Wal-Mart streamlines Canadian workforce amid competitive climate

story by Kim Souza
ksouza@thecitywire.com

Wal-Mart Canada has confirmed that up to 750 jobs were cut earlier this month amid a broad management restructuring effort. The staff reductions represent less than 1% of total market employment and another 1,300 employees were promoted and 200 store management positions were created, according to Alex Roberton, spokesman for Wal-Mart Canada.

Canada continues to be a retail battleground for U.S. retailers Wal-Mart Stores and Target who aggressively expanded there in the past two years. Profits are sluggish as Canadian consumers are cautious with spending which has retailers scrambling to improve their internal efficiencies.

"The new management structure makes more of our associates available during peak shopping periods when our customers need us the most. We tested this new management structure in select stores across Canada over the past six months and have received positive feedback from both our customers and associates,” Roberton told The City Wire.

He said the new management structure also gives store employees greater access to their manager for ongoing career development. He said those whose roles have been eliminated will receive severance packages, professional career services and support, or can apply for other positions at Wal-Mart. 

Roberton said the job eliminations average out to less than two positions per store.  

“Overall Wal-Mart Canada is a growth company and is generating many new jobs as we expand our store network and our food and e-commerce businesses. We will create 7,500 new jobs in Canada this year alone including trade and construction jobs,” Roberton said.

Wal-Mart is celebrating 20 years in Canada, and continues to invest between $550 million and $750 million annually to build new stores and refurbish older stores. This year Wal-Mart has said it will spend $500 million with 35 new supercenters and several store remodels that allow for more fresh grocery.

Roberton said last year Wal-Mart entered Nova Scotia and New Brunswick and has stores planned for Prince Edward’s Island and Newfoundland, which are new territories for the low cost retailer.

Walmart International CEO David Cheesewright said during the recent earnings call that the operating climate in Canada remains competitive, but Wal-Mart is digging in.

“In Canada we increased net sales, but comp sales declined 1.7%. The excessively cold weather impacted retail sales throughout the market, particularly in seasonal categories such as apparel and outdoor. Health and wellness sales were negatively impacted by lower generic prescription reimbursement rates due to ongoing drug reform initiatives implemented by various provinces, as well as higher utilization of generics,” Cheesewright noted in the call.

He said sales were strongest in food and consumables. According to 
Nielsen, Wal-mart increased market share 0.42%  for the 12 weeks ended April 19. 

“Our continued price investment resulted in an increased price gap to competitors,” he added.

Profits have been elusive for Target Canada as well. In the full year ended Feb. 1, Target's Canadian segment generated $1.3 billion in sales, which the retailer said in its May 3 earnings call was "well below" plan and led to "greater than expected markdowns."

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Despite the hiccups, the retailer doesn't have plans to shutter any of its locations and will open nine more stores in the country this year. Its goal is to open about 150 Canadian locations over the next several years.

Canadian shoppers are under new financial pressures. The Canadian dollar has weakened, forcing retailers to charge higher prices. Because 90% of Canadians live within an hour’s drive of the U.S. border, they are used to crossing over to compare deals, according to the Retail Council of Canada.

Big Lots Inc. is closing its 78 Canadian stores, which it bought just two years ago. The retailer blamed increasing competition amid discounters. Best Buy announced last year it was closing 15 of its 260 stores in Canada and cut about 5% of its workforce in the country as it tries to revamp its strategy.

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