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Recounting the Industry's Long Days of Summertime

Recounting the Industry's Long Days of Summertime

Now that Labor Day has passed and the unofficial end of summer is here, let's take a look at a few of the events that marked the season.

We'll start with a news article in the May 28 issue of SN, in which it was predicted that rising fuel costs would prompt rising supermarket sales during the summer. In rough terms, it's currently thought that the greater the cost of mobility, the better off supermarket retailers are likely to be. That's because at some point, it no longer makes sense for consumers to expend costly fuel to travel great distances to save money at, say, a discounter. So closer shopping choices look better to consumers. (For more, see Page 20.) It now looks like that is proving to be the case, and for an additional reason: Airport delays persuaded vacationers to stay closer to home this summer, which plumped up the local shopping pool a little too. It's not entirely clear that these fuel-driven trends will continue as fall begins later this month. An economic report mentioned in a news article in SN of Aug. 27 predicted retailers may experience a slight sales decline in the second half.

One thing's for sure: Fuel prices are quite volatile. Two weeks ago, the national-average price of a gallon of regular gasoline dropped nearly 10% against the same time a year earlier, according to the U.S. Energy Information Administration. Last week, it was up nearly 7%. There are big regional variations too. As of last week, prices in California were down nearly 22%. Prices in the Midwest were up nearly 38%. The price of diesel fuel was dropping in all regions last week. (For an outlook on biodiesel fuel, see the column below.) Adding to economic uncertainties are the woes associated with the subprime mortgage fiasco, which could affect local housing markets and employment.

Let's take a quick look at two other events of the season:

  • Labor: The industry had good reason to be pleased that labor peace was achieved in Southern California, where three years earlier a bruising strike-lockout slowed the industry for weeks. This year there were weeks of high drama, but in the end both labor and management made minor concessions, declared victory and went home. This relatively tranquil resolution buoyed the mood for other labor negotiations, perhaps lessening the possibility that strikes could break out elsewhere in the country. See Page 28.

  • Whole Foods: Capping the summer was the conclusion of the Whole Foods-Wild Oats merger saga, easily the most bizarre event in many a season. The proposed merger was announced last winter, on Feb. 21. At the time, it seemed that the merger would move forward with no more than a few pro forma pokes by the Federal Trade Commission. Not so. The FTC said on June 5 it would seek to block the merger, in part because of its discovery of emails and odd message-board posts by Whole Foods' top executive, John Mackey. Some messages suggested the merger had no purpose but to wipe out a competitor. The FTC considered that to be anti-competitive, but the FTC ultimately failed to prevail in court. On Aug. 27, the merger, made unnecessarily long and costly by Mackey's observations, was concluded.