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    Published on: October 2, 2003

    In Major League Baseball Divisional Playoff action…

    Florida Marlins 9
    San Francisco Giants 5
    (Best-of-five series now tied 1-1)

    Chicago Cubs 3
    Atlanta Braves 5
    (Best-of-five series now tied 1-1)

    Boston Red Sox 4
    Oakland Athletics 5
    (Oakland now leads best-of-five series 1-0)
    KC's View:

    Published on: October 2, 2003

    Not surprisingly, we got a lot of emails about our essay yesterday regarding Wal-Mart's position on health care.

    One MNB user wrote:

    Wal-Mart is not the only company trying to not pay for healthcare for its employees.

    Safeway has been taking great strides to systematically cut the benefits that it offers their employees too. They are cutting the amount of hours that employees receive so they too, will be unable to qualify for healthcare. They are also negotiating contracts where employees have to pay a portion of their own healthcare and with the take home salary being reduced and many now not qualifying for it, they are turning into Wal-Mart!

    Bottom line: It is utter hypocrisy for retailers to say things like "our people are our best asset" (variations of which we hear all the time from senior executives) and not provide store-level workers with the basic kinds of coverage that people need to survive, especially if they have spouses and children to care for.

    That said, we understand why companies feel the need to emulate Wal-Mart in this regard. It's just depressing.

    MNB user Steve Kessenich wrote:

    THANK YOU! It's about time you guys took Wal-Mart off that huge pedestal you have them on. When one digs below the surface a bit, and into some of the real issues, maybe this retail behemoth has a few things to learn about how to treat its people.

    One MNB user wrote:

    I applaud you for your 'Right On' comments about Wal-Mart healthcare policies. Americans need to wake up to the reality that we need to act in the 'common good', not the good for this or that group. Factionalism will be the downfall of us all, our strength is in our collective well being.

    Another MNB user wrote:

    No worries. What goes around, comes around.

    Not everyone agreed, as one MNB user wrote:

    Insurance, by its nature, is protection against expenses that would be difficult or impossible to meet with normal cash flow. It doesn't make sense to buy insurance that pays for expenses that you could cover yourself - even with a stretch. I'm not defending Wal-Mart, but health full coverage of all the things you mentioned would be very expensive, especially with a small deductible. You yourself admitted that. When you were not covered by a company plan, did you buy full, low deductible coverage?

    I do believe, however, it is in the best interest of sponsors, insurance companies and employees to structure health insurance plans to cover preventative health care (vaccinations, flu shots) and to provide some kind of coverage with an employee co-pay for pharmaceuticals (which, as we know, can break a budget). Is $1000 deductible unreasonable? I don't think so, especially in light of Wal-Mart's policy of 100% coverage with no ceiling for catastrophic coverage. Only recently have I seen companies cover chiropractic care, and usually the premium increases accordingly. Also, I don't know of many companies that pay for full health insurance for retirees--It might be a good idea to do a survey of the food industry to find our who does.

    We said in our commentary that Wal-Mart seemed to be guilty of a kind of hypocrisy, proclaiming to be pro-family and then treating employees the way it does. If that was hypocritical, MNB user Richard Lowe wrote:

    (So) was the 'buy American' theme that they had!

    Or should we just keep out all imports and keep our employment strong. What's good for the goose is good for the gander! Where do we draw the line? There was a big article this weekend in our paper how Indiana is using $30 million in Federal money to improve their computers and software for unemployment compensation and dealing with a software company that employs Indian from India programmers. Do we always use cost as the determining factor????? If so when is that our demise? How do we change our thinking?

    Perhaps by not always thinking with our wallets, sacrilegious as that may seem.

    Another MNB user weighed in:

    Except for the waiting period and exclusion of pre-existing conditions, that's the kind of insurance I had with a Fortune 50 food company where I worked for 25 years. Well visits including routine immunizations didn't even apply towards the annual deductible. And of course their secret "customary and reasonable" criteria often resulted in further coverage shortfalls. An out-patient hernia operation cost me over $1,000 out of pocket. Of course the big wigs were provided supplemental medical expense payments (and it wasn't Aflac) that covered probably 110% of their medical costs including eyeglasses. No customary and reasonable issues for those guys. Only when I left and was covered on my wife's "teachers' insurance did I experience the world of modest office visit co-pays and prescription drug coverage. We people with spouses in public service (teachers etc.) generally enjoy medical coverage better than average. The only thing I ever agreed with Hillary Clinton on is the need for and value of a national medical insurance program.

