and the cost that that brings to the state is an important consideration for policymakers," Jacobs said.
Dube and Jacobs noted that other studies have reported similar findings.
In Georgia, a state survey of the Children's Health Insurance Program found that Wal-Mart employees disproportionately relied on the program, accounting for more than 10,000 of the 166,000 children enrolled.
In Congress, a report by Democratic staffers on the House Committee on Education and the Workforce looked at employee eligibility for assistance programs and found that a typical 200-employee Wal-Mart store could cost federal taxpayers $420,750 a year, or more than $2,000 per employee.
Wal-Mart has disputed those findings.
QUEBEC CITY, CANADA, Aug. 3 /U.S. Newswire/ -- A Wal-Mart located in Jonquiere, Quebec, Canada is on its way to becoming the only unionized Wal-Mart in North America after a ruling on Monday by the Quebec Labour Relations Board (QLRC) to grant employees union certification with the United Food and Commercial Workers Union (UFCW) Canada.
The union accreditation was issued by the QLRC after a majority of employees at the store signed UFCW Canada membership cards. QLRC adjudicator Jocelyne Houle stated that, "the applicant is representative, as required by law." A hearing has been scheduled for August 20th to finalize the specific definition of which employees will have the right to union representation.
The Quebec certification shows that when workers' rights are protected, Wal-Mart workers will exercise those rights for a voice at work. Our challenge is to make sure that governments protect workers rights across Canada and the U.S. and around the world," said Joseph Hansen, UFCW International President and President of the Union Network International, a global trade federation representing 16 million workers in 100 countries.
Today's Labour Board victory is the latest in a series of organizing drives at Wal-Mart stores throughout Canada. Currently UFCW Canada has other applications pending for Wal-Mart stores in Weyburn and North Battleford, Saskatchewan; in Terrace, British Columbia; in Thompson, Manitoba; and in Brossard, Quebec where a majority of workers have sought UFCW representation.
The Quebec store will be the first wall-to-wall Wal-Mart store where workers successfully chose union representation. Meat department workers in the Jacksonville, Texas Wal-Mart Supercenter voted for UFCW representation in 2000. Wal-Mart refused to bargain with the workers, despite orders from the National Labor Relations Board. It also eliminated the meat department in Jacksonville and across the country in an attempt to scare workers from standing up for a voice on the job.
Wal-Mart stated publicly that it supports workplace democracy and that it would not close the store because workers chose a union. The UFCW Canada looks forward to sitting down to negotiating a first contract without delay.
Grocery Wars: Kroger, Wal-Mart face off
MEMPHIS, Tenn. - The competition here between Cincinnati-based Kroger and grocery rival Wal-Mart Supercenters is hotter than Rick's Ragin' Blazin' Hot BBQ Sauce - a local favorite among barbecue-crazed Memphians.
But you won't find Kroger officials pouring sweat over the smoldering market conditions in which Wal-Mart Supercenters are almost as ubiquitous as Elvis impersonators in the rock legend's adopted hometown.
"We're still No. 1," said Dick Tillman, president of Kroger's Memphis-based Delta Division, as he kicked back in his chair during a recent interview.
Tillman, who got his start bagging groceries at a Kroger store near Columbus, said his confidence stems from Kroger's continued success as Memphis' market-share leader despite the encroachment of Wal-Mart, which opened the first of 10 supercenters in the Memphis area in 1995.
The supercenters, which sell everything from tires to prime meats, are considered the biggest threat to traditional supermarket chains and were largely responsible for pushing Wal-Mart past Kroger in 2000 to become the nation's top grocer.
While the competition in Greater Cincinnati hasn't reached the fever pitch that it has in Memphis, it's certainly heating up as Wal-Mart prepares to open at least 10 more Greater Cincinnati supercenters over the next 18 months, joining existing supercenters in Dry Ridge and Aurora.
But Kroger points to Memphis as an example of the Bentonville, Ark.-based retail giant's vulnerabilities and as a model for Kroger's strategy to retain its dominant position in the market here.
