Sobeys expects job cuts due to efficiency gains

Canadian retailer Sobeys will build a new, big grocery distribution centre in Ontario. The new warehouse, which will be operational by 2009, will lead to a significant number of job cuts at Sobeys’ other warehouses, the retailer acknowledged. Sobeys intends to reduce its logistics cost base in Ontario, where it operates some 1,300 stores and where it is engaged in a fierce competition with bigger rivals Loblaws and Wal-Mart.

“The new facility will significantly increase the company’s warehouse and distribution capacity while reducing overall distribution costs and improving service to its store network and customers”, Sobeys commented to the local press. “Sobeys is stretched so wide across the country, so they have less density in any area and that’s tough on a supply chain”, an analyst said to The Vancouver Sun. “Wal-Mart has such an advantage in supply chain costs that it’s tough to make up.”