The Raley’s Strike and Beyond

In 1914, Henry Ford paid its workers an unheard of salary of $5.oo dollars  a day.    At the time the average wage was less than $2.50. per day.   The reasoning behind the  high wages so that the workers could afford the car they were building.       In  China, most of the workers can’t afford most of the good they build for American, British and Japanese companies.

For the first time in its 77 year history, Raley’s is on strike.      Raley’s headquartered  in West Sacramento has 130 stores in Northern California and Nevada.  Raley’s Inc. (80 Raley’s supermarkets,22 Nob Hill Food Stores, 20 Bel Air Markets, 8 Food Source Stores)     Last week and estimated  5000 Raley’s, and Nob Hill  Food workers walked off the Job.

Raley’s is considered one of the best supermarkets  in America by the non profit Consumer Report magazine. The issue is wages. benefits and premium pay on Sundays and holidays    A proposal to make changes in the workers’ health plan –premium pay  and eliminating coverage for Medicare-eligible retirees – became a huge sticking points.

The Wal Mart Effect

Raley’s says its losing money, some in the industry says as many a third  of its store are under performing     This isn’t limited to Raley’s other large traditional supermarkets are losing money in Sacramento and other parts of the country.        In the last 6 years Wal Mart opened several Wal Mart Super centers in the Sacramento Area,  in the last three years Wal Mart began  adding fresh food to their standard stores   The nations #3 retailer Target began adding fresh food to  to many of their existing stores in the Sacramento.  Last September, Wal Mart opened  five  Neighborhood Markets in Sacramento, unlike traditional Wal Mart stores, Wal Mart rent space in existing building.  Wal Mart plans to open 500 Neighborhood Market stores nationally by 2016.

Unlike Raley’s, Save Mart and Safeway, Wal Mart and Target are non-union stores.   Wages at these stores are considerably lower than Raley’s as are the benefit packages  The  average wage at a Sacramento area  Walmart food market is $23,000  which is less than what an entry level bagging clerk earns at Raley’s or Safeway.     Walmart employees, unlike their Save Mart counterparts have fewer medical options on’s are very limited and often requires extraordinarily high deductibles and or  co-pays .  Conversely, due to the lower earnings few  Wal Mart employees can purchase homes,due to high deductibles  are more likely to visit area  emergency rooms.

Risks for Both Sides

Raley’s is Sacramento’s store.  Many loyal customers won’t cross the picket line.   A long strike could mean the store loses permanently  loses customers.    The timing for the strike couldn’t be worse.  The holiday season is generally the most profitable season for grocers . Some industry experts believe the strike is costing Raley’s nearly 3 million dollars a day.

Beyond the Strike-Writing on the Wall

After both sides kiss and make up Raley’s will close stores in the Sacramento Area, as will Save Mart, and Safeway in next year and beyond.   Nearly every grocer within three miles radius  of a Wal Mart store has seen a significant drop in sales.    The industry will have to reinvent itself in this Wal-Mart/Discount Store era.   Safeway(the nations #10 retailer) has begun to make changes, Raley’s is the smallest of the three will need to make major changes  to stay competitive.   New Stores will be smaller in the urban markets.  With other retailers entering the market notably Great Britain’s  Tesco (one of the largest retailers  in the world ) entering the Sacramento market with its Fresh and Easy stores, the large chains will need creativity and nimbleness to be competitive.




Published by CityFella

Moved to the Big Tomata in the nineties from San Francisco. No Suburbs for me with its single colored houses and lawns and the excitement of pulling out my trash can once a week. I'm a CityFella , a part time New Yorker. I'm happiest in the Center City where people the streets and people are alive. I'm still waiting to buy a 34th floor condo somewhere downtown/Midtown with a nightclub. "Hurry I'm old" My politics are somewhere in the middle with a needle that constantly moves. I'm too liberal to be a Republican and too conservative to be a Democrat. Everything interests me . I've come to love Sacratomato, Its a nice town in cheap sensible shoes .

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