"We've been able to shift our focus to where the competitive pressures are by improving our operating efficiencies and doing the things our customers want us to do," Tillman said. "We don't look at Wal-Mart today any differently than any other food store."
The Memphis model
Wal-Mart hammers away at grocery market share in Memphis and across the country with its Sam's Club warehouse clubs and Wal-Mart Neighborhood Groceries, which, combined with the supercenters, generated $138 billion in total food sales last year - dwarfing all other conventional food sellers.
And that's just for food. Wal-Mart's total sales topped $256 billion last year, making it the largest retailer of any kind in America.
By comparison, Kroger, the nation's largest conventional supermarket chain, generated about $54 billion in total sales last year.
The key to fighting such a formidable opponent, Tillman said, has been finding ways to cut costs out of the system while maintaining a "superior shopping experience," including high-quality produce, superior service, broader selections, extensive specialty items and full-service meat departments.
For example, Kroger stores in Memphis now sell ground beef in "case ready" packages, which look better and have a longer shelf life, Tillman said.
Wal-Mart sells the same product. But unlike Wal-Mart and most other retailers, Kroger stores maintain full-service meat departments, where butchers can cut meat to specifications - a feature considered "very" or "somewhat" important by more than 70 percent of grocery shoppers, according to a recent survey titled "Trends in the United States: Consumer Attitudes & the Supermarket."
The survey, commissioned by the Washington-based Food Marketing Institute, was based on telephone interviews with 500 shoppers conducted in January and has a margin of error of plus or minus 4.4 percentage points.
Kroger also has expanded its cost-cutting strategies to its produce departments in Memphis, where instead of spending hundreds of hours a week restocking bins with fruits and vegetables, workers now put staples such as apples, potatoes and melons on the floor on pallets in the same containers in which they were shipped.
By taking these steps, Tillman said, Kroger has cut labor costs, allowing the company to reduce prices and narrow the price gap with Wal-Mart, which sells food at prices 15 percent to 30 percent less than conventional supermarkets, according to most industry estimates.
Kroger may be winning the fight in Memphis, but it has taken some hard shots since Wal-Mart arrived.
Since 1998, Kroger has seen its share of the Memphis market decline from about 37 percent to about 34 percent last year, according to Trade Dimensions International Inc., which tracks market share for supermarkets and other retailers.
That means Kroger has lost control of nearly 9 percent of total food spending in the market, despite an aggressive plan over the past five years in which Kroger has opened 10 new stores in Memphis, replaced another, expanded two more and gobbled up several stores from competitors who couldn't withstand the Wal-Mart onslaught.
Kroger has 34 stores in the Memphis area that compete with the Wal-Mart Supercenters, four Wal-Mart Neighborhood Grocerys and five Sam's Clubs, as well as 11 Sav-A-Lots, four Super Kmarts, two Costcos, one SuperTarget and at least 36 other locations of various supermarket chains.
That's in a city with a metro-area population of 650,000, compared with 2.05 million in the 15-county Greater Cincinnati area, where Kroger operates 74 groceries and faces less competition.
Outside of Wal-Mart, the only other threats to Kroger in Cincinnati are superstore operators bigg's and Meijer, which each have 11 stores in the area. Meijer is the No. 2 grocer in the area with control of about 14 percent of the market, while bigg's ranks No. 3 with market share of just over 10 percent.
Those stores will no doubt feel the pinch on pricing once all the Wal-Mart Supercenters are up and running in the Cincinnati area, said Mark Hugh Sam, a grocery analyst at Morningstar Inc. in Chicago.
"The price competition in Cincinnati will be intense with the arrival of Wal-Mart. That will almost certainly result in share loss, even for the market leaders."
Strategy to keep shoppers
So why don't Kroger and other grocers in the area simply lower their prices to match Wal-Mart's?
They can't. Their costs are too high, particularly for labor.