    And more…

    This was a topic of conversation amongst my husband and his fellow workers yesterday. They are all golf professionals, working for a company that sounds a bit like your dissertation on WM today. The point they made, is that although many of them started with the company because it is "family oriented and family supportive", their behaviors reflect differently. A few are staying in their jobs, only for the medical, for even though it is "catastrophic" as you describe it, without having another job to go to that will share part or in full the $800+ a month premium it is for medical insurance for their family. What it suggests is that there are likely many unhappy workers in America that are only staying in their jobs with a less than preferred employer because of medical insurance. That's a sad statement on our society, and even more sad on the statement of 'our' employers.

    Yet another MNB user had a different take:

    I read the same article in the WSJ. I guess this is what makes life interesting. Your take on it was that it was awful coverage. My take on it was that this is coverage that makes the most sense. For any type of insurance (home, car, health), it's the whammer that will get you, not the day-to-day little things. Question: For your home and your car, do you have a low deductible w/an accompanying high rate or do you have a high deductible w/an accompanying low rate? Only the latter makes financial sense in that, over the years, the low rate will more than make up for any high deductible paid on an occasional claim. Why should health insurance be any different? Pay the day-to-day small fees w/the knowledge that you are protected from a ruinous catastrophe. Insurance of any type was never meant to pay all coverage of all problems; insurance is just that---for a fee, you are insured against great financial harm.

    We're surprised that anyone would consider the cost of a child's checkup to be a "small fee."

    And yet more disagreement:

    I'm glad you attribute many of the statements in your "editorial" to their WSJ source. However they are still taken out of context I believe.

    "Wal-Mart is known for keeping the hours down on part-time workers so that they don't qualify for benefit.

    They are known to whom and based on what source?

    Wal-Mart uses work hours as needed at a particular store. If the store, based on past sales data, does not need, for example, 40 hours a week for all employees there, the store will have to operate on less hours. No one is guaranteed any certain number of hours a week upon being hired. This is what is overlooked by most all newly hired associates. Then they go bitch about not getting 40 hours work....or bitch about having to work overtime during the busiest season of the year.

    The "facts", as you put it, are just the views of the writers of the story; not necessarily totally true and accurate facts. This should be kept foremost in mind when reading or listening to any journalist publication or broadcast. This is not "news" where you are reading or hearing a report on what is happening at that moment.

    "Catastrophic health care coverage" does not show compassion for what can destroy a family in more ways than just the illness? Have a heart Kevin; I rather have this type coverage for my family than any of the others not covered. I can find a way to buy birth control, glasses, hearing aids, etc., etc., etc.

    But can you afford to pay for cancer coverage on a six-year old as I was able to thru my coverage if you didn't have it? I never saw all the bills but I can imagine how large the total was.

    "The fact that Wal-Mart - the biggest, most profitable retailer in the world, and a company that trumpets its commitment to family values - takes this approach to covering its employees' health care costs seems unconscionable."

    No more unconscionable than giving the store away as did many of the earlier retail giants. And not the handouts the unions are always looking for.

    Note: we've been told by Wal-Mart employees that they've been told that their hours have been kept down because of the benefits issue.

    Yet another MNB user wrote:

    I think you are suffering from a little cognitive dissonance when it comes to the subject of Wal-Mart. (semi-full disclosure: I worked for Wal-Mart briefly in the 70's and continue to hold the stock). In today‚s article you rail about the high costs of prescription drugs here vs. Canada, yet you bemoan a grocery price war in Ohio. You refer to Wal-Marts "Darth Vader view of retail expansion" and also have an article where Penney's notes one of their problems with Eckerd‚s is not building enough stores allowing their competitors to gain an advantage.

    One of your recurring themes is the loss of jobs in the current economic climate yet you are critical of Wal-Marts health insurance policies for its employees. I agree the criticism is fair but personally I haven't created any new jobs for anyone, how about MorningNewsBeat? Are you hiring? At least Wal-Mart is.

