Shares of top grocers Albertson's (NYSE:ABS), Kroger (NYSE:KR), and Safeway (NYSE:SWY) rose slightly in morning trading on the news that the five-month-old California grocery strike ended this weekend. The signing of a three-year contract now sends some 70,000 people back to work this week filling bags and stocking shelves.
The key component of the settlement appears to be the creation of two tiers of grocery employees, the second for new hires who will receive less in pay and benefits -- including heath care and pensions -- than veteran employees. (According to the Los Angeles Times, this was said to be among the grocery consortium's main goals.)
As one might expect, the settlement has also created two different tiers of employees: those glad to return to work and those unhappy with some of the new contract's elements.
This morning's slight share price fluctuations aside, the impacts of this settlement from an investor's perspective have yet to be seen. They'll include:
- The obvious (the costs the grocers will now spend on pay and benefits).
- The slightly less obvious (the grocers' ability to reclaim some of the estimated $1 billion-$2 billion in lost sales).
- The tangential (the ability of "alternative" grocers like Wild Oats Markets (NASDAQ:OATS) to maintain any business gained during the strike).
Given the number of employees, customers, and grocery dollars in California, it's not unreasonable to think that the way this story plays out over time -- for all the groups involved -- will go a long way toward helping us understand the direction the grocery business may be heading for the rest of the country as well.
Though the strike has ended, this story is far from over.
Fool contributor Dave Marino-Nachison doesn't own any of the companies in this story. He can be reached via email.
