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Alright, so anyone think this is an opportunity to short these stocks?
In my area most of the unionized grocery stores are having a hell of a time competing against wal-mart/target and big box discounters. Many are closing. Meanwhile new target and wal-marts are opening. We can clearly see the trend here: unionized retail is on the out and non-unionized retail is on the up.
This leads me to believe that there is a good opportunity to short the remaining unionized stores.
Supervalue (SVU) owns Albertson's stores but this stock has already been decimated. -95% loss since 2007.
Kroger (KR) is another major unionized shop that is faring better, for now. Only down -15% from 2007. Could potentially fall further.
the other is safeway (swy). Only down -50% or so from 2007.
The basic thing to take from this is that big-box & non-union is on the up and up. Target and Wal-mart and buys IMO. Meanwhile the unionized retailers are shorting opportunities. I think KR is the best one to short.
I would do a pair trade to hedge your risk. Perhaps go long Wholefoods International or Hain Celestial.
Full disclosure: I'm long HAIN and up 220%.
Yeah that's a possibility. IMO, those stores are just specialty types. They cater to a specific niche of customer. Those customers will generally always want to go to some sort of natural food/health type of stores. They won't go to a walmart, target, ralphs etc. With that being said, I'd say the vast majority of people are focused on general retailing and a major factor in that is price. At this point, it is pretty simple, walmart and target and non-union and have lower labor cost. Those lower labor costs are passed to consumers which eventually gets most of the customers to switch.
Also yes, the health food niche retail was a good play several years back. Unfortunately, I missed the opportunity. The next opportunity I see is with these unionized retail stores going bust. They simply cannot compete. In my head, it is very clear at this point.
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I have never been in a WALMART and will never shop there. Boycott WALMART
I hear you, I don't shop there either. Personally I think the stores look disgusting and you have alot of weirdos going there. I'm just look at the economics of the situation. The bottom line is that walmart and target are outright descimating unionized retail. In 10 years, unionized retail will be non-existent. Retail consumers don't care if the cashier has health insurance or not. They don't care if they make 20$/hr or 8$/hr. All they care about is low prices.
With that being said, there is alot of money to be made shorting these unionzed retail outlets.
I think you are focusing too much on unions instead of the reason for example why Walmart or Whole Foods is successful. It has less to do with unions and more to do with their business model. I'd examine the specfic company and look at their business model, which does include payroll expenses compared to competitors, but I'd say that only makes up 5-10% of your decision.
I think it has to do with the business model more than unions per se.
-The supermarket chains now are somewhat analogous to where department stores were in the 60's or 70's. I.e. department stores use to carry everything. But then they got hurt by all these specialty retailers. Like foot locker, or any of the apparel companies.
I'd go back to other situations similar to where supermarkets are now. Look at other dead industries and see how they fell.
Maybe a better play than shorting would be to look at new trends....i.e. organic food. I read in the LA Times today, Whole food has gone up 12x in the last 4 years.
-What about the real estate? What are the supermarkets going to be turned into?
Alright, so anyone think this is an opportunity to short these stocks?
In my area most of the unionized grocery stores are having a hell of a time competing against wal-mart/target and big box discounters. Many are closing. Meanwhile new target and wal-marts are opening. We can clearly see the trend here: unionized retail is on the out and non-unionized retail is on the up.
This leads me to believe that there is a good opportunity to short the remaining unionized stores.
Supervalue (SVU) owns Albertson's stores but this stock has already been decimated. -95% loss since 2007.
Kroger (KR) is another major unionized shop that is faring better, for now. Only down -15% from 2007. Could potentially fall further.
the other is safeway (swy). Only down -50% or so from 2007.
The basic thing to take from this is that big-box & non-union is on the up and up. Target and Wal-mart and buys IMO. Meanwhile the unionized retailers are shorting opportunities. I think KR is the best one to short.
Anyone looking into this industry?
If you do short the unionized companies, just how do you go about doing that? Do you need a broker or can you DIY?
The problem with unionized grocers is that oftentimes a large majority of the employees are part-time and aren't eligible for any of the union benefits.
I remember applying for Jewel Osco back when I was in high school. I was to be paid $6.00/hr, and then the union would take out, something like 15% or 20%... while I got pretty much none of the benefits of a union. I worked for a local movie theater for the same $6/hr instead with no union.
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