Stater Bros. Chief Executive Officer Peter Van Helden last month told his company’s workforce and the world that a new financial era has dawned, making further layoffs beyond the 63 that have just gone into effect unavoidable.
In what Van Helden said were the first layoffs ever in the grocery store chain’s 89-year history, 63 courtesy clerks were handed pink slips last month.
Since the first store’s founding by Cleo and Leo Stater in Yucaipa in 1936, Stater Bros. Has experienced steady growth, such that the corporation, now headquartered in San Bernardino, has expanded to 171 stores.
The 26th largest grocery-store chain in the United States, it looms much larger within Southern California. It is under challenge at present, however, according to Van Helden, because of inflation that has already taken place, further inflation that is going to occur, particularly prompted by President Donald Trump’s imposition of tariffs and the dwindling opportunities to engage in cost reductions of its products because of the escalating expenses of labor, electricity, fuel and other overhead.
The United Food and Commercial Workers on March 2 ended contract talks with a number of other grocery store companies and is due to begin negotiations with Stater Bros. Shortly. Without being specific as to what the expected outcome of those talks will be, Van Helden indicated that his company will continue to pay the going rate to its unionized workers, at least those who are able to retain their jobs.
Given the financial pressure the company is under, its belt-tightening had to begin somewhere, and it started with the courtesy clerks, who represented the least crucial and lowest-paid element of its workforce. Courtesy clerks with Stater Bros. are paid $16.50 an hour. The courtesy clerks bag groceries, help load purchases into the cars for shoppers who need that assistance and keep the sales areas and check-stands clean and tidy.
In an effort to explain to Stater Bros. employees why the first round of 63 layoffs had been made and prepare them for more in the future, Van Helden made comprehensive statements which pointedly addressed, without saying so confrontationally or directly, how unionization represents a threat to corporate survival and unflinchingly acknowledged that the goods at unionized supermarkets are more expensive than ones that do not have unionized employees. He also pointed out that the number of unionized employees are throughout the industry being replaced by nonunionized ones.
The Sentinel has obtained a copy of that video.
Said Van Helden, “It’s impactful to everybody when they hear the word layoff, especially because in this company, we’ve never done this before. We’ve never had a layoff. It’s unique and different.”
Things are getting tough, and that is why the layoffs occurred, he said.
“I don’t think it’s any secret that in the last four years we’ve seen significant inflation, more than I’ve ever seen in my career,” he said. “Retail prices are up about 30 percent now more than they were four years ago and that’s a big impact to our customers. Inflation did soften a little last summer We saw about one-and a half percent last summer, but the last four months it has picked up. We’re seeing about four, four-and-a-half percent inflation each of the last four months. With the recent announcement of new tariffs and probably more tariffs to come, it’s probably quite likely that inflation is going to take off, even above the four-and-a-half percent that we’re seeing now.”
He said that three – three percent – is a “magic number,” meaning that if the company can realize a three percent profit, which he also referred to as a “gross margin,” meaning the difference from what the company brings in and what it pays out for everything, it can remain in business.
Stater Brothers is “fighting the nonunion competition,” Van Helden said. “The enemy for Stater Brothers, the enemy for you, I think, is the non-union competition. That’s who we’re really fighting against.”
Van Helden said Stater Brothers customers are going to the company’s competitors who feature lower prices. Those competitors employ a non-unionized workforce. “That’s how they sell their products at a lower price,” Van Helden said, making a concession he perhaps thought might not be heard by anyone other than the Stater Brothers employees for whom the video had been made. “They are selling food at a lower price than us.”
Van Helden’s reference was too a host of retail establishments that employ workers who are not members of the retail clerk’s union, such as Aldi, Grocery Outlet, Dollar General, Walmart, Sprouts and Target.
“They take that savings [on employee wages and benefits] and they plow it into pricing,” Van Helden said. “They have lower prices. I’m not complaining about being unionized. I’m very proud that 90 percent of our workforce is unionized. I’m proud of what we pay and I’m proud of the benefits that we offer, but it does cause us to charge more for our product. That strategy for those nonunion players has really impacted this market, has really impacted those nonunion players.”
According to Van Helden, the entire landscape for companies involved in grocery sales has changed in the last generation. Previously, in California at least, the lion’s share of grocery store employees were unionized, which more or less meant there was an even playing field among competing grocery store companies. That has changed, however, such that many grocery store chains have a distinct advantage over others. Among those at a disadvantage is Stater Brothers, Van Helden said.
According to Van Helden, at the turn of the millennium in 2000, 90 percent of the state’s grocery stores were unionized. At present, only 35 percent of the stores employ unionized workers.
Under normal economic conditions, Van Helden said, prices at unionized stores were only marginally higher than at non-unionized stores. But, he said, in times of accelerated inflation, unionized stores have to up their prices while non-union stores can hold the line on their prices. Thus, he said, “Inflation drives customers to the nonunion stores.” An while previously, only 10 percent of the stores in California were nonunion, today 65 percent of supermarkets are nonunion and they are killing the union stores.
“There is a substantial change in the market because customers have changed their shopping habits,” Van Helden said. “When inflation happens, there’s three things we can do as a company. One, we could just simply absorb the cost increases, do nothing and go broke. We’d be bankrupt. If we had not increased our prices 30 percent over the last four years, this company would not be here today. We have to move that price forward.
“The second thing we can do,” Van Helden said, “which is what we’ve been doing, is accept the cost increases of the cost of goods, pass along those cost increases to the customers, continue to do that. It’s worked okay. We’ve given up some items. But if this continues, it’s not going to play well for us. Over time, our sales will decline. We will have fewer customers. We’ll be selling fewer items, which will mean a reduction in hours and will mean layoffs. It’s inevitable if we don’t do something different.”
Van Helden continued, “So, a third option is to say, ‘We’ll take the cost increases on the cost of goods, but rather than passing it along to the customer, let’s hold our prices, let’s not pass it along. That means instead offset that cost increase with a cost-of-operations decrease.”
Van Helden referenced labor, electricity, rent of the buildings the company occupies, and fuel as typical costs of operation.
“As we reduce those costs, then I don’t need as much margin to keep our three percent. That’s what we’re doing here. Those 63 jobs we laid off are a cost reduction. Our intention is to take the cost reduction from those 63 jobs and hold the line on pricing, accept those cost-of-good increases and hold the line on pricing, if we can. And it’s not just those 63 jobs. We’ve reduced jobs at the corporate office.”
Van Helden said, “By holding the line on prices we can complete. These are tough decisions. These are decisions I have to make. My number one job in this company is to make sure this company is here for a long time, providing jobs, union jobs and a career path for those who want them.”