By: Bruce W. Both, President
2015 presented many challenges to our union. The A&P bankruptcy
obviously overshadows them. The bankruptcy comes at a time where the
traditional grocery store’s future is very much in doubt.
Companies are now merging in order to compete in the enormously
difficult business, which is dominated by competition from Walmart, CVS
and drugstores, and specialty stores like Whole Foods and Trader Joes.
Earlier this year Ahold (Stop & Shop, Giant, Martin’s) announced a
completed merger agreement with Delhaize (Hannaford, Food Lion), a
direct competitor. According to
Supermarket News, the merger,
valued at $29 billion, would result in some 2,000 U.S. stores and 6,500
stores worldwide, with sales of more than $44 billion and 375,000
employees.
Last year, Safeway and supermarket chain Albertsons merged creating a
network of 2,230 stores, 27 distribution facilities and 19
manufacturing plants with over 250,000 employees across 34 states and
the District of Columbia.
Earlier in November, another major merger was announced between
Roundy’s and Kroger. Together Kroger and Roundy's will operate 2,774
supermarkets and employ over 422,000 associates across 35 states and the
District of Columbia. Following the closing, Roundy's will continue to
operate its stores as a subsidiary of The Kroger Co. and will continue
to be led by key members of Roundy's senior management team. The company
announced there are no plans to close stores, and promised “associates
will have employment opportunities with both companies”.
That’s
three new super chains, employing over 1 million people. I’ll repeat
that, three supermarket chains that employ over 1 million Americans.
That’s where our industry has gone.
This is the first reality of our industry: Mergers. Mergers
between traditional supermarkets create more buying power and more
ability to compete against the Whole Foods and Walmarts of the world.
However, mergers focus more on stock prices rather than the affect they
will have on the men and women who make these companies successful.
Consolidation of costs follows mergers, which leads to cutting labor and
closing unnecessary stores, which ultimately leads to the loss of jobs. The
Washington Post wrote about this recently,
The supermarket, which rose up in the 1930s and had its heyday in the
1980s and 1990s, has long relied on its convenience and size for its
popularity. It’s been the place where you can find 10 different types of
pasta or five different brands of peanut butter. You’ll find that peanut butter in the aisle, not because of its
popularity, but because the company usually has paid the supermarket to
put it there.
According to the Washington Post, stores like
Whole Foods and Trader Joe’s work on a different model: relentlessly
present only what you think the customer wants. Trader Joe’s, for
instance, is especially brutal in its decisions about what to put on its
shelf space. If the product doesn’t sell well enough, it’s rotated out
for something else.
This competitive model has contributed to a
major loss in market share. Over the past decade, supermarkets have lost
about 15 percent of their market share to other retailers, according to
Phil Lempert, an editor at
Supermarket News. Drug stores like
CVS & Rite-Aid pop up on every block throughout our neighborhoods.
Walmart & Target have opened stores with fresh produce and dry
goods, while CVS has stocked its aisles with eggs and ice cream. The
continued expansion of Wal-Mart, which has more than one-third of the
national grocery market, continues to threaten traditional supermarkets.
Shopping habits have changed the playing field, and it’s time we wake
up to this. We all know this, the stores we grew up in,
must evolve.
The competition is fierce, and we haven’t even gotten to worst of it.
The second reality is technology. Companies like Fresh Direct, and
AmazonFresh, and startups like, Blue Apron, or InstaCart are now
revolutionizing our entire industry. I know many of you reading this
right now either know someone who has worked or is working for one of
these companies. On-demand shopping habits through the digital age have
molded our society’s workforce into on-demand workers.
Two-income families are prevalent across America, therefore there
aren't as many stay at home parents shopping during the day. This leads
to busy families who are hurrying after work to the store so they can
easily throw together a meal. During the week, people don't want to
wander through aisles of endless pantry items; they increasingly want
prepared foods and other quick options.
The success of Uber is made off the backs of the thousands of
on-demand workers throughout the world. We must react before our
industry becomes ‘on-demand’ and loses the benefits, rights and
securities we’ve earned.
Start-ups like Instacart and companies like AmazonFresh are
revolutionizing the way grocery shopping is done. Customer habits have
changed, and shopping through your smartphone or computer is the new
norm.
Technology is creating an at-will contracted workforce. The problem
when everyone is an independent contractor is there is no unity, no
partnership. It’s impossible to attain any benefits, security,
steadiness in pay and most of all scheduling. How can we expect to
support our families in this Uberfication of the grocery industry?
We can’t. That’s why we can never stop fighting for the better life that all Americans have earned with their hard work.
The greatness of America is evident when hard work is rewarded, and
every family has the opportunity to succeed and earn a better life. No
one who works hard should live in poverty, or struggle to pay the bills,
or worry about the future.
We must make sure that companies are not taking advantage of their
employees, because without their employees, they are nothing. We look
forward to facing these challenges together in 2016.
Happy Holidays and a Happy New Year to you and your loved ones.
In 1999 Bruce was elected as Secretary-Treasurer, and in 2004 Bruce was elected President of UFCW Local 1500. In January 2007, Bruce was elected International Vice President of the UFCW. Throughout his 10 years of leadership, Bruce successfully secured the future of our union by increasing our welfare fund significantly.