    I have a lot of cognitive dissonance my self about Wal-Mart. I love the stock. I hate to shop there. I much prefer Target and HEB but for someone as passionate as you are about retailers differentiating themselves I'd hope you'd consider that as recently as 1970 Wal-Mart only had eighteen stores TOTAL in the entire world and they grew by giving the buying public what they wanted - low prices, convenient hours, a broad selection. In other words they DIFFERENTIATED themselves from the giant world dominating retailers of that era - Sears and Kmart and the high priced, poorly staffed, limited selection, and always closed when you really needed to buy something, with never a parking place available, independent "downtown businesses" that every one mists up over in dewy eyed reminiscences of a retail paradise that only existed in their memories.

    Kevin, the fact that a lot of people don't seem to want to acknowledge is that Wal-Mart never put anyone out of business. Customers exercising their free will compared local independent businesses to Wal-Mart and voted with their dollars and their feet for Wal-Mart, emphatically. Now I agree that a lot of these Wal-Mart customers would prefer the vastly superior shopping experiences provided by Stew Leonard‚s, Fresh Direct, HEB Central Market or the local "downtown" hardware store run by the grey haired guy with a pony tail and Birkenstocks but THEY CAN"T AFFORD IT. Wal-Mart meets their needs and has deservedly been successful no matter how much that offends some elitist sensibilities (present company excluded of course).

    Wal-mart is not perfect and deserves scrutiny as any large company does. From what I've seen they are going to get nailed and deservedly so in this wage discrimination suit. But let‚s face the objective reality. They earned their success by lowering consumer‚s costs period, and the prescription drug cost crisis would probably be alleviated if the drug companies were run more like Wal-Mart is.

    On the general subject of competing with Wal-Mart, one MNB user wrote:

    A long time ago, early in my career, someone told me that the best thing a company can have is a strong competitor because they force you to be better. Without that, you will naturally not push as hard to get better. Wal-Mart to me seems to be able to adapt by continuing to enter new markets within the four walls of their stores. Maybe they've figured out how to continually find and then challenge their strong competitors no matter what the market is.

    True…though it always seems more like a fair fight when the playing field is even.

    We ended our commentary on the Wal-Mart healthcare situation by writing, “It's all a crock. And it makes us despair about the future.”

    This depressed MNB user Marv Imus:

    You need another cup ( or pot ) of coffee or at least some down time after your travels … you’re bringing me down and I have enough to do that WITHOUT your input!

    Better yet … get that wine you have been saving for that “special” moment …

    Suggestion noted.
    KC's View:

    Published on: October 2, 2003

    MNB user Greg Miller was kind enough to file the following report:

      Attended the Grand Opening of Krispy Kreme UK last night. Hot KKs of all kinds and free-flowing Champagne at a packed Harrods reception to celebrate the occasion. Even had a chance to say hi to Dick Clark (what a tan he has!) who was in attendance!

      Party favors (favours) were two boxes of doughnuts - so I didn't sleep too well last night. I can confirm that Krispy Kreme translates across the Atlantic quite nicely. Oh, what a night.
    KC's View:
    Can't imagine why we didn't get an invitation…

    Ah, well…Krispy Kremes and champagne. We can only imagine.

    Published on: October 2, 2003

    • Family Dollar Stores posted fourth-quarter net income of $47.7 million for the period ended Aug. 30, compared with $41.9 million during the same period a year earlier.

      Quarterly sales were $1.21 billion, up 14 percent from a year ago.

      The retailer operates more than 5,000 stores, and plans to open another 565 in the current fiscal year.

    KC's View:

    Published on: October 2, 2003

    • Dollar Tree Stores Inc. announced that it has promoted President and COO Bob Sasser to the role of CEO, effective January 1. He retains the title of president.

      Current CEO Macon Brock remains chairman of the board.

    KC's View:

    Published on: October 2, 2003

    • French retailer Carrefour yesterday opened its fifth hypermarket in Japan, and plans to open another two stores later this month including one developed jointly with Costco.

    • McDonald's Corp. reportedly is reconsidering its plan to sell off its Donatos Pizzeria, Chipotle Mexican Grill and Boston Market chains. Now, the company reportedly is thinking about spinning them off into a new business entity, in which it would keep an equity stake.

