MARTIN SLOANE | Supermarket Shopper California supermarket war continues raging

A supermarket drama is now playing out in California -- a battle between the three largest chains and their unionized workers. At issue is the demand by supermarket bosses that employees help pay for rising health care costs. But beneath the surface, it's the beginning of a war to save the supermarket industry, a war that will eventually affect every supermarket shopper.
Consumers in Central and Southern California are facing a dilemma. On Oct. 11, United Food and Commercial Workers Union members went on strike against the Vons and Pavilions chains, both owned by Safeway, Inc. A day later, competitors Albertsons and Ralphs locked out the union's members as part of a mutual negotiating strategy. Soon after, some of the 859 affected stores closed. Most, however, remain open on a reduced-hours schedule and with newly hired non-union workers. Union pickets in front of the stores discourage shoppers from entering, and picketers direct them to smaller chains and independent grocers.
Here's why
After 25 years of supermarket labor peace, why is there now a problem in California? It's really about Wal-Mart. The supermarket industry has finally realized it can no longer do business as usual. The huge price gap between its prices and Wal-Mart's is luring customers away from supermarkets. It's no coincidence that California is where the supermarkets are making a stand. Wal-Mart has been their nightmare ever since it announced plans to sweep into Southern California with 40 huge grocery and general merchandise superstores.
Wal-Mart's prices are lower than supermarket competitors, because the mega-chain runs a very efficient operation and, because of its huge size, often obtains better prices from suppliers. One of Wal-Mart's biggest advantages: employees are non-union, so it can pay lower wages and offer a health-care plan that is expensive and unattractive. The cost for Wal-Mart employees ranges from $114 to $236 for each two-week pay period, with deductibles up to $1,000, and no health care for retirees. Two-thirds of Wal-Mart's employees, more than 700,000 of them, decline coverage.
When union contracts expired in California, supermarkets reviewed operating costs and calculated that health-care benefits were their fastest-rising expense. In California, supermarkets paid the total cost of these benefits, despite a 50 percent increase over the last four years (which may soar higher in the future). Supermarket officials say they can't afford the entire burden. They are asking union members to contribute $5 a week for individuals and $15 a week for family participation in their health-care plans. "We're asking for very small, modest sharing of costs on the part of our employees and we're not asking for anything unusual," said Michael Dowling, a spokesperson for Safeway. The unions are adamant in their rejection: "They would be cutting our benefits in half," said Rick Icaza, president of one of the food worker locals.
Is this really about the survival of supermarket chains? Not only am I convinced that it is, I know that my readers will be affected by the outcome.
Competition needed
Just a few years ago, Wal-Mart wasn't even a top 10 grocery retailer. Today, it is, by far, the largest grocer in America. If the nation's supermarkets do not become more competitive, most existing chains will be out of business within 10 years, or consolidated into just a handful of national supermarket chains still struggling to compete with the colossus from Bentonville, Ark. I know that most shoppers will go to the store with the lowest prices, so gone will be the local grocer and the chains that served their local markets for generations. And what happens when this competition is gone? You and I will pay higher prices for our groceries!
The solution is not just curbing heath-care costs, but it's a start. This places the union and its members on the spot. Hopefully, they will see the need to adapt to changing times and economic conditions. Workers in other industries have done it. They can, too. Unions should realize that if they win this health-care battle, they may ultimately lose the war. If their stores go under, they may wind up working for Wal-Mart for lower wages and a health-care plan they can't afford. And, since they also have to eat, they will suffer with higher food costs, the same as we will.
United Features Syndicate