Part-timers could go full time at grocery giant

Move by Loblaw designed to boost productivity, retention
By Shannon Klie
|Canadian HR Reporter|Last Updated: 03/16/2009

Canada’s largest grocery chain is looking at creating up to 10,000 full-time jobs over the next 18 months, announced Loblaw president and deputy chairman Allan Leighton.

The move to convert about 10 per cent of its workforce to full-time is part of a plan to boost productivity and retention to help Loblaw weather the recession, said Leighton at an investor conference at CIBC World Markets in Toronto earlier this month, where retailers discussed plans to cope during the economic downturn.

“Increasing our full-time workforce would not only benefit our colleagues but also our store productivity,” a Loblaw spokesperson told Canadian HR Reporter. “We think it is the right thing to do and it would benefit the Canadian economy.”

The company will need to work with the United Food and Commercial Workers union, which represents Loblaw employees, to make the necessary changes to collective agreements to accommodate the staffing changes.

While it might be counter-intuitive for a retailer to spend more money on staff during a recession, Loblaw’s investment will result in more engaged employees who will, in turn, provide better customer service and help boost the company’s profits, said Lisa Hutchison, a senior consultant at Toronto-based retail consultancy J.C. Williams.

“It’s a really strategic move. Improving the productivity of their employees will help differentiate themselves from the other players in the market. Having motivated employees helps with the whole customer experience,” said Hutchison.

The grocery chain employs more than 140,000 staff at more than 1,000 stores. In retail, including grocery, roughly 77 per cent of staff work part time, said Leighton.

The industry has a part-time staff turnover rate of about 50 per cent every three months, he said. The average hourly wage for a full-time employee is 50 per cent higher than that of a part-time employee. The turnover rate for full-time employees is 90 per cent lower than that of their part-time counterparts, he said.

In his presentation at the conference, Leighton referred to this as the “sweet spot” — the point at which the benefits of increased productivity and reduced turnover more than make up for the added cost of more full-time workers.

“Having happy, talented, motivated employees means there’s less turnover. Reducing turnover helps the bottom line as well. Employee turnover and finding the right employees is one of the greatest challenges for any retailer,” said Hutchison.

The move to more full-time staff is just another way the grocery giant is revamping employee programs to be more competitive. Last year, Loblaw introduced a 10-per-cent employee discount program for all corporate store staff, a rarity among grocery retailers.

“They’re really trying to implement employee programs to retain happy, talented workers and reduce their turnover,” said Hutchison. “It’s following along with what their strategy is all about and aligning their employee programs.”

Among large grocery chains, the majority of staff work part time, said Hutchison. However, independent grocers are more likely to have more full-time staff than part-time, said John Scott, president and CEO of the Canadian Federation of Independent Grocers, a Toronto-based association representing 3,800 independent and franchised grocers across the country, including Longo’s in Ontario and Quality Foods in British Columbia.

To be competitive, independent grocers have focused on providing great customer service and that just can’t be done if the majority of staff are part-timers, he said.

“The independents’ point of differentiation is looking after the customer. You can only do that with full-time people,” said Scott.

The decision that led to the majority of Loblaw’s staff being part time was probably made to save money, he said.

“Now they’re looking at it and saying, ‘From a productivity point of view, it makes sense to have full-time people.’ And, frankly, I agree with them. But we’ve been there. It’s not new to the grocery business,” said Scott. “It’s maybe new to that company, but it’s not new to us. The fact they’re moving this way says to me we’ve been right all along.”

Grocers’ profits steady

While retail sales fell 5.4 per cent in December and hit the lowest levels in 17 years, according to Statistics Canada, large grocery chains, including Loblaw and Metro, saw profits rise in the final quarter of 2008.

This is a trend Scott has seen among independent grocers as well. As the economy worsens, people become concerned about saving money so they stop dining out and start buying more food at grocery stores, he said.

“We’ve seen people move into the stores. Basically they’re trading restaurants for the grocery stores right now,” said Scott.

Eventually, as the economy worsens, people will move from high-end products to low-end products at the grocery store. However, neither Scott nor a spokesperson for Metro who attended the CIBC World Markets conference has noticed this shift.

Other retailers at the conference talked about various ways of coping with the economic downturn and changes in consumer spending. These included opening fewer, smaller stores in the case of big-box home renovation retailer Rona, and stocking more necessities, such as food, in the case of Canadian Tire.