Stop & Shop Strike May Cut Sales Long-Term

Editor’s note: This article has been updated with information from Stop & Shop on health care deductibles offered to employees by the company.

WARWICK —Last week, United Food and Commercial Workers Local 1445 President Jeff Bollen asked customers to stop shopping at Stop & Shop during their 31,000 employee-strike in MA, CT, and RI, but many who heeded him may not come back.

The strike is over changes in pension benefits and health care.

By Wednesday, six days into the strike, retailing industry expert Burt Flickinger had dubbed it the most effective in decades. Customers were honoring picket lines, he said, and were refusing to shop at the stores, leaving the buildings and their parking lots empty. At Stop &Shop’s stores in Warwick and Cranston, that success was evident in the lack of commerce and deserted lots.

“It was some of the most effective striking that we’ve seen in 30 years,” Flickinger said.

The strike will have a big impact on Stop & Shop sales as a result, he said.

Flickinger said a similar dispute between the UFCW and Safeway, owner of the Vons supermarket chain, which also involved CA grocery chains Albertsons and Ralphs (owned by Kroger), with a total of 700,000 employees striking, occurred in 2004.

Vons, a chain similar in size and scope to Stop & Shop, lost a significant portion of their sales to competitors like Costco during the strike, damage that lasted 10 years.

Vons lost a reported $2 million per day across the Safeway-Vons’s 296 strike affected stores during the 20-week strike, Flickinger said.

“They never completely got that value back,” Flickinger said.

Stop & Shop has 253 strike-affected stores; which do approximately the same sales in total as the 296 Safeway-Vons stores did in Southern California, he said.

If the strike ends soon, before the Holy Week holidays begin, Flickinger said, Stop & Shop may only lose about three percent of its 2019 sales to the strike, and stands to lose four percent of operating profits.

“Which will never be recovered,” Flickinger said.

If the strike lasts through Holy Week, the grocery chain could lose 20 percent of its sales, he said.

Pension Benefits

Richard Miller, steward for Local UFCW 328, among the workers striking at Warwick’s Warwick Avenue Stop & Shop Tuesday, says the company is seeking to end pensions for employees hired after 2016.

When asked whether this claim is accurate, Stop & Shop’s corporate office replied that pension benefits employees have already earned would not be cut. The company did not address whether it is proposing to stop offering pensions for new employees.

Health Benefits

Miller also said employee Health insurance deductibles will rise to $9,000 to $12,000 under Stop & Shop’s plan, he said, an unreasonable burden on employees.

Stop & Shop’s communications office also failed to respond when asked if this claim was accurate, instead talking about health care premiums in their offer to employees. However, in an April 16 strike update on Stop & Shop’s website, Stop & Shop President Mark McGowan said deductibles would not increase or change, and have been $200-$300 since 2007.

“Stop & Shop would pay at least 92 percent of premiums for family coverage and at least 88 percent for individual coverage. Other large retail companies pay, on average, only 72 percent of family premiums and 80 percent of individual premiums,” the company said in a statement in reply to an emailed question seeking to confirm Miller’s claim.

Synergistic value in pension benefits

Flickinger said the pension benefits, while a significant expense, are a valuable asset for the company and the employees alike. While the pension is scarce among most other grocery chains, as well as among private employers across most industries, the security it provides employees is buoyed by its value in keeping skilled, dedicated workers working for the company over the long haul.

“Stop & Shop has some of the most productive store members and teams,” in the supermarket industry, Flickinger said. The company’s pension makes it easier to keep those effective employees working for them, he said.

But, Flickinger said, the company has shouldered additional pension burdens as it has acquired smaller and less successful grocery chains, often with acquisition deals that require them to honor the existing chains’ pension plans. That has likely made funding pensions more costly for the company overall, he said.

Flickinger said it’s a shame the union and grocery chain haven’t been able to come to terms more quickly, especially since the parties have kept serious labor disputes, and the weakness that allows competitors to exploit, at bay for the past 50 years.