Retailing -- Ernst Images Likely To Clash
To its customers, Ernst Home Centers wants to be known as a larger version of the corner hardware store, offering friendly service, low prices and huge selections of nuts and bolts, paint and potting soil.
But some employees and competitors know a different Ernst - a corporate giant with an out-of-state owner. This Ernst plays hardball, and has earned a reputation for fighting its adversaries in the courts.
These two images will likely clash in coming months as the union representing 450 of Ernst's Seattle-area sales clerks prepares to step up a boycott at a time when Ernst's busiest selling season is just around the corner.
The union, Local 1001 of the United Food & Commercial Workers, announced last week that it had filed a class-action lawsuit against the home-improvement chain, charging the Seattle retailer with failing to pay employees for work done on their own time. A morning of picketing outside Ernst headquarters followed the announcement - a symbol, says union official Nancy Holland-Young, of more to come.
The boycott, which started in November, has been low key so far. But with the coming of the spring home-improvement and gardening season, the period in which Ernst rings up more than half the year's sales, the union's activities will undoubtedly intensify.
Ernst and Local 1001 have been locked in contract talks since October. Ernst spokesman Monty Reese contends the union filed its class-action suit to divert public attention from the "real" issue at hand - the company's desire to make union membership voluntary.
Reese says employees deserve a choice and that several have expressed a desire for an "open shop" clause in their contract.
Local 1001 President Joe Peterson counters that in a vote held before the contract expired Nov. 1, a majority of employees did not want such a clause.
Last fall, Ernst filed suit against the union, accusing it of misleading its employees with a mailer that encouraged workers to file back-wage claims for off-the-clock work. Peterson responded by producing claims from 89 Ernst employees for back pay ranging from $12 to $6,569.40 and filed unfair-labor-practice charges against the company.
The National Labor Relations Board has since filed a complaint against Ernst, charging it with unfair labor practices and urging it to drop its lawsuit.
The board has said it may file additional complaints against Ernst if the company does not comply with its request.
These union squabbles come at a time when Ernst faces intense pressure from superstore competitors. Ernst's response has been to fight those battles in court as well.
In the past 11 months, Ernst has sued three of its competitors. The suits are against:
-- Wal-Mart Stores Inc., on charges that Wal-Mart stole Ernst's registered advertising motto, "Always the Right Price. Always!"
The lawsuit claims that after Ernst began using the motto in March 1990, Wal-Mart began using the slogan "Always the low price. Always."
In a counterclaim, Wal-Mart contends it began using its slogan in 1989 after a Forbes magazine article touted its low prices, and accuses Ernst of stealing the slogan.
-- Pay'n Save Drug Stores, now known as Payless, on charges that the retailer sold nursery items in 15 shopping centers where Ernst has the sole right to sell these products.
Payless, in a counterclaim, accuses Ernst of selling camera film and film-processing services at eight shopping centers where Payless has the sole right to sell these services.
-- Eagle Hardware, on charges that Eagle violated the state's Consumer Protection Act by running newspaper ads that compared prices in a false and deceptive manner.
Eagle, in turn, accuses Ernst of misleading consumers with its advertising and claims. Eagle also is accusing Ernst of defamation for suing Eagle just before the Tukwila-based chain went public, a move that generated publicity about the lawsuit at a time when Eagle was distributing its prospectus to potential shareholders.
Shortly after these suits were filed, the state of Washington sued Ernst, on charges that it failed to objectively portray prices at Pay 'N Pak and Home Club in a 1990 advertising campaign. The state alleged that a research company hired by Ernst to gather pricing information for the campaign failed to gather data objectively.
In a settlement last October, Ernst admitted no wrongdoing but agreed to pay $19,500 in court costs, consumer education and to enforce the Consumer Protection Act.
These disputes may sound like playground fights among children on the surface, but they underscore Ernst's efforts to hold onto market share in a tough retail environment.
Sales at Ernst's 72 stores in six states continue to show annual increases, despite the tough economy and increased competition.
Though the company is privately held and will not release financial information, industry estimates put the chain's annual sales at $400 million.
Reese says sales at stores open more than a year have increased 12 percent to 14 percent annually over the past three years.
But with Eagle showing strong growth and the entry of another large competitor, Home Depot, in the Seattle area this year, Ernst is undoubtedly feeling pressure.
Not everyone agrees that Ernst's hard-line stance against its competitors is the right approach.
"When you engage in this kind of thing, you're not trying to make your business better, to cater to your customer's needs," marketing consultant Dick Harvey says. "They should be discussing strategies, merchandising, how to serve the customer better. Instead, they're wasting time and lots of money in court."
Ernst says it's only trying to create a level playing field. "As a company, we're going to defend ourselves when other companies slander us," Reese said.
Ernst differentiates itself from its competitors, describing itself as a full-line home center and nursery store positioned in shopping centers that are convenient to the middle-class Seattle and suburban shoppers whom it targets. Reese says the company will compete on price, it also offers value-oriented merchandise and employees with specialized knowledge of its products.
"The warehouse stores have their customer," Reese says. "We have ours."
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