Thursday, February 26, 2004

California Supermarket Strike About to End

Calpundit informs us about the details.

It's hard not to believe that this is really just short-sighted on the part of management. To the extent we take the "fear of Wal-Mart" argument seriously, this is just going to bite them in the ass. The source of Wal-Mart's strength isn't their low labor costs, though they have that too, it's their market power which allows them to squeeze every penny out of wholesalers. There's not much the supermarkets will be able to do to fight that.

When it comes to labor - you get what you pay for. Shopping in California supermarkets is different than in many places. Frankly, the workers are just of a better quality. You get good friendly service. The jobs are careers, and people treat them that way.

There are two fundamental ways to compete - price and quality. Wal-Mart will win the price competition game every time, even if Safeway cuts salaries and benefits. But, if they cut salaries and benefits then people may as well go buy their groceries at a Wal-Mart superstore. What will be the difference?