Contract talks are dragging on between Southern California’s “Big 3” supermarkets – Vons, Ralphs and Albertsons – and their union workers.

The union worries about rollbacks in wages and benefits; the stores worry about Walmart and other giant non-union competitors moving into the grocery business.

And there’s another worry: a crowd of small grocery chains, most of them non-union, that do bang-up business where the “Big 3” couldn’t.

When people say L.A. is a company town, don't think Hollywood. Think groceries.

At the Super King market on San Fernando Road in Glassell Park, a neighborhood in northeast L.A., store director Raffi Karayan plays tour guide. "Right now we’re just going through people, trying to maneuver ourselves through the shopping carts. We have 14 checkstands open, and we have baggers on each checkstand to make sure the lines are going as fast as possible."

We try to walk through the aisle in front of the checkstands and there are grocery carts and people everywhere. This is at 4 p.m. on a Tuesday. Karayan says it’s a slow Tuesday for his Super King.

And his isn’t the only store in the neighborhood. Victoria De Leon has been living and grocery shopping in Glassell Park for over 30 years. She ticks through her neighborhood options: Super A, Super King, Superior, La Esquina carniceria.

A couple of miles away in front of El Super is Johanna Sanchez of Highland Park. "We usually shop at Food 4 Less here in Highland Park, or we go to the Food 4 Less in Pasadena," says Sanchez. "We also go to the supermarkets here, El Superior, there’s also a Super A, there’s also a Fresh & Easy, and pretty close by there’s a Trader Joe’s where we’ve shopped."

The competition in Southern California between grocers is fierce. And, notice, not one mention of Vons, Ralphs or Albertsons – the “Big 3” in tense contract negotiations with employees.

There was a Ralphs in Glassell Park and an Albertsons in nearby Eagle Rock. Both are now closed. The Ralphs? That’s the Super King we just left – the one with 14 open registers on a Tuesday afternoon. The Albertsons is now a Fresh & Easy owned by Britain’s Tesco.

"What happens in Los Angeles and then what happens in the rest of California is typically what happens across America," says Burt Flickinger. Flickinger is a grocery industry analyst in New York for Strategic Resource Group.

He calls Southern California the “most important” food market in the U.S. and Canada. "In food retailing, California was the first with organics, the first with scanning. California was one of the first to have food and drug combination stores for one-stop shopping. So, every decade, California, particularly the Los Angeles area, tends to be the trendsetter."

Flickinger says Southern California is experiencing a retail renaissance for independent grocery chains like Super King, El Super and others. They’re beating the “Big 3” – Vons, Ralphs and Albertsons – in low-income neighborhoods with better prices and products their customers want.

This is the second part of a five-part series. For months, Ralphs, Vons and Albertsons have been chipping away at a new contract with the union for grocery store workers. Sometimes, the talks get nasty enough to raise the specter of the “Big Three” labor dispute of 2003, when 70,000 grocery store workers stopped working for four months. In the end, the workers kept jobs but lost pay. The stores won a new pay scale but lost customers. Eight years later, a repeat of that dispute could be a disaster for the supermarkets and their workers. We look at why this week.