For Acme Markets executives facing a potential walkout of union workers Friday, the contract dispute boils down to this comment, contained in a recent letter to employees from president Judith A. Spires:

"Our business is under attack by the competition now. If we don't change, our competitors will win," Spires wrote to 4,500 Southeastern Pennsylvania members of United Food and Commercial Workers Local 1776, whose contract expires Friday after 19 months of failed negotiations. "That's not good for you or our business."

Indeed, Acme Markets was in trouble long before Spires penned that July 2 letter, and well before Acme gave the union a take-it-or-leave-it contract offer last month that was met with the pledge of a possible walkout Friday at 41 stores.

The union voted down the proposal two weeks ago and warned Acme not to implement the terms Friday without its consent. The two sides were set to meet this week in negotiating sessions.

Recently released sales figures show a continuation of year-after-year sales losses at Acme. The trend could make Acme's divisional chiefs in Malvern and its corporate owner, Supervalu Inc. of Minnesota, resolute in contract talks with workers in Southeastern Pennsylvania, industry analysts said.

"I think there are going to be some givebacks. How that is ultimately forged, I think, is the $64,000 question," said Food Trade News publisher Jeff Metzger, whose annual market survey showed Acme sales taking a hit.

Competitors such as Giant, ShopRite, Wawa, and Wal-Mart continued to outmaneuver Acme and cut into its lead in the eight-county Philadelphia area, according to the survey, published in late June.

Acme retained its top sales spot. But of $13.4 billion spent on groceries, drugs, tobacco, and cosmetics, Acme's share was just 13.6 percent during the 12-month period that ended March 31.

A year earlier, its share was 14.5 percent - $60 million higher in sales. In 1996, Acme's market share was 20.8 percent.

Genuardi's, Super Fresh, and Pathmark joined Acme in losing sales, the survey showed, while Wal-Mart and Wawa's sales grew. Unionized ShopRite and nonunion Giant were right on Acme's heels.

ShopRite, a cooperative of family-owned supermarkets with headquarters in Elizabeth, N.J., was second with 10.8 percent of sales in Southeastern Pennsylvania and South Jersey, nearly $130 million more than last year.

Giant, based in Carlisle, Pa., had 9.4 percent of sales in the region, a $145 million increase - despite having no stores in Philadelphia.

Analysts said ShopRite has lured customers by offering low prices week after week and stocking goods tailored to the desires of the shoppers who live near each store, rather than items purchased by corporate buyers, as is common in large chains.

Selling merchandise at low prices costs money and means less profit. But some chains are willing to take lower profits if they can draw more customers - they make up the difference on volume.

ShopRite has been willing to do that, analysts said, which helps it compete for Wal-Mart customers. But it has managed to still feel like a supermarket.

"ShopRite is just making a small step away [from Wal-Mart] in saying, 'We're still really low price and we give you choice, we give you some variety,' " said John Stanton, chairman of the food-marketing department at St. Joseph's University.

Giant, Stanton said, has promoted its perishables, but at prices lower than higher-end Whole Foods or Wegmans. "It has the freshest, widest variety in produce at a reasonable price."

Acme's strategy?

"I have no idea," Stanton said. "I don't know what they're trying to convince people of. I see a store that's neither the lowest price nor the widest variety."

Metzger, of Food Trade News, said that since its acquisition in 2006 by Supervalu, Acme has been preoccupied with paying off corporate debt rather than reinvesting cash into many newer stores or selling cheaper merchandise.

"Acme is not competitive on everyday pricing," Metzger said. "Consumers are punishing Acme for higher prices."

Acme would not make anyone available to comment on the survey's results, though it has done so in past years. In a statement, a spokeswoman said it was a matter of company policy not to discuss market share.

"We understand that our work is never finished," the statement said, "and we strive diligently every day to earn our position as Greater Philadelphia marketplace's preferred grocer."

Acme said it strove to "bring value back to our shoppers in a multitude of ways, including numerous community-relations and marketing programs that range from local events and sponsorships to our weekly coupon specials and innovative initiatives."

Giant spokeswoman Tracy Pawelski said the chain, which opened its first area store in 1987 and now employs more than 7,800 people in Bucks, Chester, Montgomery, and Delaware Counties, has focused on modern stores with fresh produce, variety, and good prices.

"At Giant, our objective is to offer the best combination of quality and selection at prices that families can afford," Pawelski said.

Wakefern Food Corp., the cooperative that oversees ShopRite, said its edge came from the fact that its stores were family-owned and locally controlled.

"I think the advantage that we have is that we are able to combine that intimate know-how with the community with the buying power of a large cooperative," said Wakefern director of consumer affairs Cheryl Macik.

Acme could drum up cash for better promotions or store renovations by squeezing savings out of its labor contract, Stanton said.

Even if does, Metzger said, the competition will remain intense.

Contact Maria Panaritis at 215-854-2431 or mpanaritis@phillynews.com.