It’s coming down to the wire for a contract settlement between two UFCW Locals (27 and 400) and the two largest chains (Giant/Landover and Safeway) in the B-W market. As we go to press, it appears that both sides are far apart as an October 31 deadline has passed and negotiating continues. According to UFCW Local 400’s Union Leader magazine (fall issue), clerks and meatcutters employed at Giant and Safeway are mobilizing for “what could be a long, challenging, fierce battle” for a new collective bargaining agreement. The union accuses both chains, which it claims have achieved an “obscene level of prosperity” of seeking to squeeze workers even more by demanding givebacks at the bargaining table. “Our members need to understand the environment in which this bargaining is taking place,” said Local 400 president Mark Federici. “The attitude in corporate boardrooms these days is to maximize profit at all costs, to enrich themselves and their shareholders, and to treat workers as not their most valuable asset, but as a cost to be driven down to the lowest possible level. This is true in California where Safeway is headquartered and in the Netherlands where Ahold executives call the shots.” In the story, Federici acknowledges that the growing cost of its health care plan, caused by the Affordable Health Care Act (ugh!) presents another bargaining challenge. He also noted in another story, that despite the difficulties in ratifying its new contract with Kroger’s Roanoke division (which included a five month extension), a deal was struck between the two sides that resulted in a total compensation increase of nearly $2 per hour, maintenance of health and retirement benefits for current employees and expansion of job classification that will create the number of lead positions. Federici termed the three-year agreement “as good as any in the country.”… a tip of the hat to Wakefern Food Corp. which posted retail sales of $14.1 billion for its fiscal year that ended September 28, an impressive 3.9 percent increase for the cooperative that oversees the business of ShopRite and PriceRite stores. The Keasbey, NJ firm also posted consolidated wholesale sales totaled $11.4 billion. It’s often been stated in this column that there is no more tenacious conventional supermarket retailer in the Northeast (only Market Basket on a smaller level is comparable) than the independent owners who operate ShopRite stores. And now that the co-op will reportedly allow its 50 members to open and own discount PriceRite units and will also allow those operators to open “fresh” oriented stores under its newly acquired Fresh Grocer banner, Wakefern has thrown down the gauntlet even more aggressively, essentially telling all comers (including Wal-Mart, Wegmans and Costco) to “bring it on” because we’ve now got the formats, operating skill, capital and intensity to compete on any level…at Supervalu, the turnaround continues as the slimmed down company earned a net profit of $40 million in its second quarter ended September 7. A year ago, SVU posted a loss of $111 million. While CEO Sam Duncan noted that he was pleased with the company’s accomplishments, he added that “we must remain focused on driving sales and generating cash. A big difference made during last year was at its corporately-owned Save-A-Lot discount unit where same store sales increase 4.6 percent. Including its Save-A-Lot licensed stores (about 75 percent of the fleet), same store revenue decreased 0.3 percent, still an improvement over recent quarters. Sales at SVU’s wholesale grocery (independent business) segment declined 1.6 percent to $1.84 billion and same store sales at its five conventional retail banners (Shoppers, Farm Fresh, Shop ‘n Save, Cub and Hornbacher’s) were at negative 0.9 percent, as compared to negative 3 percent in SVU’s first quarter (same store sales numbers have been negative every quarter dating back to 2008). Clearly, Duncan and his team have done a fine job over the past nine months with limited resources. Like a lot of turnaround stories, much of the early saving have resulted from “trimming the hedges,” rather than significantly increased sales. However, Duncan and chairman Bob Miller are now running the business professionally and are much more focused on execution and problem solving. On the obverse side of the coin, the significant cap-ex investment that’s sorely needed to improve its current store base and build new units hasn’t materialized yet and the competition in all of the company’s markets continues to become more aggressive and diverse. For corporate parent Cerberus, the deal is already a great one, having paid $4 a share for 30 percent of the company and operating control (when we went to press on October 31, SVU shares were trading at $7.03). And like many other PE companies, Cerberus still has assets it can potentially sell – its five conventional supermarket banners as well as Save-A-Lot. So, from an investment perspective, the deal is already a home run. And even from an execution point of view, the company is far better off than it’s been in at least five