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Grocers defend pandemic pay cut decisions as independently made despite emails, calls



Executives from three of Canada’s largest grocery chains were in communication before launching and ending temporary wage increases for grocery store workers during COVID-19, but maintain their decisions were not co-ordinated.

Metro Inc. was aware of Loblaw Companies Ltd.’s decision to stop its so-called pandemic pay program before it made a similar decision, chief executive Eric La Fleche told the House of Commons standing committee on industry, science and technology Friday.

La Fleche said that a Metro competitor’s move was one of several influencing factors in its decision-making process.

He joined the Loblaw president and Empire Co. Ltd. chief executive at a two-hour session about why they stopped paying a temporary wage bump to employees as of June 13.

“Let me be absolutely clear, we did not co-ordinate our decisions,” said Michael Medline, Empire CEO, in his opening statement before the committee. Medline, whose company owns the Sobeys and Safeway brands, was the first of the trio to give his opening remarks.

“The decision was our own.”

Loblaw president Sarah Davis echoed the sentiment, but noted she sent a “courtesy email” to both competitors, as well as Walmart and Save-On-Foods, on June 11. The latter two did not appear at the hearing.

The email notified competitors of Loblaw’s decision to end its pandemic pay program on June 13. The company had already informed its roughly 200,000 employees, she said, and recognized “the news would be public immediately.”

La Fleche said in later questioning that he was aware of the email when Metro made its decision to end its bonus pay program on the same day.

“We made our own decision based on the information we had, which included that last piece of information, yes,” he said.

He called it “one factor among others” contributing to its decision. Other factors included the broader economic reopening, other retailers starting to open their doors, lower business volumes and a gradual return to more normal conditions.

Empire had not received Davis’s email when the company made its decision to terminate the extra wages, said Medline, but had heard through the grapevine that Loblaw was considering doing so.

Davis received a reply to her June 11 email, and said she would provide copies of the original and all answers to the committee.

She also sent a courtesy email to competitors when Loblaw decided to begin its extra pay program. Davis said she doesn’t recall sending courtesy emails to competitors on other topics, including executive compensation.

In addition to receiving the email, La Fleche said he made several phone calls to competitors in May and June to ask whether they planned to extend their bonus pay programs or end them on previously announced dates.

“In perfect compliance with The Competition Act, I asked my counterparts their intentions regarding whether or not they would maintain the temporary bonus,” he said, in a translation from French, during his opening remarks.

In each case, competitors, including Medline from Empire and Davis from Loblaw, told him they had not yet decided.

“Whatever the case, those calls were made in a decisional process that was much larger and … did not inform our decisions.”

When asked why he made the phone calls, La Fleche answered he “wanted as much information as I could have in order to make a best decision for our company, our employees at the right time.”

He said he would “absolutely not” characterize those conversations as trying to obtain a tacit agreement on wages.

Those who sent emails and made phone calls said they consulted with company counsel before doing so and lawyers were present during at least one phone discussion.

The appearance was a chance for the executives to admit they were wrong to end the pay increases, said Jerry Dias, president of Unifor, a private sector union.

“What we got instead was highly paid grocery executives insisting they did not collude, and then going on to say _ remarkably _ virtually the same thing over and over again,” he said in a statement.

“The executives all admitted to exchanging ‘courtesy emails’ and ‘courtesy calls’ on pandemic pay, and yet insist there was no collusion. I look forward to the committee’s ruling on that.”

Unifor has been critical of retailers ending temporary wage increases while the pandemic continues and has called for the pay bump to be permanent.

Convenience giant Alimentation Couche-Tard also ended its pandemic pay for retail staff.

With files from Michelle Warren


Grocery workers should be properly paid during pandemic, Trudeau says

Grocery store employees who continued to work during the COVID-19 pandemic are “heroes” and should be properly compensated, said Prime Minister Justin Trudeau Friday.

Trudeau’s remarks came about a week after Canada’s three major grocers scrapped so-called pandemic wage premiums for their staff.

“The people who step up in the midst of the most serious times to ensure that Canadians can still put food on the table, that they can get deliveries they need, that shelves are stocked, that Canadian continue to be safe and fed are heroes of this pandemic every bit as much as our front-line health workers and emergency responders,” he said at a news conference in Chelsea, Que., after being asked for his reaction to the pay clawback.

Loblaw Companies Ltd., Metro Inc. and Empire Co. announced last week they would stop paying an hourly premium to store workers starting June 13.

Loblaw and Metro both had been paying workers an extra $2 an hour since March 8, while Empire offered a weekly bonus to all employees and a $2 hourly wage bump to those working more than 20 hours a week.

The companies provided various explanations for the decision, which was slammed by two unions that represent the workers.

Loblaw stores settled into a more stable situation, a spokesperson said at the time, adding the company has invested more than $280 million into safety measures and “is no longer benefiting financially from COVID-19.”

