The Wal-Mart Effect, 2.0

I realize that we are Wal-Mart Watch, not Loblaws Watch- however, there was no way I could pass up the chance to talk about this story. The London Free Press reports today that Canadian retailer, Loblaws, is cutting wages and change the name of “rebranding” its stores in London, Canada so that it can compete with discount retailers like Wal-Mart. This will also allow them to bypass their union contract with UFCW.

If anyone ever questioned Wal-Mart’s global impact and the strength of their mere existence, this situation should lay those concerns to rest. Wal-Mart’s expansion into the Canadian grocery market has led to Loblaws demise and pathetic attempts to compete at the expense of its workers. It’s interesting to note that Loblaws, while trying to battle the behemoth Wal-Mart, is taking a page right out of their handbook of putting profits before people. It’s good to see that Wal-Mart brings out the fighter in everyone- and the claws. What’s next Loblaws? Are you going to start discriminating against your women employees and denying adequate health care to your staff? Clearly, that is the path to success in the global retail environment.

Loblaws rebrands and cuts wages

London’s three remaining Loblaws stores will undergo major changes that include new names and lower wages for workers.

The company is slashing wages and hours and rebranding its London stores as it struggles to compete with discount food stores, a union official says.

The Loblaws store on Southdale Road is under renovation to become a No Frills. The Wonderland Market at Wonderland Road South and Southdale Road and the Richmond Market at Richmond Street North and Fanshawe Park Road will be renamed in the fall.

Loblaw can cut wages under a new store banner, said Tony Soares, secretary-treasurer of Local 1000A of the United Food and Commercial Workers, the union representing store workers.

“This is all about wage reductions. They cannot compete with the discount grocery store competition and they want to lower wages so they can lower prices to compete with the likes of Wal-Mart,” Soares said.

A Loblaw spokesperson said the conversion of its Southdale Road store to a No Frills has nothing to do with cutting payroll.

“When we look at converting a store to a No Frills banner, we look at the demographic and see if it would support it and we look at the success of other No Frills stores close to that area,” David Primorac said.

“There is not a lot of differences in offerings, but you cannot beat the prices.”

The conversion of the Southdale store will be completed in October.

No decision has been made on converting the other two stores, Primorac said.

But the union and employees say the stores will change.

By converting its Loblaws stores into No Frills, the company can save as much as $6 an hour on the wages of workers, who will see their pay go from a high of $16.50 to a low of $10.50 an hour, he said.

Workers at Valu-Mart and Great Canadian Super Stores, both owned by Loblaw, earn about $4 an hour less, $12.50 an hour.

“Everyone is very anxious here right now,” said one worker at the Loblaws store on Wonderland Road, who declined to be identified.

“We are so disheartened, so disappointed. You will see turnover here like a call centre and the way products are changing, customer service will really suffer.”

There has also been little information from the company and union on the restructuring and workers have to decide whether they will take a pay cut or leave, said the worker.

Staff have been offered a buyout to leave or a buy down—a cash payment after which they will see their wages and hours cut, said the worker.

“No one will lose their jobs, but they will get reduced hours. Some are getting 20 hours a week now, but may get four or even zero hours,” Soares said.

In London, there are between 1,000 and 1,500 Loblaws workers—each store has more than 300 employees, he said.

A No Frills store has 50 to 80 workers, meaning the more than 250 displaced employees from the Loblaws store on Southdale will bump into the other two remaining Loblaws stores in London.

The influx means there will be more people working fewer hours or taking a buyout.

“They are still on the payroll, but they will get no work,” Soares said.

LONDON CHANGES

Loblaws store on Southdale Road will become a No Frills.

Loblaws stores on Wonderland Road South and Richmond Street at Fanshawe Park Road will be rebranded in the fall to either Great Canadian Super Stores or Loblaw Great Food stores.

Great Canadian Super Stores in Oakridge and Wolseley Barracks, as well as Valu-Mart and No Frills stores, will not change.

Top hourly salary range for part-time workers:

Loblaws: $16.50

Valu-Mart: $12.50

Super Stores: $12.50

No Frills: $10.50

Posted by Vasudha Desikan on Wednesday, July 30, 2008