Ralphs charging more: consumers may be paying a price in order to avoid store picket lines.

Ralphs the only major supermarket chain not being picketed by striking and locked-out workers, is charging generally higher prices than its two competitors, a Business Journal survey of local stores has found.

The survey covered 15 Vons, Ralphs and Albertsons stores, clustered in groups of three in five geographic locations, and sampled a market basket of 15 common food items.

Ralphs stores offered the highest price or were tied for highest on nine of the 15 items and priced five items the lowest. Vons stores offered the highest price on eight items and the lowest on nine, while Albertsons offered the highest price on only three items, and the lowest on four. (Because of ties, lowest and highest each total more than 15.)

The results suggest that customers who have been reluctant to cross picket lines are paying a price by going to Ralphs, and those who do brave the glares of striking or locked-out workers may be benefiting in the way of lower prices.

"It is certainly a possibility that (Ralphs officials) realize they can charge a little more because customers are reluctant to go to the other stores," said Richard Feinberg, professor of retail management and director of the Center for Customer Driven Quality, a Purdue University program that studies consumer behavior. "The stores that are being picketed have no choice but to lower prices to try to compel customers to come in."

Terry O'Neil, spokesman for Ralphs, said prices change weekly and the sampling wasn't large enough to draw conclusions.

"We price against the competition within the same area," he said. "We believe what we are offering in quality service and competitive prices is enough to encourage shoppers to visit our stores and not the competition's."

Albertsons spokeswoman Stacia Levenfeld refused to discuss details of the company's pricing strategy.

"It's proprietary and I don't know our competitors' marketing and pricing strategies at all," she said. "We work to ensure that we are priced competitively in the marketplace."

Vons spokeswoman Sandra Calderon declined comment.

Customers looking to save some money on a holiday feast will have to be picky, however. Prices on one item can vary greatly from store to store, even within a single chain. Some stores offered the lowest price on some items, but the highest on others.

The Vons at 2355 E. Colorado Blvd. in Pasadena, for example, offered the lowest price on a 6-oz. can of Starkist albacore tuna--99 cents, less than half the price at a competing Albertsons. But the Pasadena Vons also had the highest price of any store in the survey for a gallon of milk: $5.45. By contrast, the Vons at 18439 Ventura Blvd. in Tarzana and the one at 24325 Crenshaw Blvd. in Torrance each charged only $2.50.

Generally, stores sampled in the central San Fernando Valley (Sherman Oaks, Van Nuys and Tarzan) and the Crenshaw District/Inglewood area had a greater ratio of high prices to low than elsewhere, and stores clustered in the Torrance vicinity had more low prices than high ones. The other two cluster areas, in West L.A. and Pasadena, didn't show much of a variance.

It is unclear what, if any, bearing the chains' mutual aid agreement has on pricing structures. But the chains have eliminated some of the steep discounts that were offered in the earliest days of the strike, when it became clear that shoppers were not crossing the picket lines.

The chains have not disclosed details of the mutual aid pact, but have acknowledged that Ralphs, owned by Kroger Co., is sharing some of its revenues with Albertsons Inc. and Safeway Inc., owner of Vons and Pavilions.

Earlier this month, California Atty. Gen. Bill Lockyer announced an investigation into possible state and federal antitrust violations resulting from the revenue sharing agreement.

"It's a piece of information that raises more questions about the mutual aid pact," said Tom Dresslar, Lockyer's spokesman, when told of the results of the pricing survey. He added that Lockyer has not conducted any of his own price surveys.

As of last week, the chains had until Dec. 22 to respond to Lockyer's subpoena for copies of the agreement and other related documents, emails and communications. The agency is still waiting for a response, Dresslar said.

Daniel Mitchell, a professor of management and public policy at UCLA, said that in theory, the revenue-sharing agreement would discourage discounting by Albertsons and Vons--but it' s complicated.

"It's in keeping with economic theory: less competition so less downward price pressure," Mitchell said. "But it doesn't necessarily work out in Ralphs' favor if Ralphs shares its profits with the other stores."

Officials at the United Food and Commercial Workers union pointed out that any additional revenues generated by Ralphs pales in comparison with the earnings all three chains are losing amid the dispute.

"That does seem a little odd," said Kathy Finn, director of collective bargaining research and education for the UFCW's L.A.-based Local 770. "But I tend to think whatever pennies (higher) they are pricing is not making the difference. They are wasting a tremendous amount of money trying to fight this fight."

The pain has hit both sides, though. Union workers have lost more than $270 million in wages (excluding strike benefits) since UFCW struck Vons and Pavilions stores on Oct. 10 and were locked out by Albertsons and Ralphs the next day, according to Barbara Maynard, a labor consultant for the UFCW. The stores also stopped paying health insurance premiums, but union officials said last week they had reached deals with insurers to keep coverage going through the end of January.

Talks between the two sides, which have been proceeding in fits and starts, were scheduled to resume on Dec. 19 under the guidance of federal mediator Peter Hurtgen. They last recessed on Dec. 7, with both sides holding to their hard stances.

Pricing constraints

In a survey published Sept. 3 by Consumer Reports, all three of the major chains scored a middling "3" on a scale of 1 to 5, for prices when compared to 41 other supermarket chains nationwide.

The survey included large, non-unionized discount operations, such as Wal-Mart Stores Inc.'s supercenters, which sell more groceries than any other chain in the nation.

However, the results of such surveys are full of caveats. Milk prices, for instance, are affected in California by state law that prohibits supermarkets from selling milk for less than they paid.

"Instead of using it as a loss leader--something that's priced cheaply to get people to come to the stores--it's sold at inflated prices at the major chains," said Michael McCauley, media director for the western region of Consumers Union. "There's very little competition at the major chains when it comes to milk."

In fact, a survey his office conducted in 1999 found that the chains' milk prices are generally higher than mom-and-pop operations.

Ultimately, the chains may be betting that most of their steady customers will return to their regular stores after the strike and lockout are over.

"Customers have a short memory and are complicit in the high cost of certain products," said Elisa Odabashian, senior policy analyst for Consumers Union, which publishes Consumer Reports magazine. "I think the supermarkets know that after this has all blown over, that consumers will continue to come to them out of convenience of their location and vast diversity of products.