FIRES, STRIKE CONVERGE ON CALIFORNIA FOOD RETAILERS

ELLIOT ZWIEBACH

The double whammy of raging fires and the ongoing clerks strike disrupted supermarket business across Southern California last week.

Fires stretching across the state resulted in evacuations and the temporary lifting of picket lines at some stores, while at other locations, the fires gave some consumers an excuse to cross picket lines for emergency supplies.

As the strike-lockout of 70,000 United Food and Commercial Workers union members at Albertsons, Ralphs and Vons approached its fourth week, local observers told SN that business at the three chains could be down as much as 50%, based on the amount of business that non-struck chains and independents are reporting. (See Page 4 for an update on other supermarket labor disputes.)

In a sampling by SN of business patterns among non-struck companies, Top Valu Markets, a chain of 22 stores in urban areas of Los Angeles, said sales at the 16 locations that compete with the three affected chains have risen 30% to 40%, with increases across all categories; HOWS Markets told SN that average grocery orders at its four stores have gone up 50% in the past three weeks, primarily in groceries; and Major Markets, a two-store independent retailer in the San Diego area, said sales have gone up 60% since the strike started.

Unified Western Grocers, the Los Angeles-based member-owned cooperative, said warehouse shipments for the week of Oct. 20 were up 39% in groceries, 51% in frozens, and 57% in delicatessen. Other companies said volume was on the rise, though they declined to be specific.

Wild Oats, Boulder, Colo., said in a conference call with analysts last week that its sales were "very positive" at the 21 Henry's Marketplace and Wild Oats stores it operates in Southern California, and that it was adding personnel and expanding its product offering to better service the influx of shoppers. Costco Wholesale, Issaquah, Wash., was seeing sales gains of about $20 million per week at the 50 to 60 stores it operates in the area, according to a report issued by George Strachan, an analyst with Goldman Sachs, New York.

Most operators who spoke with SN said post-strike business was holding steady, although Stater Bros. Markets, which is not involved in the labor dispute, said sales have begun returning to normal levels as some consumers are beginning to cross picket lines.

Ellen Anreder, a union spokeswoman, told SN that fire dangers prompted the UFCW to pull union members from a handful of the 859 stores being picketed -- either because police ordered evacuations as fires drew near, or because heavy smoke from the fires posed a potential health hazard to pickets and customers.

Picketers tended not to interfere with customers seeking emergency supplies, she added.

She said morale remains high among union pickets.

Despite the strike, at least two chains initiated efforts last week to provide fire relief. Stater Bros. asked customers to donate money at the checkstands to the American Red Cross, with the understanding that 100% of those funds will be returned to local relief organizations. Ralphs donated $50,000 to the American Red Cross Disaster Relief Fund and $15,000 to various humane groups to assist in animal rescue efforts. Ralphs also donated water and other supplies to firefighters, and pledged future donations to emergency evacuation centers.

It appeared likely last week that the fires would be over long before the strike, which commenced Oct. 11 when employees of Vons, a division of Pleasanton, Calif.-based Safeway, went on strike, followed by a lockout of employees at Kroger Co.'s Ralphs stores and Albertsons. The three chains had been negotiating as a single bargaining unit with seven UFCW locals.

A Kroger company spokesman declined to comment last week on the strike. He said no Ralphs stores were impacted by the fires.

Sandra Calderon, a spokeswoman for Vons, told SN the chain had to close five stores for a few hours Oct. 26 as a safety precaution against possible smoke danger from the fires, but all were back in operation within a few hours. A sixth store shut down Monday, and remained closed at mid-week.

As for the strike, Calderon said Vons has seen "some increase in our overall customer counts," though she said she wasn't sure if that was due to the fires or a loss of consumer interest in the strike. "But the increase has been consistent, with a good flow on weekends," she said.

Stacia Levenfeld, an Albertsons spokeswoman, declined to comment on reports that the union had temporarily pulled pickets off some of its stores in the wake of fire threats, giving some consumers an opportunity to enter without crossing picket lines.

Regarding the fires, Levenfeld said Albertsons had to close four stores briefly last week, with one unit still closed at mid-week.

Stater Bros. had to close two stores early last week following mandatory evacuations in Big Bear and Lake Arrowhead, Jack Brown, chairman, president and CEO, told SN, while he said another store near San Diego, was closed for a few hours one day last week.

Brown said the chain is posting a $50,000 reward -- on top of a similar amount offered by the San Bernardino sheriff's office -- for the arrest and conviction of the individuals suspected of starting one of the fires in that area. "We believe half the folks who live in the Waterman Canyon area [site of one of the fires] are our customers, and this is the right thing to do," Brown told SN.

Regarding the strike, Brown said about one-third of Stater's 157 stores are unaffected; one-third have had small volume increases; and the other third have had more significant increases. He declined to indicate how much business his stores were picking up.

However, he said the jump in sales started falling off last week. "With the fires, the bus strike in Los Angeles, and everything else that's going on, people are deciding they need to buy what they need at the most convenient market, and they're starting to cross the picket lines," he said.

PICKING UP CUSTOMERS WHO HONOR PICKETS

Companies not involved in the strike-lockout that reported increased business included the following:

UNIFIED WESTERN GROCERS, Los Angeles, the major wholesaler in the region, which said "shipments are up significantly." It has added staff at the warehouse, which is operating around the clock.

HOWS MARKETS, Pasadena, Calif., which said order sizes have grown "dramatically -- up 50%" since the strike began." According to Mark Oerum, a partner in the four-store operation, "We've always sold a lot of perishables, while groceries have been weak. But sales of canned goods and staples have increased quite a bit since the strike began because non-struck stores have been so crowded that people don't want to shop as often." He said there's been no falloff yet in sales.

TOP VALU MARKETS, Carson, Calif., which has had sales increases of 30% to 40% at 16 of its 22 stores that compete with the three affected chains. Darioush Khaledi, chairman and CEO of Top Valu, said business has remained strong during the last few days of the month, when sales usually drop off among his primarily less-affluent customers. "I think the longer the strike lasts, the more of that business we can keep."

BRISTOL FARMS, Carson, Calif., which said it has maintained the same level of sales increases since the strike started. "Before the strike, we thought we'd benefit by about 30%, but it's been significantly greater than that," Kevin Davis, president and CEO, told SN.

GELSON'S MARKETS, Encino, Calif., which said business has increased since the strike began, though a spokeswoman declined to pinpoint the amount.

TRADER JOE MARKETS, South Pasadena, Calif., which said "dramatic" volume increases have held since the strike began. "We've seen a lot of new faces, and we're trying to give them the best grocery experience we can," spokeswoman Pat St. John told SN.

MAJOR MARKET, a two-store operation based in Fallbrook, Calif., near San Diego, which said sales are up close to 60%, with increase in all categories. Dick London, owner, said business on a week-to-week basis has held steady since the strike began.

SMART & FINAL, Los Angeles, the non-membership warehouse store, which said its business has picked up since the strike began. "The stores are being overrun with new customers who are willing to accept larger sizes and a more limited selection," Ross Roeder, chairman and CEO, told SN.

THE MEXICAN AMERICAN GROCERS ASSOCIATION, representing a variety of independent operators, which said many members have reported they are doubling their business.