The Chicago Tribune reports that while there seems to have been some resolution of the battle between Safeway's Dominick's division and the United Food and Commercial Workers (UFCW) union, there really have been no winners.
At this point, the union has gotten the terms of its expired contract reinstated.
Safeway has agreed to put Dominick's on the market.
But who has really won?
Safeway isn’t likely to make back the $1.8 billion it spent on Dominick's four years ago, so it is a loser.
Dominick's has had its value and market share driven down over the past four years, so it is a loser.
Consumers have lost a retail entity that used to have a distinct and differentiated presence in the marketplace, so they are losers.
And the union could close its presence at Dominick's if Safeway sells the division to a company that won’t make a deal with the UFCW, which it can apparently do after 60 days, so the union could be a loser.
Maybe nobody got fired and no stores got closed, but the opportunity for progress may have been lost.
At this point, the union has gotten the terms of its expired contract reinstated.
Safeway has agreed to put Dominick's on the market.
But who has really won?
Safeway isn’t likely to make back the $1.8 billion it spent on Dominick's four years ago, so it is a loser.
Dominick's has had its value and market share driven down over the past four years, so it is a loser.
Consumers have lost a retail entity that used to have a distinct and differentiated presence in the marketplace, so they are losers.
And the union could close its presence at Dominick's if Safeway sells the division to a company that won’t make a deal with the UFCW, which it can apparently do after 60 days, so the union could be a loser.
Maybe nobody got fired and no stores got closed, but the opportunity for progress may have been lost.
- KC's View:
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We got a great email on this subject, which we'll post here because it seems relevant to the discussion at hand. MNB user Don Sutton wrote:
"Okay, let's see how bright Safeway management really is.
"They know what Dominick's was doing to garner the business that made it 1.8 billion dollars worth of attractive in the first place. The direction and the vision weren't big secrets. They also know that a lot of union stores in the area are making a lot of money. It can be done.
"The first question is: "Are they as smart as their competitors?"
"It doesn't take a rocket scientist to see the most obvious solution. Bring in a new division head (from outside the Safeway operation), preferably from a similar upscale operation, who won't be starting out on everybody's "guano" list.
"The most important facet of this plan, of course, is to put the guy in place and then get out of his way and leave him alone. KEEP his division separate. After all, if the current management team had the expertise to tell this guy what to do (other than make money) they wouldn't be in trouble in the first place. This plan would also give the guy some credibility with the unions, which would make am partnership to put the company back on solid ground something more than a pipe dream.
"This is not genius stuff. In fact, of all the various stores and chains changing hands this year, this is probably the easiest group to salvage."
This is a very good idea…if Safeway isn’t able to sell the company for what it seems an appropriate price. Keep it, and find someone to run it who won't walk in with sacred cows and prejudices.
(It could be someone from Gap, or Nordstrom…the mind boggles at the possibilities.)
The question is, who would be the right kind of person to run Dominick's in 2003? Or specifically, who is the right person?
And why?
