As the Dominion strike continues, is Loblaw paying attention? Maybe not, said this teacher


As the Dominion workers’ strike now enters its eleventh week, the biggest change on the picket lines in Newfoundland has been in clothing, as the 1,400 striking Unifor members don more padded layers to continue their cautious demonstrations.The strike has remained in the news, from police tactics at a protest in Mount Pearl to the province appointing a mediator on Monday to seek a solution. But at least in public, Dominion’s parent company, Loblaw, has been almost as silent as its storefronts.

No customer, except some looking for pharmaceutical services, has set foot in its 11 Newfoundland stores since the strike began on August 22. Grocery sales across Atlantic Canada are one-fifth of Ontario’s.

“We’re just a mistake,” said Tom Cooper, a business professor at Memorial University, adding that the figure could almost be seen as a rounding error on an accounting spreadsheet.

The grocery industry in Canada is very competitive, steadily increasing with players big and small, and COVID-19 has added layers of complications such as supply chain issues for all of these retailers, Loblaw included.

“Rather, they’re focused on ‘How do we make sure we can shop for groceries in our biggest markets effectively and efficiently?’ Cooper said.

“How do we get people to think about changing their behavior, looking at online delivery or all those kinds of mechanisms? [us] a competitive advantage over the Costcos, over the Walmarts, who aren’t doing that now?

The Dominion’s 1,400 unionized workers want better wages and reinstated part-time jobs to full-time positions, but all talks have so far failed. (Colleen Connors / CBC)

Exchange Traded Pressures

This year, profits in the grocery industry have soared in Canada, as people panicked at the very onset of the pandemic and the trend persisted to cook at home rather than eat out. Loblaw reported first quarter 2020 profit of $ 240 million, an increase of $ 42 million from the same period last year.

Unifor workers are partly looking for better wages, and while Cooper sympathizes with them, he said Loblaw’s ability to spread the profits from a pandemic may not be as straightforward as it sounds. .

As a publicly traded company, it is beholden to its investors, especially large institutional investors – think pension funds or large corporations. These entities seek a high return on private equity – Loblaw’s return has been 8% so far in 2020 – and are not particularly sentimental about it.

“If you could just generate an 8% ROI, and on the other hand, you could get into part of the tech industry and get triple that investment, where are you going? Cooper said.

But Loblaw is not under financial pressure just from its investors; buyers also have a say.

Beware of Wal Mart (and others)

Loblaw may be leading the Canadian grocery retail scene, with the most stores and nearly a quarter of the market share nationwide, but that doesn’t mean the company can to rest on its laurels in an increasingly diverse sector.

There is special pressure from a newcomer: Walmart, a “I would be really scared if I was Loblaws or if I was Sobeys company,” Cooper said.

It doesn’t disclose its exact grocery sales, but Walmart has made aggressive gains around the world in recent years, especially on prices.

“I’m always blown away every time I go to Walmart and the amount of stuff they do, how competitive they are on price and how easy it is to get in and out and get my stuff out. in a very short period of time, ”Cooper said.

Walmart is going to fetch your grocery dollars with more fresh food. (CBC)

As the strike dragged on, Dominion shoppers altered their purchasing habits, and many no doubt discovered Walmart and Costco, as well as niche independents that increased their supply, such as Volcano Bakery in St. John’s.

These habits can have lasting power, Cooper warns, and contribute to Dominion’s unconditional pursuit when the strike is resolved.

When exactly will it end?

It’s a big question that doesn’t seem to have a clear answer yet – Unifor’s chief negotiator in the national strike has expressed little optimism about the provincially appointed mediator, a move the government has made after the breakdown of talks between the union and the company on Friday. a day after starting.

As Canadians enter the biggest spending bonanza of the year in the weeks leading up to Christmas, it’s a critical time, from a profit standpoint, to either resolve the strike or let it linger.

“This is… one of the dominant or busiest times for grocery stores and retailers, whether you’re buying Joe Fresh or buying bananas. Lots of people are spending money this time of year, even in the midst of a pandemic. And so in the end, if [Dominions] remain closed until Christmas, I wouldn’t be surprised if they continued any longer after that, ”Cooper said.

Loblaw has a habit of playing the long game and letting stores idle: its Newfoundland Drive Dominion store in St. John’s sat empty for years before the lease ran out and it became a Coleman’s, a noted Cooper.

This is a Loblaws grocery store in downtown Toronto. Elsewhere in Canada, the trend for groceries has been towards small stores, but Newfoundland remains a favorable market for larger infrastructure. (Michael Wilson / CBC)

Loblaw has invested heavily in its Dominion buildings, and in Newfoundland these department stores still attract shoppers, even as elsewhere in Canada consumers tend to prefer smaller stores that make it easier to get around quickly. This infrastructure remains attractive and could be detrimental to Loblaw who decides to take shares on the island, although nothing is certain.

“There is always a risk. You know, I don’t think it’s a very high risk. I don’t think it’s very likely, but it could happen, ”Cooper said.

When better pay is a good look

Unifor workers seek better wages and a restoration of full-time versus part-time positions at Loblaw, at a time when their profile as front-line workers has never been higher, or where the public values ​​their essential services more.

Workers were temporarily given a $ 2 per hour raise during the pandemic, but Loblaw ended that in June. Unifor promoted the idea of ​​a living and fair wage throughout its strike, with workers saying they depended on food banks to get by.

Cooper was not sure grocery chains were listening to these concerns and said that while the principle was not forthcoming, from a sales standpoint it might make sense.

“As a consumer, is this something that is marketable? Is this something you could say: “Hey, we pay our employees a fair and decent wage. We pay better than the competition because we want our employees to be well taken care of ”? He said, adding that it would likely be a daunting task, forcing consumers to pay a few pennies more on their items.

“It’s an interesting strategic question, which I think no supermarket has really thought about. ”

Costco has a reputation for good benefits and a stable workforce, and Cooper noted that even anti-union Walmart is known to offer internal training programs and other incentives to employees.

Chris MacDonald of Unifor, at the lectern, speaks at a Friday afternoon press conference in St. John’s. The union has repeatedly rejected Loblaw’s offers, saying the proposals did not offer enough to its workers. (Ted Dillon / CBC)

But these companies, along with Loblaw, face a future that includes more online sales, increased automation and ever more diverse rules of the game, Cooper said, tides of change that workers will also need to be prepared for. adapt.

“There are a lot of disruptors to come. And overall, that’s something Loblaws is probably thinking about, and it’s probably something Unifor needs to think about as well. ”

Learn more about CBC Newfoundland and Labrador


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