    • Shaw’s Supermarkets will acquire eight of the nine stores operated by Butson’s, Woodsville, N.H., from GU Markets, an affiliate of C&S Wholesale Grocers.

      C&S got Butson’s last month in an asset swap with Supervalu, which bought the company seven years ago. C&S reportedly plans to continue operating the sole remaining Butson's in Greenville, NY.

    KC's View:

    Published on: October 2, 2003

    In recognition of excellence in training initiatives, the Food Marketing Institute (FMI) presented the 2003 Maximizing People Potential Award to Hy-Vee, Inc., for the company's distinctive learning programs. The award is presented annually to a retailer or wholesaler that has developed an exceptional human resources (HR) or training program.

    Judged on originality, quality and the impact the program has had on the company, the award submissions were narrowed down to three finalists and presented to the attendees of the annual HR/Training and Development Conference (HR/T&D) in Washington, DC. The attendees then voted for the most exceptional program and the winning company was announced at the awards dinner.

    Based in West Des Moines, IA, Hy-Vee offers three unique training curricula designed to benefit participants through various phases of employment:

    • An e-learning program offers courses in customer service, leadership and management, communication, sexual harassment, personal development, marketing and desktop skills.

    • The Hy-Vee University Graduate Degree is designed to encourage college employees to stay with the company after graduation. The Graduate Degree is a fast-track training program for people whose objective is to gain key management positions within the company.

    • The Hy-Vee University Operations Degree provides secondary training for employees with an associate degree or less and is geared toward people who wish to enhance their knowledge of the perimeter departments with the intention of becoming a department manager.

    The runners-up for the award were Bashas' Inc. of Chandler, Arizona, and Food Lion, of Salisbury, NC.
    KC's View:

    Published on: October 2, 2003

    The National Retail Federation (NRF) reports on the results of its 2003 Halloween Consumer Intentions and Actions Survey, which found that 55.8 percent of consumers plan to celebrate Halloween, spending an average of $41.77 on the upcoming holiday. Spending will be virtually unchanged from 2002, when consumers spent an average of $44.20.

    Halloween continues to be the second-biggest holiday for decorating next to the winter holidays. Nearly half of consumers (46.6 percent) celebrating Halloween plan to decorate their homes or yards with a Halloween theme this year, and plan to spend $10.37 each on Halloween decorations. Consumers will also spend an average of $14.85 on costumes, $14.41 on candy, and $2.14 on greeting cards.

    According to the study, Halloween will be celebrated by adults of all ages, but quite differently depending on age. Young adults aged 18-24 plan to celebrate Halloween by dressing in costume (57.3 percent) and throwing or attending a party (48.6 percent). More than half of consumers aged 25-44 will take children trick-or-treating (52.8 percent) and carve a pumpkin (54.3 percent) this Halloween. Consumers over the age of 45 will spend their Halloween night at home and hand out candy (86.9 percent).

    The NRF study also posits that discounters will continue to see the majority of traffic, with 69.2 percent of consumers planning to shop for Halloween merchandise at a discount store. Consumers will also be heading to grocery stores (45.5 percent), specialty stores like Halloween or party stores (23.4 percent), department stores (19.1 percent), and drug stores (16.9 percent).
    KC's View:

    Published on: October 2, 2003

    Michigan Gov. Jennifer Granholm has said that her state may follow the path already taken by the governments of Illinois, Minnesota and Iowa, and investigate the acquisition of prescription medicines from Canada as a way of reducing the state's escalating health care costs.

    In this case, the state would actually be following the lead of many of its senior citizens, hundreds of whom regularly cross the border into Canada to pick up their prescriptions at dramatically cheaper costs.
    KC's View:
    Based on the level of interest in this subject on a national level - hell, just based on the level of email we've gotten on this subject at MNB - we have to believe that there is going to be some sort of movement on the issue from a public policy point of view.

    You know things are changing when diehard Republicans start saying that maybe Hillary Clinton had the right idea with her health care program after all. (We actually have gotten several emails like that, one of which is reprinted in "Your Views" below…)

    Published on: October 2, 2003

    The Washington Post reports that a new study conducted at the University of California at San Francisco (UCSF) suggests that "food with lots of sugar, fat and calories appears actually to calm the body's response to chronic stress."

