Blaming a weak economy and fierce competition from other retailers, Shaw’s Supermarkets of West Bridgewater said Friday that it’s laying off 700 workers.
“We are operating in a tough competitive landscape, a challenging economy, and we’ve experienced sales losses,” said Shaw’s spokesman Steve Sylven. Jobs will be cut at each of the 169 Shaw’s and Star Market stores in New England, said Sylven, leaving the company with a total of 17,000 employees after the layoffs are completed.
The job cuts come as Shaw’s struggling parent company, Supervalu Inc. of Eden Prairie, Minn., is trying to find a buyer after several years of steadily declining revenues and mounting losses.
In the quarter ended Sept. 6, Supervalu’s retail food business revenues declined over 7 percent, and posted a loss of $83 million. The overall business has posted losses in three of the past four years, including a loss of over $1 billion in fiscal 2012.
“The parent company supervising this has been in dire fiscal straits for some time now,” said Peter Derouen, spokesman for United Food and Commercial Workers Union Local 791, which represents some of the Shaw’s employees who will be laid off.
“It’s a very, very, very competitive market for food retailing, and both Supervalu and Shaw’s have been struggling,” Derouen said.
In addition to Shaw’s, Supervalu also owns the Albertson’s grocery chain, a 2006 acquisition that pitched the parent company deeply in debt.
David Livingston, president of supermarket consultancy DJL Research in Milwaukee, said the $17 billion purchase of Albertson’s has proved too costly for Supervalu. The Albertson's stores were performing poorly, Livingston said, and many of Supervalu’s other stores look dated and unattractive.
“The Shaw’s stores, these are basically 1990s-type supermarkets,” Livingston said. “They’re not up to date compared to some of the other competitors in the market.”
At Shaw’s the layoffs are apparently targeted at staffing during those hours when the stores have their fewest customers. “We recognized an opportunity to align our workforce to more effectively serve the marketplace by scheduling team members more appropriately to serve customers at the times they shop,” Shaw’s president Mike Stigers said in a statement.
The company said it already notified 90 employees about the layoffs and would inform the rest in coming days. Officials said a variety of different jobs within the stores would be eliminated.
Derouen, the union spokesman, called the layoffs, “devastating news” and said 260 part-time workers in the union would lose their jobs. The remaining workers to be laid off are employed at supermarkets with workforces that don’t belong to the union.
Derouen said the union reached an agreement with Shaw’s earlier this year to protect the jobs of employees who were hired before Jan. 1, 2011. Local 791 represents 4,400 workers at 33 Shaw’s and Star Market stores in Massachusetts and Rhode Island and distribution centers in Massachusetts and Maine.
In 2010, about 300 workers at Shaw’s Methuen distribution center staged a four-month strike over rising health care costs contained in the company's new contract offer.
Supervalu spokesman Jeff Swanson said the layoffs at Shaw’s are part of a cost-cutting strategy to enable the company to invest more in renovating its stores. He also said that Supervalu is in talks with unnamed investors about a possible sale of the company.