Todd Schnuck Pens Op-ed Outlining Union/Non-union Market Dynamics

Union families should consider basic facts about the grocery industry when choosing where to buy their groceries, according to Todd Schnuck, chairman and CEO of Schnuck Markets Inc.

Schnuck, chief executive of the St. Louis-based grocery store chain, explained the competition between locally owned retailers who operate union shops and non-local companies whose employees are not unionized, in an op-ed piece he penned this week for the St. Louis Post-Dispatch.

“The recent approval of a new contract between our company and our biggest union, Local 655 of the United Food and Commercial Workers, represents an important win for both parties. Tough negotiations produced an agreement that represents progress,” Schnuck wrote in the Post-Dispatch.

“Now the way is cleared for all of us to move on, and soon this contract will understandably pass from the news. But before it does, I want to suggest that labor relations in the grocery industry deserve more public awareness than occasional coverage of any single negotiation can provide. Labor relations in the grocery industry are, in my view, a significant community issue. Everyone who supports or cares about unions and everyone who cares about St. Louis has a stake in them.

“Here’s the situation: The grocery industry is a fierce competitive battleground between traditional, St. Louis-based grocers like ourselves, Dierbergs and Shop ’n Save — all of which are union shops — and non-locally based, nonunion competitors, including Walmart, Aldi, Target, Whole Foods, Lucky’s, Fresh Thyme, Sam’s Club and Costco. Even the gas station/convenience and drug stores put pressure on grocers.

“This battle has long been underway. Only about 20 or 30 years ago, the traditional, St. Louis-based grocers probably had 90 percent of the market, and as recently as 2003, 67 percent. But the pressure from nonunion competitors has mounted steadily, especially in the last 15 years. Now the collective market share of the traditional players like ourselves is about 48 percent.

“The evidence is not just in dollar signs, it’s physical. Over the last five years, only three new stores have been opened on the Missouri side of the metropolitan area by traditional operators: one each by us, Shop ’n Save and Dierbergs. But over just the three years, 84 more nonunion stores have begun selling food. They include six more Walmart Supercenters, two Walmart Neighborhood Markets, five Save-a-Lots and 17 more Dollar Tree and Family Dollar stores, among others.

“Kroger presents a particularly stark illustration of the situation here. In 1986, after many years as a big union player in this market — it had 54 stores here — Kroger called it quits. It pulled up stakes from St. Louis entirely.

“Last year it came back, but not as Kroger. It came back as Ruler Foods, a nonunion Kroger subsidiary that in the space of a year has already grown to nine area stores.

“Schnuck Markets, by contrast, has worked with unions for more than half a century. Today, we have over 10,000 union employees, accounting for about 75 percent of our total workforce. We believe we are the largest union employer — of any kind — in town. Our annual payroll for union employees is over $200 million. That is just for direct wages; the pension and health care benefits provided by Schnucks only adds to that total.

“The benefits we pay our union teammates are above-market for any industry in St. Louis. We pay about twice what Walmart does for the health care of our cashiers and twice as much for retirement benefits, too. Our average wages and top wages are also superior.

“We love it that way. It helps make us the kind of company where our teammates want to spend their whole working lives. Last spring I went to a reception for employees where 67 of them — mostly union members — were celebrating 40 years with us. How terrific it is to feel that we’ve provided the kind of work environment where people would want to stay part of our team for such a long time. And how terrific it is to know that many of our people stay on so long that our customers become friends with them.

“We also love giving nearly $2 million a year to school bands, clubs, churches, synagogues and other local nonprofits through our MySchnucks Card program, which lets customers donate a portion of their purchases. We love giving away about $13 million of food every year to local food pantries as well. We love supporting important community agencies like the United Way.

“In short, we love playing our part in making St. Louis a stronger and better community in every way. Working in partnership with our unions helps us do this.

“But working with unions also entails sometimes-difficult negotiations, which even when they are resolved successfully — as our most recent talks with UFCW Local 655 were — can leave lingering resentments.

“How ironic it is, then, that Schnuck Markets can be the target of those resentments, while the nonunion and nonlocal competitors who have been taking so much of the market here escape notice altogether. How ironic that the ones sometimes tarnished with the anti-union label are the ones who work with the unions, instead of those who shun them.

“Union families in St. Louis, above all, should take notice. When they decide where to buy their groceries, they need to know about the basic facts of the industry. So should those who support unions and those who just support the idea of a locally owned company that is invested — in every way — in its communities.

Read the original column here.