Ralphs and Food 4 Less Closing in Long Beach over $4 per hour additional required "Hero Pay"

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CalItalian
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Ralphs and Food 4 Less Closing in Long Beach over $4 per hour additional required "Hero Pay"

Post by CalItalian »

Closing 2 locations in the city. About 25% of their locations in Long Beach.

The Food 4 Less is just 1 1/2 miles from another Food 4 Less (with fuel station...and adjacent Target) on Cherry and the 91 Freeway. Closing Food 4 Less is in a very ethnic area and adjacent to a very large chemical plant.

The Ralphs is in a somewhat upscale area. 1 mile to a Pavilions. About 2 1/2 miles to a Whole Foods.

I'm surprised they didn't close the Ralphs on E. Carson Street. Adjacent to a nice area but that store severely underperforms, too. It is larger than the closing Ralphs (4 miles away). Last I was in that store, the non-closing one, it didn't have self-checkout.

Both stores close April 17.

https://www.nbclosangeles.com/news/loca ... y/2515687/
https://losangeles.cbslocal.com/2021/02 ... d-pay-law/
Last edited by CalItalian on February 1st, 2021, 2:27 pm, edited 1 time in total.
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Re: Ralphs and Food 4 Less Closing in Long Beach over $4 per hour additional required "Hero Pay"

Post by Bagels »

I understand Kroger’s decision. With the additional $4/hr “hero pay,” minimum wage is $19/hr. Groceries stores simply aren’t set-up for that type of wage environment.
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Re: Ralphs and Food 4 Less Closing in Long Beach over $4 per hour additional required "Hero Pay"

Post by veteran+ »

Bagels wrote: February 1st, 2021, 3:54 pm I understand Kroger’s decision. With the additional $4/hr “hero pay,” minimum wage is $19/hr. Groceries stores simply aren’t set-up for that type of wage environment.

Yes they are.

Corporate does not want them to be because all the profit goes "upstairs".

The majority of grocers have done quite well during this pandemic and offered measurably lower levels of service. Standards have lowered quite a lot with the perfect excuse of COVID.

I used to do analytics work for district, division and regional P&Ls for a couple of chain grocers..........the money is there but it does not stay in the store. Ask smart Store Managers that know how to track their bonuses.
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Re: Ralphs and Food 4 Less Closing in Long Beach over $4 per hour additional required "Hero Pay"

Post by storewanderer »

Bagels wrote: February 1st, 2021, 3:54 pm I understand Kroger’s decision. With the additional $4/hr “hero pay,” minimum wage is $19/hr. Groceries stores simply aren’t set-up for that type of wage environment.
They just need to increase prices and see if the customers will continue to shop in these stores when they can go to a surrounding city without this higher overhead cost. The grocers have zone pricing and should be able to adjust operations to account for higher overhead costs (rent, theft, etc.). Same way many businesses (though not all...) in Seattle have their products marked up higher than surrounding suburbs in Seattle with its $15/hr wage.

Also that higher labor cost could mean time to close certain marginally performing departments in certain stores, cut slow moving produce (labor intensive to rotate), and/or switch to more prepack product.

Also the City of Long Beach is saying this is temporary due to COVID... seems a little harsh to close the stores completely. You can do an economic forecast and generate whatever result you want and skew it but to close the stores before the temporary $4/hr wage increase even goes into place unless the lease just so happened to be up on both stores seems to be a very rash move in my opinion.

That is okay- there are plenty of grocery competitors in Long Beach who will continue to operate their stores under these rules. Whether or not they opt to price increase is up to them but they will at least be there to serve the customer.
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Re: Ralphs and Food 4 Less Closing in Long Beach over $4 per hour additional required "Hero Pay"

Post by CalItalian »

Bagels wrote: February 1st, 2021, 3:54 pm I understand Kroger’s decision. With the additional $4/hr “hero pay,” minimum wage is $19/hr. Groceries stores simply aren’t set-up for that type of wage environment.
Currently, in 2021, the minimum wage is $14 per hour in Long Beach for 26 or more employees. But for Los Angeles County Ralphs employees, the lowest wage is $15.10 per hour starting 3/1/21 (for first 3 months of employment for Clerk's Helpers). I'm not sure if that applies to the City of Long Beach. But it does to Los Angeles County, Malibu, Santa Monica, Pasadena, City of Los Angeles.

Starts on page 70. https://ufcw324.org/wp-content/uploads/ ... atures.pdf
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Re: Ralphs and Food 4 Less Closing in Long Beach over $4 per hour additional required "Hero Pay"

Post by CalItalian »

storewanderer wrote: February 1st, 2021, 7:54 pm
Bagels wrote: February 1st, 2021, 3:54 pm I understand Kroger’s decision. With the additional $4/hr “hero pay,” minimum wage is $19/hr. Groceries stores simply aren’t set-up for that type of wage environment.
They just need to increase prices and see if the customers will continue to shop in these stores when they can go to a surrounding city without this higher overhead cost. The grocers have zone pricing and should be able to adjust operations to account for higher overhead costs (rent, theft, etc.). Same way many businesses (though not all...) in Seattle have their products marked up higher than surrounding suburbs in Seattle with its $15/hr wage.

Also that higher labor cost could mean time to close certain marginally performing departments in certain stores, cut slow moving produce (labor intensive to rotate), and/or switch to more prepack product.