For example, while nonmanagement union workers at Kroger and other traditional supermarket chains average between $11 and $14 an hour, Wal-Mart said it will pay its nonsalaried employees in Cincinnati $10.57 an hour, which is slightly higher than Wal-Mart's national average of $9.64 an hour.
Health care costs, or lack thereof, are another advantage for Wal-Mart. Kroger spent more than $1 billion last year to provide health benefits for more than 80 percent of its 290,000 employees - more than three times the company's earnings of $314.6 million last year.
By comparison, less than half of Wal-Mart's roughly 1 million employees are even enrolled in a company health plan, though the company won't say how much it spends on health benefits.
Besides lower costs, Wal-Mart's size allows it to bargain for lower prices from suppliers and pass those savings on to consumers.
Wal-Mart can even afford to sell some food items at a loss because it can make up the loss on the more profitable general merchandise sold at its supercenters.
Despite operating at a decided disadvantage, Kroger officials in Memphis and Cincinnati say they're not conceding they'll lose ground in the market.
"There's no way Wal-Mart will run us out of town," said Bob Hodge, president of Kroger's Cincinnati/Dayton marketing division. "Wal-Mart is a pure price player, but we won't compete with them on price."
Instead, Hodge said, Kroger stores in Greater Cincinnati will emphasize cleaner stores, better selection and full service.
And Kroger is well prepared to face the Wal-Mart onslaught after more than a decade of going toe to toe with Meijer and bigg's.
"Between Dayton and Cincinnati, we compete all around this marketplace with more than 45 supercenters, and from our position we're doing quite well," said Hodge, referring to Kroger's position atop the local grocery market.
But Kroger continues to face challenges in an increasingly competitive marketplace in which even loyal shoppers find themselves spending more of their food dollars at Wal-Mart Supercenters and other nontraditional grocers.
"I shop at Kroger 99 percent of the time because I know where everything is, and I think they have better variety and quality," said 55-year-old Anne Pratt, from the Memphis suburb of Cordova. "But I do shop at Wal-Mart for certain things that they have for less, especially when I'm buying in bulk."
If you can't beat 'em ...
Kroger officials, realizing there's no silver bullet for dealing with Wal-Mart and other competitors, are also testing new store formats in a multipronged approach to protecting their market share.
Kroger, which already has bolstered its supermarket selection of nonfood items, such as lawn furniture, electronics and sporting goods, recently expanded its standalone Marketplace supercenter concept to Columbus after successful trials in Arizona and Utah.
Kroger said it plans to open six Kroger Marketplace stores in Columbus by the end of this year, offering more general merchandise than traditional Krogers in stores about double the size of the average Kroger supermarket.
And while company officials would not comment on possible future locations, industry watchers say they wouldn't be surprised to see Marketplace stores emerge in Cincinnati, Memphis and other markets where Kroger faces heavy supercenter competition.
"The Marketplace stores are a great format that would do very well against supercenter competitors in Cincinnati and other markets," said Sheila McNeely, an industry analyst at Fitch Ratings in Chicago. "Supercenters are by far the most difficult competitive threat to Kroger and other supermarket chains because they offer everything in one place. The Marketplace stores are Kroger's format for one-stop shopping."
Kroger also picked Columbus for its most recent expansion of its Fresh Fare concept, a higher-end supermarket with greater emphasis on prepared and gourmet foods to compete with the likes of Wild Oats and Whole Food Markets.
The first Fresh Fare in Ohio will open later this year, featuring everything from fresh organic produce and dried beans to slabs of hormone-free beef.
The Wal-Mart Supercenter in Dry Ridge would be better named "Wal-Mart Superhighway," according to Barbara Williams of Corinth.
"The parking lot is always jammed, the lines are horrible, and when it's packed, driving a cart through the aisles is like riding the bumper cars at Kings Island," Williams said as she left the store on a weekday afternoon.
But despite her complaints, Petersen said she would never consider shopping anywhere else.
