Industry expert weighs in on why the deal should go through at a time of rising multichannel retailer competition and declining union membership.
Burt P. Flickinger III CEO, Strategic Resource Group
Over the past 20 years, the explosive growth of large, non-unionized food retailers has come to dominate the food retail landscape at the expense of typically unionized grocery retailers.
According to industry expert Burt P. Flickinger III, the Kroger-Albertsons merger is the best outcome for union workers, customers, and communities.
Non-union grocery retailers like Walmart, Amazon/Whole Foods Market, Target, Trader Joe’s, Costco (majority non-union) and ALDI have become powerhouses in food retail, offering the consumer more choices than ever. These chains in aggregate have added thousands of grocery stores across the country, shifting hundreds of billions of dollars of sales volume from supermarket chains (many of them union) in every major geographic region in the United States. There is clear evidence that a correlation exists between the growth of large, typically non-unionized food retailers and a loss of union membership.
I set out to determine both the aggregated and unique membership declines for the United Food & Commercial Workers International Union (UFCW); the Bakery, Confectionary, Tobacco Workers & Grain Millers International Union (BCTGMI); and International Brotherhood of Teamsters unions over the past 20 years. My research included a comprehensive review of U.S. Department of Labor reports filed annually by each UFCW (independent of the Retail, Wholesale and Department Store Union); Teamsters; and BCTGMI local in the United States for the for the years 2002, 2007, 2012, 2017 and 2022 to determine changes in membership enrollment.
I found that between 2002 and mid-2023, aggregated total union membership for the UFCW, Teamsters and BCTGMI has decreased by 193,046 members, or -8.19%. Broken out by the respective unions:
UFCW membership has decreased by -151,798 members, or more than -14%.
Teamsters’ membership has grown modestly, gaining 2,864 members, an increase of 0.24%.
BGTCMI has suffered substantial losses, with membership levels down 44,112 members, or more than -44%.
Unionized grocery retailers will continue to face significant headwinds, and Walmart is becoming unstoppable.With each Walmart Supercenter generating approximately $58.8 million in yearly grocery sales, these stores alone have displaced hundreds of billions of dollars in comparable sales annually (research firm Numeratorrecently reported that Walmart now has a 25.2% share of all groceries sold in the United States).
Other large non-union food retailers are also expanding aggressively. ALDI recently revealed its acquisition of 400 Winn-Dixie and Harveys stores, and Trader Joe’s is currently building a 1 million-square-foot distribution center in Los Angeles County.
The Kroger Difference
Kroger, meanwhile, has been a shining light for unions. The company’s employees have been members of the UFCW, Teamsters and BCTGM unions for more than 80 years. When Kroger is strong, union membership is also typically strong: While UFCW levels have declined since 2002, Kroger has grown its UFCW membership by 110,000.
Future union membership levels depend on the ability of Kroger and other supermarket chains to compete effectively. Kroger has a history of being a good corporate citizen, both benefiting the labor force and the consumer. Since 2003, Kroger has invested more than $5 billion in lowering prices for its shoppers.
Kroger’s recent divestiture announcement of 413 stores, eight warehouses and two corporate facilities to C&S meets the FTC’s criteria. C&S has the size, scale, capital and deep industry knowledge, including experienced executives who know how to run retail. Distinguished supermarket chain executive Mark McGowan, C&S’ retail president, has put together a winning team to operate the divested stores for the long term, benefiting the unions and employees.
Leveling the Playing Field
I have been surprised by the persistent negative commentary surrounding the Kroger-Albertsons merger to date. Albertsons put itself up for sale nearly two years ago and undertook a comprehensive review of strategic alternatives. The Kroger transaction is the best outcome for union workers, customers and communities. If the deal is blocked, Albertsons, which is still majority-owned by private equity, with private equity having significant influence on Albertsons’ future, will remain for sale. That could result in selling off the Albertsons portfolio in pieces, resulting in thousands of union jobs lost. In contrast, Kroger won’t close any stores or lay off any store associates as a result of its merger.
Full disclosure: As a young man, I was a proud member of both the Teamsters Local 558/264 and UFCW Local One. In addition to my consulting work for Kroger, I have also been a longtime Kroger, Walmart, Target, Amazon and Costco shareholder, and I understand the added value of a unionized workforce for Kroger. The company’s acquisition of Albertsons is the last, best and final chance to level the playing field in a way that is pro consumer, pro-competition, pro-workers, and pro suppliers, as well as benefiting local communities. Both the unions and Kroger should work together to remain viable in the face of unprecedented food retail competition.
"Burt Flickinger III and Strategic Resource Group (SRG), G Henry Mellet & Team have done meaningful pro bono work for the UFCW, Teamsters, and BCTGM (Baker & Food Manufacturers) unions for 25 years to help preserve and save union jobs."
Burt P Flickinger III
Strategic Resource Group is the lead retail and brand CPG consulting firm throughout the United States and the globe. With more than three decades of experience, our team strategically collaborates with top retail chains, wholesalers, suppliers, and investment firms. Our retail industry experts are highly skilled at illuminating retail trends, identifying opportunities to increase consumption, and growing retail sales.
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