At just about any company up for sale, workers have ample reason to worry about job security and cuts in compensation.
But 25,000-plus Chicago-area Jewel grocery store workers are probably in a best-case scenario if their current owner, Albertson’s Inc., seals a proposed deal to sell its Chicago outlets to Supervalu Inc.
Minnesota-based Supervalu has teamed up with Cerberus Capital Management LP, Kimco Realty Corp. and CVS Corp. to buy Boise, Idaho-based Albertson’s, the nation’s second-largest grocery chain.
CVS would buy Albertson’s stand-alone drugstores, including 74 Osco outlets in the Midwest.
Supervalu would get more than 1,000 grocery stores or combination grocery and drug stores, including 14 Jewel outlets and 188 Jewel/Osco stores in the Chicago area.
Supervalu would likely have little incentive to make major job cuts in the Chicago area because it would be buying Jewel to bolster its slight presence here.
Jewel has a 43.8 percent share of the Chicago-area market with 202 stores, while Dominick’s has a 16.1 percent share, according to the market research firm. Supervalu says its Cub stores have a market share of 5 percent to 6 percent in the Chicago area.
Supervalu’s stores in its largest market, Minneapolis-St. Paul, are unionized, as are Jewel stores in the Chicago area. And Supervalu has decent relations with those unions, avoiding the labor strife that has plagued the grocery industry in recent years.
“They are fair folks to deal with,” said Don Seaquist, head of United Food and Commercial Workers Local 789, which represents about 5,000 St. Paul grocery workers.
Seaquist said a Supervalu purchase of Albertson’s would be the best outcome for Jewel/Osco workers. “You could do a helluva lot worse.”
Rosemont-based Food and Commercial Workers Local 881, which represents more than 25,000 Jewel/Osco workers, has had good relations with Supervalu, said Elizabeth Drea, a union spokeswoman.
But she added, “At this point, until a final bidder is successful, it’s really hard to see exactly what we are facing.”
The grocery industry is the only retail industry with a relatively high level of unionization. Historically, unionized supermarket workers have been more highly compensated than non-union.
A study co-authored by John Budd of the University of Minnesota found that union grocery workers were paid 31.1 percent more in 1983 than non-union workers. However, as unions lost their share of supermarket workers, that premium fell to 3.8 percent by 1998.
Budd, a human resources professor at Minnesota’s Carlson School of Management, hasn’t updated that study in recent years. But he said the trend has likely continued as non-union competitors have grabbed more of the grocery business.
Traditional unionized supermarkets have been under competitive siege from lower-cost non-union rivals, particularly Wal-Mart Stores Inc. They have been under pressure to cut labor costs, particularly health-care benefits for union workers.
Struggling to compete, Albertson’s put itself up for sale three months ago, sparking speculation about a wave of consolidation in the grocery industry. Such waves are rarely worker-friendly.
“On a general level,” Budd said, “when the second-largest grocery chain in the country [Albertson’s] can’t compete with Wal-Mart, workers have got to be nervous.”
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mhughlett@tribune.com