"It's a big store, and you pretty much do have to hunt everything down," she said. "But I can find just about everything I need here, and you can't beat the prices."
Many shoppers share Williams' love/hate relationship with their local big-box retailers, which average 150,000 square feet in size - about three times the average Kroger.
Most shoppers would probably prefer a store that was easier to navigate, experts say. And many are put off by the size of the big boxes.
Carol Maas of Norwood is one such shopper. She said she does most of her shopping at the Hyde Park Kroger because she likes the service and selection. She said she doesn't shop at discount stores or stores that aren't full-service because "I don't need the stress.
"When I go grocery shopping, I want to find what I'm looking for in a hurry and get in and out fast, without a lot of hassle," Maas said.
"I'm willing to pay extra for the fast checkout and other services you get at Kroger that you don't get at other places."
It's an attitude that Cincinnati-based Kroger Co. is counting on.
"We don't want to have giant superstores because a lot of our customers are intimidated by stores that are overwhelming in size," said Kroger spokesman Gary Rhodes.
But the fact is that smaller stores can't offer the product selection and prices as the big-box chains because they're not big enough to house the same inventory.
And while many consumers say they appreciate the convenience and basic goods and services found at neighborhood shopping centers, shopping patterns show they are spending more at big chains.
Five of America's Top 10 retailers are big-box chains, according to Stores magazine's annual list of the nation's 100 biggest retailers.
Ten years ago, only two big-box retailers were in the Top 10: Wal-Mart, now No. 1, and Kmart, which has fallen to No. 14.
"The size of the big-box retailers certainly is a turnoff to some consumers," said retail guru Stan Eichelbaum, president of Cincinnati-based Marketing Developments Inc. "But when you look at the price differential of Wal-Mart and other big-box retailers and the depth of their inventory compared to smaller stores, there's no comparison. The smaller stores generally lose customers to the bigger retailers because they have everything in one place and lower prices."
One disadvantage big stores have is their location.
Because of their size, big-box operators almost always locate in suburbs or rural areas. Kroger, for instance, has 74 stores in Greater Cincinnati, while Wal-Mart will have 12 supercenters stretching from Oxford to Dry Ridge.
Hometown chains fight to defend turf against supercenter onslaught
Bob and Linda Fultz consider themselves loyal Kroger shoppers. But that hasn't stopped them from taking some of their food dollars to other stores.
"We still do most of our shopping at Kroger," said Bob Fultz as he loaded his car trunk with groceries from the Kroger store in Hyde Park Plaza recently. "But we find we don't come here as often as we used to.
"Last night, I was downtown and picked up a bag of charcoal and a pint of Ben & Jerry's ice cream from Walgreens on my way home. I remember when I'd have to run out to the grocery store to get those items."
Grocery shoppers in Greater Cincinnati and Northern Kentucky are learning they have more options than ever for where to buy food. Discount stores, warehouse stores, convenience stores, drugstores, dollar stores, even online retailers are expanding food offerings.
At the same time, Wal-Mart plans to build supercenters in 10 more neighborhoods over the next 18 months - joining the ones in Aurora and Dry Ridge.
Cincinnati-based Kroger, the region's top grocer, is adding six new stores.
Stores are getting bigger, too, and they're selling everything from grapes to gardening tools.
Grocery shoppers in Greater Cincinnati and Northern Kentucky are learning they have more options than ever for where to buy food. Discount stores, warehouse stores, convenience stores, drugstores, dollar stores, even online retailers are expanding food offerings.
At the same time, Wal-Mart plans to build supercenters in 10 more neighborhoods over the next 18 months - joining the ones in Aurora and Dry Ridge.
Cincinnati-based Kroger, the region's top grocer, is adding six new stores.
Stores are getting bigger, too, and they're selling everything from grapes to gardening tools.
As competition increases, the pressure on price also is growing. Traditional grocers are countering with price drops where they can, even as they try to convince shoppers that a bigger selection and more personal service may be worth a slightly higher price.
