Community Grocery

Background Information

Community Grocery was born in 1935 when three small-town general stores joined forces to continue operating when threatened by the worst of the Great Depression. As widespread unemployment wreaked havoc across the nation, small communities clung to life by relying on food and farm supplies purchased at the local general store. The loss of the only place to buy life-sustaining necessities would likely precede the abandonment of farms, other businesses, and eventually entire towns. Facing the collapse of their communities, the founders of Community Grocery banded together to stay open.

From this legacy, Community Grocery has evolved into a modern retail grocery chain. It is well-known across the province for its steadfast commitment to small-town values, endeavouring to treat customers and employees as valued members of a small community. Presently, 1,700 employees work in 20 stores spread across the province. Two hundred of these employees are managers and therefore excluded from the bargaining unit. The remaining 1,500 employees are organized in the same bargaining unit, represented by the Grocery Workers' Union (GWU), Local 306, herein referred to as the Union. There are five urban stores and fifteen rural stores. The urban stores are larger and offer a more upmarket modern grocery experience with a focus on a large in-store bakery, an artisan-style butcher shop, and gourmet produce and grocery departments. In all, 550 of the bargaining unit members work in these stores. The remaining 950 employees work in fifteen rural stores, which serve as a regional base for outlying areas and offer a more basic retail food line but include a varied range of additional goods, such as hardware, lawn and garden, and hunting and fishing products.

Community Grocery enjoys a strong reputation across the province for being a good corporate citizen; it's the kind of company where not only does the company sponsor the little-league team but its employees are often the coach and have kids on the team. Many of the stores have been operating for over sixty years and it is not uncommon for grandparents to run into their children and grandchildren while shopping. Over the years, Community Grocery has been responsive to the evolving needs of rural and urban consumers while retaining its proud rural heritage. In addition to its community involvement and long history of serving rural communities, Community Grocery has developed a well-earned reputation for providing good-paying, secure careers with benefits and a pension plan. Indeed, a large portion of the workforce is made up of long-term employees with decades of service and with no intention of ever leaving the company. The turnover rate at Community Grocery is 20 percent, which is considerably lower than the industry norm. The vast majority of the grocery industry has moved to a high-turnover model of casual, part-time jobs with low pay, without job security, benefits, or pension.

Regrettably, the senior management team at Community Grocery (CG) feels obligated to amend the current employment model and bring it more into line with the lower-cost industry standard. For the past fifteen years, a worrying trend has persisted. Increasingly, consumers are choosing to shop at other grocery stores because they offer similar products at a lower cost. Competitors are able to offer lower prices because they have replaced higher-cost long-term employment with a low-cost model featuring pay that is close to the minimum allowable wage, with no benefits or pension and little paid time off (aside from the minimums in the employment standards legislation). New hires work in the same job for a year or two before quitting and moving to another low-paying retail job or into a higher-skilled and better compensated career in another industry. There is no expectation of pay raises, job security, benefits, or pension provisions. Applicants are willing to accept these conditions because they often have no other option; better jobs are simply not available.

Management believes that labour costs at CG are 20 percent higher than their competitors'. The additional cost is passed on to consumers in the form of higher prices. On average, the price differential is estimated at 8 percent. While the modern consumer, who is presented with many grocery retail options, may be willing to pay an additional 3 or 4 percent to shop in a store that has superior community engagement and a compelling history and that provides good jobs, they are clearly not willing to pay an additional 8 percent. At a steady rate, seemingly loyal customers are shopping elsewhere.

At the same time, senior management notes that the labour market has changed drastically in recent years. A growing segment of working Canadians are looking for casual or part-time employment while they find themselves on the fringes of the labour market. Generally they are either: students earning extra money while completing secondary or post-secondary training for a career most likely outside of the grocery industry; semi-retired seniors interested in earning income to supplement personal or social retirement funds; full-time caregivers, often women, who are interested in only short-term, part-time work while their children are at home and who plan to return to another career once their children are in school or out of the house. In addition, as a result of recent federal and provincial immigration policies, a large number of new Canadians have settled in the area and are looking for temporary work to gain Canadian work experience and earn a survival income while they complete certification and training requirements to seek employment in careers in which they have pre-immigration experience. Senior management believes that ignoring this growing supply of cheaper labour is a mistake, especially while competitors are taking full advantage.

While labour relations at CG has always been good, senior management has recently identified the Union as part of the problem that the company now finds itself in. Since the Union's certification in 1981, it has negotiated several entitlements for its members that are uncommon in the rest of the industry, which is almost entirely non-union. For instance, the following clauses stipulate some of the existing entitlements.

• Clause 4. Wage Schedule: The wage schedule is identified in Table 1. Employees graduate to the next level after one year of service. A Clerk will top-out at $28.00 per hour after 5 years of service. Management approval is required for graduation to the Team Leader Position and is reserved for long-service employees with an exceptional service record when a new area team leader is needed.

TABLE 1 WAGE SCHEDULE BARGAINING UNIT POSITION PAY PER HOUR Clerk Level 1 $18.00 Graduate to next Clerk level after 1 year of service. Graduate to Team Leader by Management approval Level 2 $20.00 only. Level 3 $22.00 Level 4 $24.00 Level 5 $26.00 Level 6 $28.00 Team Leader $32.00