Uberfication of Retail

December 2015

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 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 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.


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