Stan Eichelbaum, a Cincinnati-based national retail consultant, says the region is already home to a highly competitive marketplace, and consumers will see "a severity of competition" they haven't seen here before.
"It will not only be a wake-up call, it will be a matter of survival and will force all players in the market into restructuring and reworking," he said.
More choices
Kroger and other supermarket chains are facing an increasingly competitive marketplace, forcing them to work harder to maintain customer loyalty.
"There are so many options now for consumers to buy food that their loyalty to their local supermarket chain has steadily eroded," said Mark Hugh Sam, an analyst who follows Kroger for Morningstar Inc. in Chicago.
"It's true that Wal-Mart has gobbled up market share by the handfuls from supermarket chains across the country. But Wal-Mart isn't the only factor."
In Cincinnati and Northern Kentucky, shoppers can pick up basic groceries everywhere from convenience stores such as United Dairy Farmers to CVS or Walgreens drug stores to warehouse clubs and no-frills, limited-inventory stores such as Sav-A-Lot.
While supermarkets remain the primary grocery outlet for 72 percent of shoppers, according to a recent survey from the Food Marketing Institute, that number has declined from 81 percent in 2002.
At the same time, patronage at discount stores, supercenters and other retail channels that sell food has continued to increase, with supercenters leading the way - 21 percent said supercenters were their primary destination for buying groceries, up from 15 percent in 2002.
The survey was based on random telephone interviews in January with 500 adult and young adult grocery shoppers. The survey has a margin of error of plus or minus 4.4 percentage points.
Cathy Davis of Crittenden shops at the Wal-Mart Supercenter in Dry Ridge. She said she saves so much money on food and other items that, "I'd be stupid to shop anywhere else."
Davis' grocery bills are already higher than most because, in addition to her family, she regularly buys groceries for the nearly 100 kids who attend the two New Discovery Educational Centers she operates in the area.
"Between home and the two centers, we save a ton of money," she said.
Big stores, more stuff
Wal-Mart's impending building boom here has put pressure on conventional grocers to increase their size so they have room to sell general merchandise, which carries a higher profit margin.
Combining a wide selection of general merchandise and services, including gardening centers, photo labs and pharmacies, with meat, produce and other groceries is what distinguishes supercenters from traditional grocers.
But Kroger recently built its biggest store ever, in Anderson Township at the Anderson Towne Centre, and the 104,000-square-foot store features a Fred Meyer Jewelry Store, a Starbucks, a drive-up pharmacy window and a photo lab.
There's also an adjacent fuel center, a major revenue generator for Kroger, which now operates more fuel centers than any other retailer except Wal-Mart.
"The stores we're building today are larger on average than they were 10 years ago as part of our effort to meet the increasingly diverse needs of our customers," said Gary Rhodes, Kroger's corporate spokesman. "It's all about offering them more product variety, better value and service in a convenient location."
But don't look for Kroger to become the next Wal-Mart.
Kroger stores have grown by a modest 10,000 square feet on average over the past 10 years, to between 65,000 square feet and 70,000 square feet, Rhodes said.
That compares with supercenters such as Wal-Mart, bigg's and Meijer, whose average store size ranges from 150,000 square feet to more than 200,000 square feet.
Kroger wants to keep its stores at a manageable and easy-to-navigate size because, unlike the supercenters, its focus and the backbone of its business is still food.
Selling food in a format in which items are easy to find gives Kroger a competitive edge, Kroger officials say.
"There is a supercenter customer out there," said Bob Hodge, Kroger president of the Cincinnati-Dayton marketing area. "Our customer has different expectations, and there's no comparison when it comes to the service and selection we provide."
Still, traditional grocers are losing ground. Thriftway, once the No. 2 player in the region, is closing its doors here after struggling to compete with Kroger and the supercenters. The 21-store Thriftway had fallen to fourth place in the market by last year.
Since then, Kroger has snapped up eight Thriftway stores, and Erlanger-based Remke Markets has grabbed one. Milford-based bigg's is rumored to be close to a deal to buy the Thriftway store in the Hyde Park Plaza, and insiders say Kroger may have its eye on at least two more Thriftway locations.
