Fresh & Easy Buzz has learned the United Food and Commercial Workers Union (UFCW), the retail supermarket clerks' union in California, Nevada and Arizona where Tesco's Fresh & Easy Neighborhood Market has its stores, plans to launch a union organizing campaign designed to sign-up workers at Fresh & Easy stores beginning shortly after the new year.
The retail clerks' union has already had representatives out in front of the stores at nearly every Fresh & Easy store grand opening, especially in Southern California where the majority of the grocer's 27 stores have been opened to date. The union representatives, joined by a coalition of labor groups, have been handing out literature and information to store employees and informing customers that Fresh & Easy stores aren't union like nearly all of the region's chain supermarkets and major independents are.
Additionally, a coalition of community groups in Southern California is working with the union, asking Tesco to among other things sign a pledge promising to meet certain neighborhood and community goals and criteria in return for being able to do business in the communities.
Most of the chain supermarkets in California, Nevada and Arizona are union stores. These chains include: Safeway Stores, Ralph's, Albertsons, Stater Bros., Save Mart/Lucky, Raley's Superstores, Basha's and others. Additionally, most multi-store independents in the three-state region are union stores as well. Even many large, single store independent supermarkets are union shops.
On the other hand, Tesco's Fresh & Easy joins a growing list of non-union food retailing chains in the three states. These include Wal-Mart, Whole Foods Market and Trader Joe's. The UFCW has been working on organizing Wal-Mart food retailing employees, especially in California where virtually 100% of chain, regional and large independents are union. To date, however, the union hasn't been successful in getting a pro-union vote from Wal-Mart employees.
The same is the case with Trader Joe's employees. In fact, the UFCW has pretty much given-up on trying to unionize TJ's retail clerks at this time.
With its rapid growth plans for the region, Fresh & Easy is a key target for the union. Additionally, all the major supermarket chains in the region recently signed a new multi-year contract with the UFCW. The union has publicly said the new contract is the best one for employees in many years. It includes decent pay raises, and in terms of the health benefits package, it actually provides for a reduction in the amount of co-pays workers pay out of pocket for doctors visits and prescription drugs. The supermarket clerks health insurance package is considered one of the best in the U.S.--not just for retail clerks but for workers in all fields and professions.
For example, a journey-level supermarket clerk in California (a clerk with one year of full-time work experience at 40 hours per-week under his or her belt), makes about $21 per hour. They also receive premium pay for any hours worked over a certain time at night. Additionally, they receive double-time for working on a Sunday (double the hourly wage) and triple-time when they work on a national holiday.
On top of this excellent pay package, the unionized retail clerks receive a very generous medical insurance plan. It includes full medical coverage, with minimal out-of-pocket expenses for doctors' office visits and prescription drugs. It also includes dental and vision benefits for a small premium relative to what most others have to pay. According to independent analysis of the health plan, when it is included along with the hourly salary (fully burdened) mentioned above, the total hourly wage of a journey-level clerk is about $35.
In contrast, Tesco's Fresh & Easy Neighborhood Market is currently paying an average hourly wage of $10 hour for retail clerks who do a similar job as the unionized supermarket clerks do. Fresh & Easy's retail managers are paid more.
Further, the majority (about 60%) of these clerks work part time, averaging 20-25 hours week. Tesco does offer a health plan for its employees, both for full-time and part-timers. However, it doesn't compare to the UFCW plan the union supermarkets like Safeway, Von's, Stater Bros. and others offer. Fresh & Easy's employee contributions are much higher, as are its co-pays for everything from office visits to prescription drugs. And, unlike the UFCW plan, dental and vision aren't available at as an affordable cost. Even adding in the benefits from the health plan to the hourly wage like we did with the union plan, the convenience-oriented grocer's fully-burdened hourly wage still doesn't come close to the unionized supermarket fully-burdened wage.
The UFCW Campaign
According to a number of sources inside and outside the union, the UFCW plans to make Southern California, where Tesco has the majority of its Fresh & Easy grocery markets, ground zero for it's campaign to organize store clerks. According to federal law, a retailer (or any other business) must allow employees to organize, create a petition and ballot, and ultimately vote amongst themselves as to if they want to join a union or not.
