Kroger shuts down stores to avoid paying risks: Bad news for real estate investors

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We have highlighted this issue many times, as It’s fair to say that grocery workers have been putting their health and safety on the line. Since the coronavirus pandemic began. As primary workers, these employees are currently prioritized to get the Coronavirus vaccine, and some supermarkets will, as other employers do, pay their wages to go out and get vaccinated.

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Kroger shuts down stores to avoid paying risks

Yet with the slow introduction of the vaccine and new weather-related delays in getting doses to the masses, many supermarket workers still work largely unprotected, except for the face masks they wear regularly.

For this very reason, Seattle decided to implement a rule requiring grocery workers to receive a pay increase of $ 4 an hour. All supermarket chains with more than 500 employees will be required to provide a hazard pay as long as the state of emergency remains in effect. Given where we’re at in terms of pandemic and vaccines, that might take some time. However, one of the major supermarket chains is not so happy. Kroger announced that it will close two of its stores in April in response to a risk allowance mandate in Seattle. The reason, not surprisingly, is money.

Although there was no shortage of demand for groceries during the pandemic, some supermarkets cannot increase workers’ wages by $ 4 an hour. Kroger claims that the new risk allowance clause will make it impossible to run a financially sustainable business and close some stores as a result. Seattle isn’t the only city requiring grocery workers to be eligible for risk allowance. Long Beach and Montebello, California have enacted risk pay-off measures, and similar proposals are in business across California.

More Updates:

Earlier in February, Kroger announced that it would shut down two stores in Long Beach in response to risk allowance requirements – and that’s in addition to two locations in Seattle it plans to close. Of course, the four grand scheme closures of all major stores in the US aren’t that terrible. But if more cities adopt risk-reward rules in the near term, the concern is that additional grocery store chains may choose to follow in Kroger’s footsteps and start closing locations. And if that happens, the malls could end up with a huge vacancy crunch in their hands. Shopping centers usually rely on supermarkets as their primary tenants, and finding alternative tenants for larger spaces is a difficult question, especially when new businesses are not in a hurry to open up. As such, real estate investors, especially those working in the commercial real estate space, will need to monitor the status of the risk allowance and prepare accordingly.

What about the Millionaire profits?

Although the risk allowance idea thus far appears to be gaining the most momentum along the West Coast, if enough cities adopt their own policies, the concept can take off at the national level. This would be good for grocery store workers, but it could be bad for commercial and homeowners who could lose a lot of time if supermarkets start to close due to financial constraints. Well, what is your take on this? Let us know what you think about it? In the comment section below!

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