retail news in context, analysis with attitude

Got a number of emails responding to the decision by Supervalu-owned Albertsons in Southern California to reduce its store-level workforce by an estimated 2,200-2,500 positions. These reductions, which will occur across all 247 Albertsons stores in California and Nevada, will begin the week of June 17 and should be completed near July 1. The change is expected to directly impact a small number of positions at any specific store location.

The company said that the decision is part of the company's focus "on simplifying its organization and reducing expenses to help reinvest in more customer facing initiatives."

I commented, in part:

somehow doubt that if we all had polled Albertsons customers in Southern California a few months ago, would people have said that there were too many employees in the stores, that the service was too good, and that what they really wanted were fewer cashiers and stock clerks and department employees?

Supervalu has decided that fewer people on the front lines is the way to be more economical. The question is whether fewer people on the front lines will make it more competitive ... which is a completely different thing.


One MNB user wrote:

This continues to amaze me… companies like SVU that are struggling for sales, aren't priced right, fail over and over to make stores locally relevant… lay off workers at store level but continue to recruit and over pay for what those executives/board members believe to be the "top talent" that can change the company.

When a company makes these kinds of moves, and SVU is not unique, the impact on sales is usually noticeable within 90 days max. If you graph labor cuts at stores against comp sales it always follows the same axis.

If  you look at the org chart of the corporate office the layers and layers of individuals performing similar functions is astounding!

… can you imagine a company that does 4 billion in sales with 4-5 grocery/center store directors reporting to a vp of center store who reports to a group vp of center store who reports to a senior vice president of merchandising…. and by the way the directors have 3 or more category managers, 2 or more assistant category managers and admin assistants… oh and by the way - this group doesn't even "buy" the product.. there is a supply chain procurement team that actually cuts the PO's…. and there is a financial team that actually crunches the numbers to ensure the merchandising team didn't over invest on advertising, give up too much margin on promotions and every day pricing….. and we wonder why we can't get help in the deli at 7pm (most of us don't work 9-5 anymore!) and we wonder why we have to pay more for groceries here than let's say WalMart or Aldi or why we are shopping in a "vanilla box" paying the same prices we would expect to pay at retailer like Whole Foods.

Over promise, under deliver- corporate decision and lack execution. Raise prices, focus on making money on the buy and cut store labor to compensate for the lack of sales. Sure, makes great sense.


Another MNB user wrote:

Got to love the irony…..
 
The company's focus "on simplifying its organization and reducing expenses [reduce Store personnel] to help reinvest in more customer facing initiatives."
 
Last I checked, aren’t store personnel (especially in the front end) “customer facing”……  What few customers remain would probably prefer people to some “Initiative."

So I guess there are a few less people to play musical chairs on the Titanic now.


From another reader:

Same old song, different verse. No retail ever "saved" themselves into long term profitability and this isn't likely to be the first.

MNB user Dave McKelvey wrote:
 
I remember quite clearly a lesson taught to me at Retail Counselor Training at none other than Supervalu way back in 1982. It was called the downward spiral. The article on SV cutting labor at their SoCal stores reminded me of that very spiral. Sales drop, so you cut labor and services. Sales drop even more as a result of the cuts, so you cut even deeper, resulting in a downward spiral you can’t pull out of. I guess the teacher forgot the lesson.
KC's View: