retail news in context, analysis with attitude

The San Francisco Chronicle reports on a new study conducted by the Food Labor Research Center at UC Berkeley and UC Davis Professor Chris Benner suggesting that "1 in 3 grocery workers is on some form of public assistance. While grocery chains are cash machines for investors, nearly 1 in 5 workers has cut back on meals because he or she couldn't afford to buy food."

The study, according to the story, "shows how much has changed in an industry that long promised stable, middle-class jobs. These days, the 124-page report found, 'workers who sell food in California are almost twice as likely as the general population to not be able to afford to eat the food they sell.' This new generation of low-wage grocery workers uses $662 million worth of public assistance benefits annually, according to the report."

The piece goes on to say that the study found that from 2000 to 2012, "the median wage at a union grocery store decreased from $19.38 to $15.17 an hour. Roughly 1 in 4 of California's grocery workers belongs to a union … Meanwhile, the report lauds Costco, which has captured the largest share (13.3 percent) of California's grocery business while paying workers above the norm."

The report also specifically "chides California's larger grocery chains - particularly Safeway and Albertsons/Supervalu - for directing a majority of cash back to investors rather than back to the workforce."
KC's View:
The Chronicle story says that "industry analysts" describe this trend - of paying investors rather than employees" as "not surprising," with one person suggesting that "investors don't want them to start passing out money like it's a charity."

It is that kind of statement that really sets me off, because it seems to validate an attitude that is moronic almost beyond description. (I'm not debating that some investors may feel that way, nor that public chains have to respond to these demands. Just that the the attitude itself seems to reflect a misguided attitude toward the marketplace.)

I'm not sure about the study's numbers. I cannot independently validate them, and they certainly seem to come with an agenda. And, it needs to be pointed out, California is coming out of a decade of severe economic stress … and so one has to keep wages declines in context.

But I'm sure that a lot of investors do believe that when they invest in a publicly owned retailer, that company has no responsibility to create a better shopping experience or pay its workforce in a way that is fair or recognizes the fact that the people on the front lines are responsible for the shopping experience. No, they just want profits, and fast … and believe such profits can come through efficiency far more than through effectiveness.

That just strikes me as a load of crap. And I believe that the winning retailers, in the long run, will be the ones that say (like Costco) that this is not the approach they will take … that they are focused on Main Street more than Wall Street … and resist the entreaties from investors and "experts" that push them in the opposite direction.