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.