There are three major grocery retailers in Canada, Sobeys (a division of Empire company), Loblaws (George Weston Ltd.) and Metro Foods.

Last week Sobey’s announced a major re-organization which will reduce their office staff across the company by about 800, as it is implemented nationwide.

Why Re-organize

The goal of changing the structure of an organization typically is one to all of the following:

• Address changing market forces which are attacking the organizations business model. In the case of Sobey’s the rise of on-line retailing is beginning to impact the food sector. The signs of major impacts like those that affected book,  music and general retailers are clearly present.
• By changing the way you do business and even in some cases focusing or expanding the business scope, a key objective is improved efficiency and higher quality so the business becomes sustainable
• Reduce resource cost (expense reduction) without impacting volume or quality of service or product by changing processes and practices both significantly and rapidly (not a slow continous process improvement but a drastic one in a fell swoop)

Cutting Staff

Some organizational changes increase staff but often expense reduction is one of the goals (not always though).  Unfortunately the press has focused on the Sobey announcement as a staff reduction.

This is a good way to sell news content but the perspective is a little unfair to Sobey’s.  The reality is any retail company can go bankrupt in the current consumer environment (e.g., Sears and Toys r Us) , size is not a protection.

Sobey{s move to sustain the company by changing its business model is both strategic and wise.