    Of course, if you eat sugary comfort food because you're feeling stressful, it'll make you gain weight…which in turn may add to your stress levels.

    And here's the rub. There's also research from UCSF that says that stress hormones actually encourage the growth of fat cells - which, according to the report, "may be at least one reason why obesity rates are skyrocketing in the United States and many other modern societies."
    KC's View:
    File this one in the "you can't win" file.

    Published on: October 2, 2003

    Wine Spectator reports that the sales of French wine in the United States do not seem to have rebounded in the months since France opposed the US's decision to invade Iraq - even as Americans bought more wine overall.

    The import of French table wine was down 20 percent in each of the months of May, June, and July 2003.

    However, wine retailers around the country told the magazine that they think that the inexpensive price of other wines may be more responsible for the decline in French wine sales than any political concerns. It isn’t just the "Two-Buck Chuck" trend that has fueled these preferences, but the overall value of wines from the US, Australia and Chile that is perceived by US consumers.
    KC's View:

    Published on: October 2, 2003

    USA Today reports that the 2,400 residents of the town of Excelsior, Minnesota, have decided to take a stand against the big chain stores that sometimes seem to define the nation's landscape.

    "We are not big-box. We are small town all the way," says Mayor Lynn Johnson.

    The town actually hired an advertising agency to craft a campaign to tell the major chains to stay away, using the tag line: "Secede from Starbucks Nation."

    Starbucks, for one, says it is a little confused by the campaign, since it doesn't have a store in Excelsior and has no plans to put one there.

    But rather than specifically targeting the coffee chain, the campaign seems more focused on drawing a line and establishing a sense of local ownership and pride…a point of view that seems to be gaining some currency around the country.

    "People are beginning to realize, especially in small towns, that while they can pimp themselves for corporate dollars, that's not going to keep economy going 30 years from now. It's not sustainable," Pratap Chatterjee of, a group that opposes globalization, tells USA Today.
    KC's View:
    One of the interesting things that seems to be happening with campaigns such as Excelsior's is that they tend to have a lot of appeal to young adults.

    The big box store folks seem to bridle at such campaigns, saying that they seek to restrict their freedom to conduct commerce. But freedom cuts both ways, and communities have a right - within the bounds of ethical propriety - to establish what their communities will look like.

    Published on: October 2, 2003

    BJ's Wholesale Club has announced that it will introduce smaller, sizes into its mix, offering convenience-oriented options in produce, dairy, meat and baked goods in about half its stores.
    KC's View:
    We're torn on this one. On the one hand, we think offering smaller options to consumers isn’t a bad idea, if only because creating alternatives always seems like a smart move.

    On the other hand, at some point if BJ's gets too far away from the club packs that are intrinsic to the membership warehouse business, people may begin to wonder why they're paying membership fees.

    Published on: October 2, 2003

    Core-Mark International, the c-store wholesaler that is the sole remaining business of what used to be Fleming Cos., said yesterday that it is entertaining bids for the company as well as exploring strategic options including possible reorganization.

    Core-Mark operates as a separate legal and business entity from Fleming.

    It is expected that preliminary bids will be in by November 3, with final bids in by December.
    KC's View:
    Yeah. This is an enormous surprise.

    Published on: October 2, 2003

    Global news and commentary from…
    Following the announcement of the Department of Trade and Industry’s verdict on the Safeway takeover battle - clearing Morrisons to proceed with its bid with the proviso that it should dispose of 53 of Safeway's 479 stores, and blocking Tesco, Wal-Mart’s Asda and Sainsbury’s - there has been a raft of speculation as to how the final stages of the saga might play themselves out.

    Morrisons has responded by saying that it would start talks with the Office of Fair Trading over the deal. "Morrisons will now begin the process of discussing the necessary undertakings relating to the required store divestments with the Office of Fair Trading. This is likely to take several weeks," it noted in a statement.

    Asda, Sainsbury’s and Tesco have all expressed varying degrees of disappointment, but have tempered this with expressions of resolves. Asda “will press on with our plans to grow the business and expand our store network”, Sainsbury’s is “encouraged that we have the chance to bid for some of the stores that Morrison's is required to divest”, while Tesco has “a strong strategy for growth in food, non-food, retail services and overseas which we look forward to continuing.”