Kroger also is building six new stores in the area this year, though that's about the same as each of the past several years.
The grocers are scrambling to build more stores - and grab more shoppers - before Wal-Mart comes to town.
Prices draw many
While there are many reasons people shop at certain stores, price is always at or near the top of the list.
According to a recent Enquirer/WCPO-TV survey, about two out of five Cincinnati-area respondents - or 39 percent - said price is the most important factor when they choose a grocery store.
Wal-Mart, considered the biggest threat to the grocery industry, sells food at prices 20 percent to 30 percent less than conventional grocers.
Jim Crutcher of Crittenden, who was shopping at the Wal-Mart Supercenter in Dry Ridge, described the store as the "greatest thing that ever happened to low-income people."
"I'm disabled, and I live on a fixed income, but I just bought a 27-inch, flat-screen TV," Crutcher said. "I wasn't really in the market for a TV. I just came here to pick up a few groceries. But the price was so low I couldn't pass it up. That's the thing about Wal-Mart. It lets you stretch a dollar so you can afford things you otherwise couldn't."
In addition to Wal-Mart, other food sellers that emphasize low prices also have seen their business grow here.
Meijer, with its "Lower Prices" motto, has seen its market share grow from 4.9 percent to 12.7 percent over the last five years as it climbed from fourth to second in the marketplace, according to Trade Dimensions International Inc.
And bigg's, which recently opened a new store in Delhi Township, said it is No. 3 in the market and growing because of its "True Minimum Price" campaign.
Kroger and other supermarket chains say they're working to narrow those price gaps in a variety of ways, but they acknowledge their prices may never be as low as the supercenters' because they can't afford to sell food as cheaply.
Instead, Kroger and the other supermarket chains are emphasizing such things as clean stores, fresh produce, full-service meat departments and convenient locations.
They've set up frequent-shopper programs to increase customer loyalty and, on selected items, match the deeper discounts supercenters offer.
And, they say, they carry a better selection of products, including hard-to-find specialty items, than Wal-Mart, which stocks only the most popular grocery items.
Selection is the main reason Harry Murray of Bond Hill shops at Kroger.
"I have diabetes and high blood pressure, so I buy a lot of low-salt and low-sugar items, like lactose-free milk and no-sugar-added ice cream," he said. "That's why I shop at Kroger - because it's hard to find those items anywhere else."
Fort Mitchell resident Sandy Gronick, on the other hand, can't wait for Wal-Mart to finish its supercenter there in August or September.
"I definitely shop on price," said Gronick, who now shops at Kroger or bigg's. "If Wal-Mart's prices are as cheap as people say they are, I'll be the first one in line when they open up here," said Gronick, "I have four kids, and the thing that matters first and foremost to me is saving money at the register."
Wal-Mart, Target, bigg's pay workers less, offer low prices
Wal-Mart's vast, non-unionized work force earns wages and benefits that can be less than half of what Cincinnati-based Kroger and other unionized competitors pay their workers.
With such a dramatic disparity in employee costs, it's no surprise that Wal-Mart Supercenters can sell a box of Cheerios for the price of generic cereals at most traditional grocery stores
Consequently, Kroger and other conventional supermarket operators are demanding greater employee contributions for health coverage and other benefits so they can cut costs and remain competitive.
The pressure to lower employee costs is so great that Kroger officials said they forfeited $246 million in profits last year to secure health-care concessions in a strike and lockout involving about 70,000 workers at Kroger, Albertson's and Safeway stores in Southern California.
The 141-day California strike continued to eat into Kroger's earnings in the first quarter this year, reducing profits by 25 percent, or $71.6 million.
The supermarkets ratified a new three-year labor contract with the United Food and Commercial Workers union in February that would have workers assume more health care costs.
But issues of wages, health-care and pension benefits remain a major concern as Kroger and its peers continue to battle Wal-Mart and other low-cost operators across the country.
