Amazon & the Politics of Retail

The announcement that Amazon intends to purchase Whole Foods has the retail and grocery industries reeling as traditional grocers assess the near- and long-term impacts that the online giant’s much larger position in the marketplace may have. And with good reason. Amazon is the classic “disruptor” and has changed the face of every industry it touches. But aside from the competitive aspects, this move potentially has significant political and policy impacts as well.

When compared to other industries in the retail and service sector, the grocery industry has a significantly higher rate of unionization than its peers in traditional retail, restaurant and convenience store sectors, and the largest union representing grocery workers — the United Food & Commercial Workers (UFWC) — is a politically powerful organization.

Aside from their ongoing, decades-long assault on Walmart, the UFCW has been relatively quiet and allowed other unions, most notably the Service Employees International Union (SEIU), to do the heavy lifting with regard to leading the campaigns for a $15 minimum wage, expanded paid leave policies, scheduling reform, and a host of other business-model issues important to retailers.

But that could all change now.

As history shows, Amazon brings a high level of efficiency and automation to the marketplace, not to mention cost savings. And did I mention disruption? That one’s worth repeating because a majority of the savings that consumers love comes from Amazon’s disruption to the labor model. That kind of disruption may reawaken the sleeping giant known as the UFCW.

Amazon’s model has traditionally relied on as few actual employees as possible, levering a vast network of independent contractors. And nothing threatens the fundamental existence of traditional labor unions more than the gig economy and its widespread leveraging of independent contractors by employers across industry sectors. This is why we have seen a vigorous effort by the labor community to do what they can to put the independent contractor genie back in the bottle.

The labor community is in a desperate fight for survival — from aggressively pressuring the National Labor Relations Board during the Obama years and classifying independent contractors as employees in as many cases as possible before the board, to pressuring lawmakers in California, Seattle and New York City to classify Uber drivers as employees. Again, most of that effort has been led by the SEIU and other unions, but with only marginal success.

Now that the mighty Amazon has plunged much further into the grocery business, look for the UFCW to dust off the cobwebs and step up their game.

The question is: How? They could take an aggressive approach, fully engaging in the worker classification fight whether through legislation, regulation or the courts; by dropping their largely unsuccessful war against Walmart in order to recalibrate and turn their sights on a corporate campaign against Amazon; or by leveraging their political allies to stymie Amazon’s business model at every turn.

Or they could take a more conciliatory approach, working with grocers with whom they already have collective bargaining agreements and concede enough to help them stay competitive with Amazon; or maybe by offering potential partnerships with Amazon and similar players on job training and apprenticeship programs as other unions have done.

Generally, they’ll have to try something to prepare themselves for the booming gig economy and attempt to stay relevant in the rapidly approaching labor market of the future.

The politics of the gig economy are interesting to say the least and chock full of contrasts. Democrats love “tech” and have traditionally been close to Silicon Valley despite what automation and technology are doing to the labor market. It’s the Republicans who have been very supportive of new economy disruptors like Amazon, Uber and Airbnb.

People under the age of 40 are increasingly voting Democrat at the ballot box as they tend to be sympathetic to the potential displacement of workers and supportive of “pro-worker” policies. That contradicts with their consumer habits. The same people are voting as consumers on the web by embracing the very same disruptive, online economy Republicans seem to be protecting. Essentially, they are Democratic voters but Republican consumers.

How the unions, most notably the SEIU and potentially the UFCW, navigate that political paradigm remains to be seen. But if they don’t figure it out soon, they may find themselves a few clicks away from being deleted.

Editor’s note: The opinions in this column are the author’s and do not necessarily reflect the views of Convenience Store News.

Joe Kefauver is managing partner of Align Public Strategies, a full-service public affairs and creative firm that handles national issues and multi-state strategy for a portfolio of flagship clients including the country’s largest employers, Fortune 100 brands and national associations. For more information, go to AlignPublicStrategies.com.