years. But, taking in the full view, SVU is not gaining significant traction or market share in any of the areas in which it operates, hasn’t spent enough yet to indicate it wants to “get back in the game” and its wholesale business hasn’t added any significant accounts since Duncan & Co. took over (and like other wholesale grocers, always remains in jeopardy of a key independent retailer switching suppliers or closing stores)…here’s an example of why I believe the view of many Wall Street analysts who cover the grocery industry is misguided. Costco recently released its fourth quarter and year-end financials. For its fourth quarter (ended September 1), the Issaquah, WA-club store retailers posted an overall sales increase of 0.8 percent, a comp store gain of 5 percent (in the U.S.) and its earnings rose 1.3 percent to $617 million. And Costco’s fourth period this year was 16 weeks compared to 17 weeks last year. Additionally, Costco’s CFO Richard Galanti told analysts that 36 new stores are planned to open in fiscal 2014 and the high-volume merchant plans to increase its cap-ex from $2.1 billion to $2.5 billion next year. I’d say those were pretty strong numbers delivered by one of the industry’s best retailers, especially given the state of the economy and the ferocity of the competitive landscape. Apparently, I must be reading from a different hymnal, because the view of many financial analysts was that Costco’s numbers were “disappointing,” “soft,” or “struggling.” You gotta wonder if many of these Wall Street residents have recently gotten off their butts and visited a Costco store…Whole Foods, in the midst of one of the most aggressive expansion plans in recent food retailing history, will be building a new 35,000 square foot store near the Washington Nationals baseball stadium in southeast DC. The New Jersey Avenue unit will be WFM’s fifth District store and will be close to the Harris Teeter supermarket (4th Street Southeast) that is currently under construction…a few deaths to report this month. Gerson “Barney” Barnett, former SVP of grocery operations for Giant/Landover, passed away last month at the age of 90. “Barney” was one of the most powerful and influential executives in the BW grocery market for many years, essentially serving as head buyer for the region’s largest grocery chain. A man of integrity and discipline, Gerson Barnett pretty much wrote the rules on how buying was done at Giant. For me, “Barney” was a great teacher who often guided me in the “rules of the road,” not only as it pertained to Giant Food, but the industry as a whole. I was also saddened to hear of the passing of rock & roll legend Lou Reed. Reed, who had a liver transplant in March, died at age 71 late last month. While Reed’s musical style and voice were often difficult to relate to, he was truly a man devoted to all things rock – from history to innovation. His first album in 1967 as the lead singer of the Andy Warhol inspired band, Velvet Underground (who were inducted into the Rock and Roll Hall of Fame in 1996), was one of the first vinyl discs that I owned and its ferociousness burned an imprint in my mind that I can still remember. Despite heavy drug use and an overall lifestyle that later led to his health issues, Reed was like a misguided missile – moody, unpredictable and powerful – who also managed to write two of the greatest rock tunes of all time – “Sweet Jane” and “Rock & Roll,” which both appeared on the Velvet Underground’s 1970 album “Loaded.” Also leaving terra firma last month was Ed Lauter, one of the great movie “that guys” of the past 40 years. Lauter, 74, who appeared in more than 200 film and TV roles, usually played a cop or a bad guy. He described himself as a “turn” actor, someone who shows up at some point in a film and suddenly turns the plot in a different direction. Among his best known and most visible roles were as brutal prison guard Captain Knauer in the original “The Longest Yard “ (1974; he also appeared in the 2005 remake); as sleazy gas station attendant Joseph Maloney in Alfred Hitchcock’s last film, “Family Plot” (1976); and as violent cop Richard Shriker who assists vigilante Charles Bronson in “Death Wish 3” (1985). You may not know Lauter by name, but one look at his face in any of his movie roles and you’ll know exactly whom I’m talking about…on a personal note, I am deeply saddened to report the death of Bill Speakman, 73, who for the past 35 years served as secretary-treasurer of our company, Best-Met Publishing. Bill was much more than the financial guru of Best-Met, he served as confidant, friend and many times inspiration to me. In fact, when Dick Bestany and I acquired Food World in 1978 (and Food Trade News 18 months later), he not only engineered the deal, he told us where to set up shop and developed our first year budget. Along with being one of the most intellectual people I’ve ever met, Bill also possessed a keen street sense and uncanny ability to read people and quickly assess the situation at hand. He was a person who made a big difference in my life and I’ll miss him dearly.