    Despite Morrison being cleared to proceed, Safeway shareholders still need persuading, with some feeling that Morrison’s $4.3 billion (US) all-share offer was not overly generous. That offer - once accepted by the Safeway board and recommended to its shareholders - has now expired and the Morrisons board will have to table a new one. It is thought that Safeway is pressing Morrison to add a cash sweetener to the deal.

    If the two groups are unable to agree on the terms of a recommended offer, Morrisons has indicated that it cannot rule out launching a hostile bid for its larger rival. Safeway is arguing that the 53 stores Morrisons needs to sell should attract a premium price because of the difficulties encountered by grocery retailers in obtaining permission for new outlets. The chain also believes that Morrisons can afford to pay more because its estimate of the benefits from the merger has risen from an initial calculation of the equivalent of $402.4 million (US) to $529.6 million (US).

    However, Morrisons is pointing to Safeway's “pretty rough” trading performance since the bid was first made and the smaller number of stores it will end up with. Morrisons also argues that the price achieved for the 53 stores could be lower because the bidding will be limited to three parties. It is expected to take up to two months for Morrisons to agree detailed undertakings with the Office of Fair Trading on the store disposals required and then come up with a fresh bid, meaning that Safeway's fate may not be settled until next January. Also, Morrisons may still face competition from retail entrepreneur Philip Green who so far has still not revealed his intentions.

    The blocking of Asda throws up one major further question: what will Wal-Mart do next? The company has highlighted that it may start pursuing opportunities in smaller store formats, although it has yet to signal whether this will be via organic expansion or acquisition. The UK press, meanwhile, has been having a field day touting possible bid targets that Asda might be interested in, active in both the grocery and non-food sectors. These have included:

      Matalan: Large edge-of-town and out-of-town stores that sell a mix of clothing, footwear and household goods. Operates a membership system where consumers pay a one-off nominal fee to be able to shop at Matalan. The company trades through 163 stores with an average sales area of 27,659 square feet. Would be a fast way of expanding the sales of the George clothing range, but the main problems remains the large family shareholding in the business that precludes a hostile bid. Tesco has reportedly been in takeover talks with Matalan too.

      Woolworths: Recently demerged from the Kingfisher group, Woolies sells clothing, confectionery, video & music toys and household goods through 808 high street shops (8,460 square feet on average) and 18 large out-of-town Big W superstores (81,400 square feet). This potential deal would be a fast-track for George to increase its high street presence and would also bolster Asda’s market share in entertainment and toys. An alternative would be to pick up the Big W chain alone, the big box format a more familiar terrain for Asda.

      Primark: Owned by the conglomerate Associated British Foods, Primark trades through over 100 stores in the UK and Ireland (trading as Penneys in Ireland), selling discounted family clothing and footwear. Again, Primark would enable the George brand a quantum leap in sales, but there is no evidence that ABF is willing to sell what is a very successful business.

      Somerfield: Major grocery retailer that trades as Somerfield (608 supermarkets) and Kwik Save (661 soft discount stores). Has struggled since the merger with Kwik Save and has been linked with several takeover attempts. Would satisfy Asda’s demand for smaller store formats, but there would be a great deal of regulatory scrutiny over such a deal.

      Iceland: Part of the Big Food Group, a leading grocery wholesale/retail business. Iceland, still seen as a frozen food specialist, has found the going tough in the competitive UK market. It operates nearly 750 stores in the UK plus a handful in Ireland and, like Somerfield, would enable Asda to massively expand its high street presence. Similarly, however, the regulators would want a careful look and Asda could face competition from Sainsbury’s, which is believed to have taken a look at Iceland as well.
    KC's View:
    One would think that a bid for any one of these companies by Wal-Mart - or by any other retailer, for that matter - would set off some of the same sorts of regulatory alarm bells that sounded when Morrison went after Safeway, and started a feeding frenzy in which everyone wanted Safeway.