Metro and Empire noted a similar stability.

Trudeau said that the people who have stepped up to help Canadians, often while risking their health or safety, should continue to be supported and respected.

“That’s why we will continue to exhort and expect that people who’ve stepped up during this time be properly supported and paid for it,” he said.

Trudeau’s comments come on the heels of the House of Commons Industry Committee voting unanimously on Thursday to summon representatives of Loblaw, Metro and Empire to explain how they came to the decision, within 24 hours of each other, to cut wage premiums for front-line staff.

Deputy Prime Minister Chrystia Freeland was also asked about the decision at an Ottawa news conference Friday and whether it would impact if the companies receive future funding or access to programs.

“I hope that one of the things that this pandemic has taught us is that people who do some of the work which is most essential for our actual, our literal survival are among the lowest paid people in our country,” she said.

“I’m sure that was frightening for many of them,” she said, adding she has told workers at her local grocery stores just how grateful she is for their service.

“I do think that it behoves all of us, including employers, not to forget that lesson.”

Freeland added that the House has heard concerns that government support to Canadians may have provided a disincentive to work.

“I think the fact that grocery stores now feel able to bring the wages back down suggests that there isn’t a powerful disincentive to work out there,” she said.

A Metro spokesperson declined to comment, while Loblaw and Empire did not immediately respond to a request for comment on Trudeau and Freeland’s statements.

Fast food chains launch store versions of menu items in competitive market

Fast-food fans no longer have to go to – or even order from – their favourite eateries to indulge, as grocery stores now stock a wide array of beloved menu items so superfans can heat up a St-Hubert chicken pot pie, slather on Swiss Chalet gravy sauce or whip up a pot of Tim Hortons homestyle chili at home.

The move to sell restaurant-branded goods in supermarket aisles benefits fast-food chains and grocers as competition for consumers’ attention intensifies.

“This has been a lot of buzz in the industry,” said Robert Carter, a food service analyst with market-research firm NPD Group, of the increasing restaurant fare in grocery stores.

Most recently, Tim Hortons introduced three of its soups and its chili to supermarket shoppers.

The company started selling its cream of broccoli, chicken noodle, and chicken and rice soups, as well as homestyle chili at some retailers in August, said spokeswoman Sarah McConnell in an email.

The four products are now sold at a number of retailers across Canada – including Sobeys, FreshCo and Shoppers Drug Mart – McConnell wrote, adding they plan to make the products available indefinitely as they “do not have a list end date.”

This is not Tim’s first foray into supermarket aisles. In January, the company announced it would start selling instant coffee, as well as iced cappuccino and iced coffee bottled drinks.

It also revealed plans to release a double-double coffee bar, a snack made without chocolate, which the company says will be available in stores later this year.

The coffee-and-doughnut chain is not alone in expanding where it sells its food.

Quebec-based St-Hubert Group first introduced its barbecue sauce to supermarkets in 1965. Since then, the rotisserie restaurant has grown its supermarket aisle to dozens of items, including a variety of fresh and frozen meat pies, chicken wings, cans of poutine gravy, and fresh coleslaw.

The Keg Steakhouse and Bar, a British Columbia-based chain, sells several salad dressings, sauces, marinades and seasonings, as well as ribs, burgers, and bacon-wrapped scallops.

St-Hubert and The Keg’s parent company, Recipe Unlimited, did not respond to a request for comment.

McDonald’s Canada launched Big Mac, McChicken and Filet-O-Fish sandwich sauces for a limited time in 2017 to celebrate its 50th anniversary, wrote spokeswoman Veronica Bart in an email. The bottles sold until supplies ran out, but the burger chain still sells its coffee at grocery stores.

“The competition is becoming so aggressive that all the operators are looking at ways to increase revenue streams,” said Carter.

Recently, restaurant growth has been relatively stagnant, growing a few percentage points every year, according to NPD data. Total quick-service restaurant traffic for the 12 months ending August 2019 grew 2%.

“Grocery is now popping up as a really viable opportunity,” he said.

The move into grocery stores allows chains to increase their distribution, build more brand awareness and create more customer loyalty in and outside of the home, said Carter.

“The bigger you can create your distribution network, the better it’s going to be for your business overall,” he said.

While restaurants remain the most important channel, Tim Hortons regulars also shop elsewhere.

“We also all know that we pick up drinks in convenience stores, and when we do our weekly grocery shopping we are picking up soup and coffee for our homes,” wrote spokeswoman Jane Almeida in an email.

When customers in the supermarket reach for that can of soup, Tim Hortons just wants it to be their can.

While restaurants can benefit from the grocery store arrangement, so can the supermarket chains. Grocery store traffic has been slipping in recent years, said Carter. In an effort to lure shoppers, some supermarkets morphed into grocerants, for example, adding a hot food selection to be consumed on premise.

