Sobeys' Parent Company Reveals Plan to Cut $500 Million in Costs
STELLARTON, NS - Sobeys' parent company Empire Co. Ltd. announced a new initiative designed to deliver $500 million in annualized savings by 2020.
The initiative, entitled “Project Sunrise,” is designed, according to a company press release, to allow Empire to reinvest in its business and grow its sales and bottom line.
“We have an aggressive goal to transform our organization, better serve our customers, empower our employees, and assuredly move from defense to offense in the market. To do this, we need to unleash the talents and scale we already have at our disposal,” said Michael Medline, President & CEO. “The future Sobeys will operate with a simpler, leaner structure, more efficient core processes and tools, and will better leverage its $24 billion national scale. This will free us up to be extremely nimble, thrill our customers, and grow market share. Results of this transformation will take time, but we are committed to seeing them through given the compelling prize.”
The company noted that cost savings will come from the following:
- Collapsing multiple, independent regions into a largely national, functionally-led structure. This will simplify the way the company conducts business and will result in a reduced workforce
- Simplifying how the company collaborates with vendors while leveraging its purchasing scale as a $24 billion national company
- Driving enterprise-wide efficiencies and productivity initiatives
The company’s three year plan is, the press release noted, a clear response to Empire’s business performance over the last 18 months and to Medline’s priorities, which include changing the company’s trajectory, re-engaging with customers, and “making difficult decisions that had not been made in the past.”
"We understand and appreciate the impact that change of this magnitude will have on our employees, but are committed to moving with unprecedented velocity to make tough decisions and execute changes while not putting service to our customers at risk,” said Medline. “We have been very careful to balance significant change to our organization with awareness of the risks associated with a major transformation. We will focus on making these bold changes while at the same time ensuring we stabilize performance, particularly in Western Canada.”
As part of the initiative, the company will immediately begin restructuring its leadership and office staff (store-level Sobeys employees will not be affected). The company also announced new, largely national and functionally-led organizational structure and leadership appointments, including:
- Jason Potter has been appointed Executive Vice President, Operations
- Lyne Castonguay has been appointed Executive Vice President, Merchandising
- Pierre St-Laurent has been appointed Executive Vice President, Quebec
- Vivek Sood has been appointed Executive Vice President, Related Businesses
- Rob Adams will remain General Manager, Discount Format
The company also noted that the role of marketing has been elevated to report to the CEO with a dedicated team, to reflect the emphasis placed on the voice of the customer, brand management, and digital innovation. The company is currently conducting an external search to fill this role.
“Our new structure reflects a manifest change for the business,” said Medline. “We have made deliberate choices throughout. For example, we are elevating key functions, such as marketing, in order to more effectively communicate with our customers. We are balancing potential risk to our unique Quebec and Discount businesses, by keeping them distinct, while harmonizing the way they operate nationally. We are ensuring focus on the core grocery business by separating out related businesses, like pharmacy and fuel, into a distinct functional structure.”
AndNowUKnow will continue to report on these sweeping organizational changes, their cost-cutting consequences, and the future of Sobeys.