    Of course, this will continue to give us stuff to write about, so it's not like it would be a bad thing…

    Even now, it's sort of entertaining to watch as Tesco, Wal-Mart, and Sainsbury negotiate with the government about a proposed five-year ban on their ability to acquire any of the 53 stores that Morrison will have to divest if it is successful in acquiring Safeway.

    Published on: October 2, 2003

    The St. Louis Post-Dispatch reports that the city's three major supermarket chains - Schnuck Markets, Dierbergs Markets, and Shop 'n Save Warehouse Foods - may be facing a strike by a total of more than 10,000 workers as early as next week.

    Members of United Food and Commercial Workers (UFCW) union overwhelmingly rejected a four-year contract proposal, which offered a raise of 75 cents an hour over three years - 25 cents a year - plus a 20-cent-an-hour bonus once ratification took place. The defeat set the stage for a strike vote that could come next Tuesday. It would be the first supermarket strike in St. Louis.

    Union officials said that if two-thirds of the employees authorize a strike, they will immediately begin picketing one of the three chains; the chains say that in that event, they will lock out unionized employees and hire replacement workers.

    However, the Post-Dispatch reports that if there is not a two-thirds vote in favor of a strike, the defeated contract would eventually take effect "after formalities are completed." The defeated contract proposal has been termed the "last, best offer" by the chains.
    KC's View:
    One of the really interesting parts of the defeated proposal was the piece that not only required workers to take on a greater share of health care costs, but also refused to cover spouses who work at other companies that offer health insurance.

    We are told by people in the know that this piece was specifically targeted at Wal-Mart, and the growing disparity between the health insurance provided by the non-union Bentonville Behemoth and that offered by traditional, unionized grocery chains.

    This is an argument that is extremely timely.

    According to a report in The Wall Street Journal earlier this week, Wal-Mart makes new hourly workers wait six months to get benefits, and doesn't cover its retirees at all. Its deductibles can be as high as $1,000, and won't cover pre-existing conditions in the first year of coverage. And Wal-Mart doesn't cover things like flu shots, eye exams, childhood vaccinations, and chiropractic services. As a result, Wal-Mart's spending on health care benefits for each of its employees was roughly $3,500, or a third less than the rest of the nation's retail industry.

    Retailers like those in St. Louis are, frankly, fed up with having to deal with providing coverage to their employees' spouses who happen to work at Wal-Mart. Their health care costs go up, they deal with the unions on this issue, while Wal-Mart's costs go down.

    Now, there will be those who will suggest that traditional chains got themselves into this mess, and that it is not up to Wal-Mart to get them out of it. And we would agree with that.

    But we believe this why we are going to see increasing pressure by the unions on organizing Wal-Mart employees, and it is a pitched battle that is going to get extremely bloody. And whole almost nobody on the chain side is going to admit it on the record, they'd love to see the UFCW succeed in this effort.

    There is no easy answer to this problem. It's a mess. (And there's plenty more on this contentious issue down in the "Your Views" section.)

    Published on: October 2, 2003

    Ahold put an exclamation point on its financial difficulties this morning, announcing that it has posted a net loss for 2002 that is the equivalent of $1.4 billion (US).

    The loss stems from $1.5 billion in write-downs on the company's operations in the US, Spain, and Argentina.

    While analysts quoted in a number of places this morning seemed to think the worst is over, there was some frustration expressed about the fact that Ahold did not explain how it plans to repair its balance sheet and reduce its enormous debt load.

    The company also said it has revised its 2001 net profit to $877 million (US) from the originally posted $1.3 billion, and the 2000 net profit $1.1 billion (US) from the originally posted $1.3 billion. reports that according to CEO Anders Moberg, Ahold will announce financing plans and strategy details at a shareholders' meeting later this month. However, Mr. Moberg has said that the newly released figures show the company needs to make widespread changes. "The numbers reflect the full impact of this year's discoveries on the financial state of the company. They also underline Ahold's underlying strength. We have great assets, many solid operation, and strong cash flow generation. But the numbers also show that is it's absolutely vital to make changes throughout the entire company."
    KC's View:
    We also would be concerned about the continuing postponements that Ahold management seems to use to delay laying out its specific strategy for the future.

    So far, all we know is that the company is getting rid of non-core assets and is considering a policy of streamlining and centralization.

    But a policy of retrenchment isn’t a vision for the future.