Safeway Inc. is trying to pry concessions from unions representing about 8,900 employees of its Dominick's Finer Foods chain, resulting in a contract talks stalemate that could end in a strike later this week. The California-based grocer says it needs wage, benefits and work-rule concessions from clerks and cashiers at the Chicago-area grocery chain to control costs and better compete with non-unionized challengers like Michigan-based Meijer Inc. as well as its unionized archrival, Jewel-Osco, owned by Idaho-based Albertson's Inc.
Known as a tough negotiator, Safeway is expected to risk a strike if it can't get what it wants at the bargaining table from the two locals of the United Food and Commercial Workers (UFCW) union that represent workers at Oak Brook-based Dominick's. The contract expires Nov. 9.
"They're going to stand their ground," says Gary Giblen, director of research at New York-based research firm C. L. King & Associates.
Safeway has taken a tough stance in negotiations elsewhere in the country. For instance, last October, it held the line on a contract affecting more than 20,000 Safeway and Alberston's workers in Northern California. The workers, who sought higher wage increases than the companies offered, voted to reject the contract, but by too narrow a margin to authorize a strike.
Dominick's expiring three-year contract was negotiated about a year after Safeway acquired the local grocer from an investor group in November 1998. Talks went down to the wire, and a strike was narrowly averted.
Dominick's Web site indicates that Safeway is looking to control benefits costs, possibly by shifting some costs of health care coverage to employees. In another quest for savings, the company wants to change work rules; one proposal calls for expanding the ability of outside vendors, rather than store employees, to stock shelves.
Safeway argues that its labor costs are higher than its competitors'.
Including wages, benefits and work rules, its hourly labor costs average $2 more than those of Jewel--which last month reached a tentative agreement with its organized workers--and about $5 to $6 more than those of non-union competitors, says David Faustman, Safeway's senior vice-president of labor relations.
"We are at a competitive disadvantage," he says.
Dominick's is the No. 2 grocer in the Chicago area after Melrose Park-based Jewel. With 120 stores, Dominick's controlled about 22.8% of the market last year, down from 25.8% in 2000 and 23.3% in 1999, according to Chain Store Guide, a Florida-based directory. Jewel, with 165 stores, had a 38.7% marketshare last year, compared with 35.5% in 2000 and 42.6% in 1999.