"We have to consider the competitive situation in every market," Kroger CEO Dave Dillon told investors in a conference call to discuss the company's first-quarter performance.
"In some markets, it's important for us to reduce the health-care costs. In others, it's only necessary to moderate the costs."
Unlevel playing field
That's because Kroger and other unionized grocers' cost structures are so out of line with Wal-Mart and other discount players, such as bigg's - the No. 3 grocer in Cincinnati - and Target, which sells food in its SuperTarget format.
Kroger, for example, spent more than $1 billion last year to provide health-care benefits for more than 80 percent of its full and part-time employees.
Fewer than half of Wal-Mart workers are insured under the company plan.
When it comes to wages, Kroger pays its non-management workers between $11 and $14 an hour, while Wal-Mart's national average is $9.64 - nearly 40 percent less than Kroger.
Kroger could raise grocery prices to cover higher costs and boost profits, but then it would risk losing customers to Wal-Mart, which, because of its low overhead, already charges prices that are 15 percent to 30 percent below most conventional grocers.
"It's not like Kroger is trying to sock it to their employees and not pay their workers so they can charge lower prices,'' said Sheila McNeely, an industry analyst who follows Kroger for Fitch Ratings credit-rating service in Chicago. "The unionized workers need to understand that there's an 800-pound gorilla out there waiting to take your customers and perhaps your jobs."
Bargaining power dented
While "giving-in'' is a term that makes union officials bristle, there's no denying that Wal-Mart's rapid expansion across the United States has compromised the supermarket union's bargaining power and forced more conciliatory negotiations, McNeely said.
On the other hand, Kroger and other supermarket chains have been forced to take less of a hard line in their negotiations because they simply can't afford another costly strike like the one in California, she said.
That spirit of compromise was reflected in recent negotiations with the local union representing about 9,500 workers in eastern Tennessee, southern Kentucky and northern Alabama, where Kroger reached a new four-year pact with union workers without a hint of the work stoppages that plagued them in Southern California.
Kroger and union officials are to sit down at the bargaining table again to negotiate a new labor contract covering about 9,000 workers at 74 supermarkets in Cincinnati that expires Oct. 9.
And while a strike or lockout can't be ruled out, both sides agree that it's in their best interest to come to an agreement quickly.
"The interest of both the unionized employer and the unionized employees are at stake in dealing with Wal-Mart,'' said John Marrone, a spokesman for local 1099 representing Cincinnati grocery workers.
Juggernaut bowls over chains
According to Retail Forward, a Columbus-based consulting firm and retail think tank, for every Wal-Mart Supercenter that opens in the next five years, two other supermarkets will close.
Retail Forward estimates that Wal-Mart has already helped push more than two-dozen national supermarket chains into bankruptcy over the past decade.
And Wal-Mart's Supercenter expansion already has forced at least one major supermarket chain in Greater Cincinnati into retreat.
Florida-based Winn-Dixie Stores Inc. said in April it would shut down its 21-store Thriftway chain in Greater Cincinnati at least in part because of Wal-Mart's aggressive expansion plans here.
The competitive threat is so great that the UFCW has taken its own action to stop Wal-Mart's incursion into Greater Cincinnati.
Last year, the union hired local attorney Tim Mara to take a look at Wal-Mart's plans to build supercenters in Deerfield Township and Milford.
"They hired me back in October to take a look at the application and take a look at the sites to see if there was anything there that they could use to defeat the Wal-Mart proposals,'' Mara said. "That was the extent of my work for them.''
The union never followed through with its own campaign to oppose Wal-Mart. Community groups in Deerfield Township, Milford and Harrison subsequently hired Mara to fight the retail giant.
But the union's actions demonstrate that Wal-Mart "has scared all traditional grocers and their employees,'' Marrone said.
"When you have a company that's so powerful, sometimes you have to sit up and take action,'' he said. "You can't just sit there and wonder about your future."