As the Dominion strike drags on, is Loblaw paying attention? Maybe not, says this prof

With the Dominion workers' strike now dragging intoits 11th week, the biggest change on the picket lines across Newfoundland has been one of clothing,as the 1,400 striking Unifor members don puffier layers to continue their chilly protests.

The strike has remained in the news, frompolice tactics during a protest in Mount Pearl to the province appointing a mediator on Monday to seek a solution.But at least in public, Dominion's parent company,Loblaw, has been almost asquiet as its storefronts.

No customer save some seeking pharmacy services have set foot inside its 11 Newfoundland stores since the strike began Aug. 22.While that amounts to Dominionsales dropping off a cliff on the island, statisticsshow how little the region compares with the rest of Canada grocery sales from all ofAtlantic Canadaare one-fifth of Ontario's.

"We are just a blip," said Tom Cooper, a professor of business at Memorial University, adding the figure could almost be considered a rounding error in an accounting spreadsheet.

The grocery business in Canada is a highly competitive one, ever increasing with players big and small, andCOVID-19 has added layers of complications such as supply chain issues for all such retailers, Loblaw included.

"They're pretty much focused on, 'How do we make sure that we can get groceries to our bigger markets, in an efficient and effective manner?'" Cooper said.

"'How can we get people maybe to think about changing their behaviour,to look at online delivery or all those sorts of mechanisms that wouldgive [us] a competitive advantage over the Costcos, over the Walmarts, that don't do that right now?'"

Publicly traded pressures

This year has seen the grocery sector's profits soar in Canada, as people panic-bought in the early days of the pandemic along with a continued trend of cooking at home over eating out. Loblaw reported earnings of $240 million in its first quarter of 2020, an increase of $42 million over the same period last year.

Unifor workers are, in part, looking for better wages, and while Cooper sympathized with them, he said Loblaw's ability to spread pandemic profits around might not be as simple as it appears.

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As a publicly traded company, it's beholden to its investors, particularly large, institutional ones think of pension funds, or major corporations.Those entitieslook for large returns on investment capital Loblaw's return was eight per cent so far in 2020 andare not particularly sentimental about it.

"If you could only generate an eight per cent return on investment, and on the other hand, you could go into some of the tech sector and get triple that investment,where do you go?" said Cooper.

But Loblawisn't facingfinancial pressure just from its investors; shoppers are also having a say.

Beware of Wal Mart (and others)

Loblaw may lead the Canadian grocery retail scene, with the most stores and nearly a quarter of the market sharein the country,but that doesn't mean the company can rest on its laurelsin a sector that's increasingly diverse.

There'sparticular pressure from one relativelynew entrant: Walmart, a company "I'd be really scared of, if I was Loblaws or if I was Sobeys," Coopersaid.

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It doesn't disclose itsexact grocery sales, but Walmart has made aggressive gains in the world in recent years, particularly on prices.

"I'm always blown away every time I go into Walmart and the amount of things they do, how competitive they are in terms of price and how easy it is to get in and get out and get my stuff out of there in a very short time period," said Cooper.

With the strike dragging on, Dominion shoppers have alteredtheir buying habits, with many no doubt discovering Walmartand Costco, as well as niche independents that have increased their offerings, like Volcano Bakery in St. John's.

Those habits may have lasting power, Cooper warned, and chip into Dominion's die-hard following whenthe strike is resolved.

When will that end, exactly?

It's a big question that appears to have no clear answer yet Unifor's head negotiator in the Dominion strike has expressed little optimism at the idea atthe provincially appointedmediator, a move the government made after talks between the union and company fell apart on Friday, a day after they began.

As Canadiansenter the biggest spending bonanza of the year in the weeks leading up to Christmas, it is a critical time, from a profit standpoint, toeither resolve the strike or let it linger.

"This is one of the dominant or busiest times for groceries and retailers, whether you're buying Joe Fresh or whether you're buying some bananas. A lot of people spend money at this time of year, even in the middle of a pandemic. And so ultimately, if [Dominions] remain closed until Christmas, I wouldn't be surprised if they kept going for a longer period of time after that," said Cooper.

Loblaw has a history of playing the long game, and allowing stores to idle: its Newfoundland Drive Dominion store in St. John's sat empty for years before thelease ran out and it became aColeman's, Cooper noted.

Loblaw has invested heavily in its Dominion buildings, and in Newfoundland such larger stores still attract shoppers, even as elsewhere in Canada consumers tend to prefer smaller stores that make quick trips easy. That infrastructure remains attractive and could weigh against Loblaw deciding to pullup stakes on the island, although nothing is certain.

"There's always a risk. You know, I don't think it's a very high risk. I don't think it's very probable, but it could occur," said Cooper.

When better pay is a good look

Unifor workers have been looking for better wages and a restoration of full-time positions from part-time ones from Loblaw, at a time when their profile as front-line workers has never been higher, or public sentiment more appreciative of their essential services.

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The workers temporarily received a $2-an-hour increase during the pandemic, but Loblaw ended that in June. Unifor has promoted the idea of a fair, living wage throughout its strike, with workers telling of their reliance on food banks to get by.

Cooper wasn't certain grocery chains are listening to those concerns, and said even if the principle of it isn't sinking in, from a sales standpoint, it could make sense.

"As a consumer, is it something that's marketable?Is this something that you could say, 'Hey, we pay our employees a fair and living wage.We pay better than the competition because we want our employees to be well taken care of'?" he said, adding that would probably be a tall order, requiringconsumers to pay a few cents extra on their items.

"That's an interesting kind of strategic question, which I don't think any supermarkets have really thought about."

Costco has a reputation for good benefits and a stable workforce, and Cooper noted even union-averse Walmart is known to offer internal training programs and other employee incentives.

But those companies, as well as Loblaw, have to contend with a future that includes more online sales, increased automation and an ever-diversifying playing field, Cooper said, tides of change that workers will also have to be ready to adjust to.

"There's a lot of disruptors coming on. And overall, that's something thatLoblaws is probably thinking about,and it's probably something Unifor needs to be thinking about as well."

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