The UFCW also plans to organize in Arizona, and to a lesser degree in Nevada. Union plans also call for it to enlist a number of high profile California celebrities and local and national politicians in its campaign to organize the store-level workers. In fact, Democratic Presidential candidate John Edwards has already sent Tesco a letter requesting the retailer not try to stop union organizing.
California is a strong union state in the retail food sector. Whole Foods Market, Inc., which has about 45-50 stores in the state, has been able to avoid becoming union do to the fact that in those cases where store-level employees have voted on a union petition, the majority rejected it, choosing to remain non-union.
Wal-Mart, on the other hand, has been harder for the UFCW to crack in terms of getting a vote from it's store-level food clerks. Why? First, there aren't very many Wal-Mart Supercenters in California (or Nevada and Arizona for that matter). As such, it makes it more difficult for the union to organize workers.
Additionally, Wal-Mart has become very adept at keeping union workers at bay--and in encouraging its employees to vote non-union if a union ballot is voted on. We aren't suggesting the retailer has broken any federal laws we are aware of. Rather, there are provisions within the law that allow company's to do certain things, like hold sessions with workers on why they shouldn't join the union. By the same token, union organizers are allowed to meet with workers, as long as they follow certain provisions for doing so in the law.
Our sources tell us the UFCW organizing campaign targeting Fresh & Easy's store-level workers will be primarily grass-roots, as most union organizing campaigns are. However, we're told there also will be a heavy media component--especially public relations, targeting the print and broadcast media with stories about workers and comparing Tesco's salaries and benefits' plan to that offered by the unionized supermarkets, especially in California.
Speaking of these supermarket chains, they aren't too pleased with Tesco's non-union status at its Fresh & Easy grocery markets, just as they aren't real happy about Whole Foods, Wal-Mart and Trader Joe's.
In fact, Safeway, which a number of analysts are saying could be most hurt by the Fresh & Easy stores, just signed a very worker-friendly contract with the UFCW before Christmas. Considering how much more Safeway and the other chains are paying their store-level workers, the UFCW is determined to not let these grocers lose market share to non-union Tesco. Rather, they plan on bringing the British grocer into the union fold just as they have with nearly all the other "big boys" in the region.
Tesco is the fourth largest retailer in the world, and is actually bigger in terms of overall sales than any other food retailer in the state. And that includes some huge national players: Kroger Co., which owns the Ralph's chain, the market share leader in Southern California; Safeway Stores, Inc., which owns Safeway (number one market share) in Northern California, and Von's (number two market share) in Southern California; and Albertsons, which is owned by mega-grocer Supervalu, Inc., the second largest food retailer in the U.S.
Tesco also plans to enter Northern California with its Fresh & Easy stores in 2008. The retailer already has two confirmed sites, one in San Jose and another in San Francisco. The grocer's real estate representatives are locking up locations as we write this. Our sources tell us Tesco wants to open at least 50 stores in Northern California, from the Bay Area north to Sacramento, by the end of 2009.
Northern California, especially the San Francisco Bay Area, is the strongest region in the U.S. for the UFCW. Even many small, single store independents in the Bay Area are union stores. Additionally, local Bay Area governments are generally very pro-union. Tesco will find that when it comes time to choose a side, if that happens, these local legislators will go with the union hands down.
2008 is going to find Tesco dealing with a strong union movement and campaign, especially in California. The question will be how the retailer responds. Further, the retail prices in the Fresh & Easy stores are currently super-low; lower than most supermarkets in the three-state region. This is in fact a major positioning aspect of Tesco's marketing with the Fresh & Easy stores: a low-price leader on basic groceries, combined with being a fresh, prepared foods store.
The $64,000 question is: If Tesco has to pay the same union wages at its Fresh & Easy stores, and offer the same generous benefits package that Safeway, Ralph's, Save Mart and the likes currently do, can the retailer still offer the excellent low prices it is offering on basic grocery items in its stores, as well as the reasonable retails it currently has on most of it's fresh, prepared food items? If not, does this mean one leg of Fresh & Easy's two-legged retail marketing stool (Combined low-priced, convenient basic grocery store/semi-upscale fresh foods and specialty store) will be sawed off?
These are questions Tesco will soon have to answer if the company hasn't alread reached a conclusion. Beginning in a few weeks the UFCW will more fully develop their campaign to organize Fresh & Easy store workers. Then, later in 2008, the union plans to go full-throttle to organize and get the store workers to vote on joining the United Food and Commercial Workers union.
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