By Randy Tucker
The Cincinnati Enquirer

Now that the second-longest grocery strike in U.S. history is over, Kroger Co. and two other supermarket chains affected by the 5-month-long labor dispute have quickly turned their attention to regaining lost business and wooing back customers.

The Southern California strike and lockout, which were settled Sunday when members of the United Food & Commercial Workers Union ratified an agreement with Kroger's Ralph's division, Safeway and Albertson's, have cost the three chains an estimated $1.5 billion in lost sales.

Analysts have speculated that the three chains will have to slash prices and step up promotions to recoup their losses and lure back customers who refused to cross picket lines.

"Our first priority is getting our employees back to work,'' said Gary Rhodes, a spokesman for Cincinnati-based Kroger. "But we have a plan in place to reward our customers and further build our business.'' He declined to elaborate.

But Mark Hugh Sam, a grocery analyst at Morningstar Inc. in Chicago, said Kroger and Safeway would probably offer promotions tied to their loyalty cards as well as storewide discounts.

"Albertson's isn't as far along, but both Kroger and Safeway have advanced loyalty card programs that let them know where their customers are, how much they spend, and who hasn't been shopping at their stores lately," Hugh Sam said. "I expect to see some sort of promotions that target cardholders that would give them, say, $5 off their next purchase or 2-for-1 coupons.''

But other retailers who picked up customers as a result of the labor dispute also will likely push promotions and sales to keep their new customers, Hugh Sam said.

"There are going to be lots of great sales,'' he said. "But I don't think you'll see a price war.''

Several retailers reported a significant boost in business during the California labor dispute.

Wild Oats, for example, said this week that the strike added 6.3 percentage points to its 14.5 percent increase in fourth-quarter sales.

And Costco credited the grocery strike with helping the company post a 13 percent increase in January same-store sales.

The union and the chains settled on a tentative contract Thursday after 16 straight days of negotiations.

Almost 900 stores and 70,000 workers were affected by the strike, which centered on the chains' attempt to cut health benefits and install a two-tiered wage system.

Under the three-year agreement, current union members will not have to make contributions toward their health care plans in the first two years and will need to contribute in the third year only if reserves aren't sufficient.

But the contract creates a second tier of employees who will receive lower pay and fewer benefits.

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E-mail rtucker@enquirer.com