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Loblaw to Add Full-Time Jobs

Loblaw said it sees an opportunity to shift as many as 10,000 jobs from part-time to full-time in a move that would increase productivity and reduce costly turnover. Speaking at the CIBC Retail and Consumer Conference here last week, Allen Leighton, president and deputy chairman of Loblaw, identified worker productivity among key issues facing retailers as they navigate the economic downturn,

TORONTO — Loblaw here said it sees an opportunity to shift as many as 10,000 jobs from part-time to full-time in a move that would increase productivity and reduce costly turnover.

Speaking at the CIBC Retail and Consumer Conference here last week, Allen Leighton, president and deputy chairman of Loblaw, identified worker productivity among key issues facing retailers as they navigate the economic downturn, which is expected to continue for the next 12 to 18 months. Leighton predicted this period will have “fundamental effects” on how the retail business handles everything from private-label strategies to industry consolidation.

“What has happened in the last 12 months, not just in our company but in the world, is pretty significant,” Leighton said. “And anybody thinking about running their company the same way they did 12 months ago is going to have a problem. Things are changing big-time.”

Leighton said the recession — indicated in Canada by concurrent drops in a number of indicators, including sales, consumer confidence and the value of the country's dollar — will put a premium on worker productivity. The retail industry, he said, is caught in a “productivity trap” caused by high worker turnover and a preponderance of part-time employees. He said Loblaw will look to cooperate with its unions on a plan to transition jobs from part-time to full-time.

“The opportunity in full-time is much more productive for everyone. The hourly wage is 50% higher, but the average turnover is about 90% lower, and in that mix there's a sweet spot where in retail you can have more full-time jobs, less part-time jobs and people with better pay and productivity,” Leighton said.

“This doesn't mean you have to be at war with the unions all the time; this means the reverse of that,” he added. “It means that the retailers and the unions have to find the sweet spot. We know in our business alone we could create 10,000 more jobs, and 10,000 full-time jobs would improve productivity and have a big impact on the economy.”

Among consumers, the flight to value seen in trading toward private-label items will be a “long haul” trend, Leighton maintained.

“This is not something that's going to happen for a two-month or three-month period,” he said. “The flight to value will be for a long time. Trading toward control [private] labels has already started, and it will accelerate.”

Consumer spending habits are changing, not just among those whose jobs or pensions were affected by the economy — a group Leighton termed “the downwardly mobile” — but also among those who think they might be affected and subsequently are changing their habits. This can have some positive effect on retailers in the form of consumers “treating themselves” at home as an alternative to seeking food and entertainment outside of the home, he explained.

Retailers must be aware of the flight to value to manage their margins with regard to setting prices. “If you can be lowering your prices and improving your value perception, that's what you should be doing, as long as you manage the other two levers” of product price inflation and deflation, he said.