New Research
Study finds 'big box' grocers threaten N.J. supermarkets
Archived article from Dec 6, 2004
By Patricia Lamiell
Big box retailers selling groceries may be popular with consumers, but they pose a significant threat to New Jersey’s supermarket industry, the biggest vendor of groceries and an important player in the state’s economy.
So says a study issued last month by Rutgers’ department of labor studies and employment relations. The report comes amid a national debate over the economic and social impacts of “big box” stores such as Wal-Mart, Kmart and Target. These industrial-size buildings – often up to 200,000 square feet and three stories high – allow retailers to leverage huge economies of scale and no-frills retailing to offer products from groceries to tires at bargain prices. But their aggressive pricing can imperil smaller competitors, the report says.
The study was funded by an Academic Excellence Fund grant from the office of President Richard L. McCormick.
Wal-Mart has proposed building a supercenter in Pennsville, N.J., in competition with three neighboring supermarkets. “People across the country are passionately debating the impact of supercenters, as they are in Pennsville,” says Robert C. Angelo, assistant professor of labor studies at the School of Management and Labor Relations and the study’s lead author. Wal-Mart has other New Jersey outlets, but the proposed supercenter in Pennsville is getting a lot of opposition from residents of Salem County, Angelo said.
Proponents contend that supercenters promote lower prices, create construction and retail jobs, and improve product availability and consumer convenience. Critics are concerned about low wages and benefits, questionable labor practices, traffic congestion and unfair competition against smaller retailers.
There are 14 chains operating about 500 supermarkets across the state, according to the report. In 2002, together they directly employed 67,530 workers; this represents about 2 percent of the state’s total nonfarm workforce, nearly 20 percent of the state’s retail workforce and more than the state’s high-profile telecommunications, pharmaceutical manufacturing or casino industries. Payroll expenditures at state supermarkets in 2002 totaled $2.3 billion including benefits and payroll taxes, ranking second after the state’s pharmaceutical companies.
All but four of New Jersey’s supermarket chains have labor unions that collectively bargain for higher wages, better benefits and working conditions and more job security.
“Supermarkets often have replaced local factories as attractive and stable places of employment opportunity,” the report says.
Adding food sales to a Wal-Mart’s Supercenter would increase potential retail sales by as much as 30 percent. However, Angelo warns that the “the economic and social backlash may very well be felt by workers, consumers, policy makers and taxpayers from Trenton to High Point to Cape May.”
A bill introduced in the New Jersey Legislature last month would require supercenters to compete a rigorous regional analysis and approval process before winning development approval.
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