A given number of Californians with a given amount of income will spend a given amount on groceries — and with 38 million residents, the state’s grocery business is not only huge, over $100 billion a year, but hugely competitive.
Traditional supermarket chains — Safeway, Raley’s, Albertsons, Save Mart, Ralphs, etc. — compete fiercely, and their profit margins are notoriously thin, averaging under 2 percent. But margins have been stretched even thinner by a sluggish economy and powerful new competitors.
Many drugstore chains, such as Walgreens, CVS and Rite Aid, have expanded grocery sections, and big-box retailers such as Target and, most importantly, behemoth Wal-Mart, have moved into groceries in a big way with “superstores.” The traditional chains are unionized, but the new competitors are mostly not, which means their labor costs are markedly lower. And the chains have reacted by pressuring their unions, particularly the United Food and Commercial Workers International Union, for concessions on wages and fringe benefits such as health insurance.
That pressure resulted in a major grocery store strike in Southern California a decade ago and lesser clashes since, including a strike at Raley’s last year.
The union and its allies have also waged a political war against Wal-Mart’s expansion, both locally through city councils and in the Capitol, beginning with a bill aimed at blocking additional superstores that was rammed through the Legislature in the dying hours of the 1999 session.
The union coalition thought it had then-Gov. Gray Davis’ backing, but Democrat Davis vetoed the bill after criticism erupted over its secretive process.
Periodically since, unions have sought legislation that would require an “economic impact analysis” of a proposed Wal-Mart superstore while exempting other big-box retailers, thus giving its foes more legal ammunition. Davis’ successor, Republican Arnold Schwarzenegger, vetoed two bills, and his successor, Democrat Jerry Brown, rejected another two years ago, saying, “plenty of laws are already on the books” and describing it as “an already cumbersome process.” Undeterred, the grocery workers union is back this year with Assembly Bill 667, carried by Assemblyman Roger Hernández, D-West Covina.
AB 667 cleared the Assembly Local Government Committee this week by a 5-4 vote — just a day after the California Grocers Association, which opposes the bill, staged its annual visit to Sacramento.
Interestingly, one Democrat, San Rafael’s Marc Levine, voted against the bill, saying, “I’m with the governor on this one.” Business groups supported his successful campaign to unseat a union-backed incumbent last year. AB 667 appears headed to Brown’s desk, so we’ll learn whether he still believes what he said two years ago.
Dan Walters is a columnist for the Sacramento Bee.