Grocers are likely keen to bring in products from highly recognizable brands, like Tim Hortons, that may draw more people in, Carter said.

Top 3 challenges to overcome when implementing self scanning

The brick-and-mortar retail industry is undergoing seismic shifts driven by digital enablement and intense online competition. As part of a larger trend to offer consumers more convenience and more control as they shop — and also to counter Amazon’s cashierless stores — retailers are increasingly adopting self-scanning checkout solutions in their stores. Not surprisingly, the expected annual growth rate for self-scanning software tops 14 percent, according to research agency VDC.

One of the reasons that self-scanning is gaining popularity fast is that it reduces the length of checkout lines and checkout times. Any retailer knows that long checkout times are a deal-breaker. Forrester (2018) found that checkout (the line length and experience) is, after location and price, the most important factor to prompt consumers to head somewhere else for groceries if it takes too long. In fact, 18 percent claim that they’d rather shop elsewhere if length of lines and checkout time would be shorter.

Benefits of self scanning

11-scale-scan teaserConsumers perceive self-scanning as a way to save considerable amounts of time, especially when checking out. It allows them to touch an item only once as they “scan, bag and go.” Shoppers can scan their own items in store using a dedicated scanning device or their smartphone (“bring your own device,” or BYOD), bag their items while shopping, pay at a designated area, and leave the store without any cashier involvement. This improves the consumer experience, makes everyday shopping a more innovative experience and provides retailers with the tools to establish a “store for one” using personalized interactions — visible on the hand scanner — while shopping.

Self-scanning not only improves the consumer experience, it also improves bottom-line results for retailers. According to VDC Research (2015), European retailers have observed greater basket sizes and, on average, a 10 percent increase in overall revenues since deploying hand-held self-scanning solutions. The ROI for self-scanning projects typically is achieved within 18 to 24 months. Shoppers who use self-scanning are more likely to buy extra items when they’re alerted via hand scanner that an item is on sale. Moreover, recommendations can be made in real time, like “This wine goes well with your meat, and is on sale right now.”

Adoption rates

In areas where self-scanning was introduced 10 to 20 years ago, we see a substantial share of consumers using it. In countries like Sweden, Switzerland, Belgium and the Netherlands, self-scanning is broadly adopted, with up to 35 percent of consumers having used hand-held self-scanners to purchase products as they shop (Nielsen, 2017).

U.S. grocers are quickly ramping up self-scanning capabilities, moving from 8.5 percent availability in 2017 to 24.3 percent in 2018 (Progressive Grocer’s 85th Annual Report). Here in Canada, grocery giant Loblaw launched its phone-based “shop and scan” offering at five Loblaws locations and three Real Canadian Superstores in the Greater Toronto Area in November.

Challenges of self scanning

As a proven solution for more than two decades, the real challenges of self-scanning are no longer in the hardware and software solutions. Rather, they’re in adoption by the consumer. The successful adoption of new ways to shop is dependent on overcoming three primary challenges:

  1. Selling the concept. Consumers and staff need time to experiment and learn about new shopping processes, with technology simply acting as the vehicle to get the process accomplished. As any psychologist can tell you, learning new habits is a task not to be underestimated. Ease of use is crucial, as is a crisp and clear explanation of how to use it, and sufficient staff in the trial period to help consumers who may get stuck somewhere in the checkout process.
  2. Visibility and availability. It’s not only the devices themselves that are required; a lot of services supporting the devices are needed, such as multiple bag racks, cart brackets and dedicated pay stations. There should also be a surplus of devices clearly visible at the entry, and a surplus of brackets at the exit. Retailers should think about how to support items that need to be scanned efficiently: for example, how to enable self-scanning for fresh produce or any other non-barcoded items priced by weight. This often requires a new store process with weighing sales and barcode printers in the store to be set up in advance. Retailers must also think about how to enable loyalty programs and special discounted items for self-scanning shoppers.
  3. Consumer acceptance of security measures. Customers have to accept that they’ll be monitored and sometimes exposed to security checks, such as a partial re-scan by a staff member. This can be softened by not “incriminating” them upfront, but rather by helping them scan items properly, and clearly explaining that a first-time user is always checked. With the right mathematical algorithms and business knowledge in place, random checks can be reduced to an absolute minimum. Various self-scanning projects show that — if properly implemented, communicated and executed — the effect on shrinkage is marginal.

The winners in retail will be the ones that smartly innovate their stores to let shoppers conduct their journeys how they want. Self-scanning may be just the innovation needed to achieve this goal.

Carl von Sydow, Diebold Nixdorf’s director of self-service sales, Americas, has more than 15 years of international business experience in sales, manufacturing, quality management, R&D for hardware and software, IT/ERP, and finance. He brings a deep knowledge of both the European and North American retail markets to his position.

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