Loblaw offers staff discount

Employee perk a rarity in the grocery sector

In response to tough competition from Wal-Mart and four years of profit declines, Canadian grocery giant Loblaw has rolled out a turnaround plan that includes cutting costs, expanding services, reducing prices and revamping employee programs.

Judging by results from the first quarter of 2008, the plan is starting to pay off. The grocery retailer’s first-quarter earnings were $62 million, up from $54 million in the first quarter of 2007.

Then last month, the Toronto-based grocery chain, which controls 32 per cent of the Canadian grocery market, took its employee programs to the next level by rolling out an employee discount plan — a rarity among grocery stores.

“It’s a differentiator for us in the marketplace. It helps us recruit new colleagues and helps us keep them here,” said Martin Jamieson, the executive vice-president of Loblaw brands.

The program gives full-time and part-time employees at corporate and corporate-owned stores 10 per cent off most merchandise (some of the excluded products include milk, soft drinks and lottery tickets). In all, about 108,000 of the 140,000 Loblaw employees are eligible for the discount, said Karen Hanna, vice-president of HR for Loblaw.

“There are (clothing) retailers that have discounts, but if you think of how often you buy groceries as opposed to how often you buy clothes, this is a huge, weekly value,” she said.

Many retailers find employee discounts a good recruitment and retention tool. As a traditional music and video retailer, HMV has allowed employees to buy most store products at cost since it began operations in Canada 20 years ago.

Both candidates and employees cite the discount as a reason for choosing HMV as an employer, said Diane Blois, vice-president of HR at HMV.

“Providing a competitive salary is only part of the equation. Our staff also wants to feel attached, valued and involved,” she said.

While employee discounts are common among many retailers, they are practically unheard of for grocery stores, according to a retail consultant.

“They’re one retailer that has such tight margins that it’s very difficult for them to extend any kind of discount because it eats into their bottom line,” said Lisa Hutchison, a senior consultant at Toronto-based retail consultancy J.C. Williams Group.

As well as competing economically, Loblaw has to compete with other grocery outlets and different retailers for an ever-shrinking talent pool. Employee discounts and other employee programs are one way to set Loblaw apart, said Inge van den Berg, vice-president of investor relations at Loblaw.

Besides the employee discount, which had been launched in Atlantic Canada, Quebec and Western Canada before it was launched in Ontario last month, the grocery retailer has instituted “e-mail-free Wednesdays.” Starting in January, e-mail on Wednesdays has been limited to urgent and essential correspondence only.

The company has also started surveying employees on a monthly basis, giving individual stores “rapid action funds” to immediately address issues identified in the surveys without having to wait for corporate approval.

“We’re all focused on the action,” said Hanna.

The company also encourages open communication through daily huddles where work teams meet at the start of every shift to talk about the day’s plans and any issues employees might have.

“These days, every little bit is going to help. In retail in general, it’s difficult to find and keep employees, but the grocery sector is especially challenged,” said Hutchison.

This is because while a consumer, and potential employee, can easily identify with a clothing or entertainment store’s brand, grocery store brands aren’t as strong, she said.

Perks, such as staff discounts, fitness memberships and concierge service won’t convince a truly unhappy employee to stay on the job, but they’re a way for the employer to show that extra bit of appreciation and hold on to employees who might be testing the job-search waters, said Hutchison.

Latest stories