Also the City of Long Beach is saying this is temporary due to COVID... seems a little harsh to close the stores completely. You can do an economic forecast and generate whatever result you want and skew it but to close the stores before the temporary $4/hr wage increase even goes into place unless the lease just so happened to be up on both stores seems to be a very rash move in my opinion.

That is okay- there are plenty of grocery competitors in Long Beach who will continue to operate their stores under these rules. Whether or not they opt to price increase is up to them but they will at least be there to serve the customer.
Long Beach is being sued by the California Grocer's Association over this. Because it interferes with a collective bargaining agreement that these chains have with unions.

Also, Montebello has passed a $4 per hour similar ordinance. Pomona and City of Los Angeles are also considering.
https://www.dailybreeze.com/2021/02/01/ ... s-in-city/
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Re: Ralphs and Food 4 Less Closing in Long Beach over $4 per hour additional required "Hero Pay"

Post by ClownLoach »

I have a feeling for the Ralphs closing - this was a way to get out from under a marginal store that will be cannibalized by the new Amazon Fresh opening down the street. It is a very old and established neighborhood that used to have every brand in a short radius, Stater Bros, Albertsons, Pavilions, Fresh and Easy, and if you went further up the Los Coyotes Diagonal you hit the Towne Center with Walmart and Sam's. What is odd is that about 15 years ago they expanded and fully remodeled that store, adding about 10K Sq ft to it. The neighborhood is established and reasonably high income. I'm willing to bet it is the kind of neighborhood where residents will protest the closure, so with the City passing the "hero pay" initiative they got a built in excuse to close and someone else to point at (instead of the competition).

As far as the store out on Carson goes, that was a redevelopment deal of a former Pacific Theaters drive in I believe. Those redevelopment deals died out after Gov. Brown shut down Redevelopment Agencies. Almost all of the retail centers built or remodeled in the late 90s/early 00's in Long Beach were from these agencies and locked in below market rent for decades to encourage businesses to move there. The only reason a store wouldn't make money at such bargain basement rents would be if shrink was too high. This is the same reason they kept the problematic Marina location on PCH open instead of the 7th St one - long term low rent made it cheaper to close the higher volume store (now a Target express) and try to train the customers to find the other location.
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Re: Ralphs and Food 4 Less Closing in Long Beach over $4 per hour additional required "Hero Pay"

Post by HCal »

Reminds me of when Kroger decided to stop accepting Visa in some stores. This comes across as whiny and immature.

Financially, it makes no sense to permanently close stores because of an ordinance that is probably going to last a few months or so. Their own statement says these stores were "long-struggling", so it seems like they just want someone to blame. I think it's irresponsible for the media to blame the closures on "hero pay" in the headline.
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Re: Ralphs and Food 4 Less Closing in Long Beach over $4 per hour additional required "Hero Pay"

Post by Bagels »

storewanderer wrote: February 1st, 2021, 7:54 pmThey just need to increase prices and see if the customers will continue to shop in these stores when they can go to a surrounding city without this higher overhead cost. The grocers have zone pricing and should be able to adjust operations to account for higher overhead costs (rent, theft, etc.). Same way many businesses (though not all...) in Seattle have their products marked up higher than surrounding suburbs in Seattle with its $15/hr wage.

Also that higher labor cost could mean time to close certain marginally performing departments in certain stores, cut slow moving produce (labor intensive to rotate), and/or switch to more prepack product.

Also the City of Long Beach is saying this is temporary due to COVID... seems a little harsh to close the stores completely. You can do an economic forecast and generate whatever result you want and skew it but to close the stores before the temporary $4/hr wage increase even goes into place unless the lease just so happened to be up on both stores seems to be a very rash move in my opinion.

That is okay- there are plenty of grocery competitors in Long Beach who will continue to operate their stores under these rules. Whether or not they opt to price increase is up to them but they will at least be there to serve the customer.
In Southern California, Ralphs' pricing is universal, with very few exceptions (e.g. when a local Aldi's was undercutting the competition on eggs and milk, the nearby Ralphs matched their pricing). It'd be cost prohibitive to run an analysis on price hikes for a pair of stores, and adding a surcharge to each basket to pass along the hero pay probably wouldn't go very well. Plus, I wouldn't be shocked if both locations were marginal performers, anyway.
veteran+ wrote: February 1st, 2021, 4:13 pm
Bagels wrote: February 1st, 2021, 3:54 pm I understand Kroger’s decision. With the additional $4/hr “hero pay,” minimum wage is $19/hr. Groceries stores simply aren’t set-up for that type of wage environment.

Yes they are.

Corporate does not want them to be because all the profit goes "upstairs".

The majority of grocers have done quite well during this pandemic and offered measurably lower levels of service. Standards have lowered quite a lot with the perfect excuse of COVID.

I used to do analytics work for district, division and regional P&Ls for a couple of chain grocers..........the money is there but it does not stay in the store. Ask smart Store Managers that know how to track their bonuses.
Yes, on a macrolevel, most large companies could easily hike employee wages if it reduced oversized management compensation packages and/or educed returns to investors. But that's not realistically going to happen. On a microlevel, the $4 increase will likely shift these stores into the red. It's not shocking to see Kroger close them.
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