Laurus restructures Dutch operations
bid to make its three formats - Edah, Konmar and Super De Boer -
more competitive, the company announced this week.
"With margins under pressure from the economic downturn and the continuing supermarket price war, action has to be taken to cut costs," the company said.
For the Edah chain, Laurus has been testing a flatter store organisational structure, which is more consistent with its chosen positioning as a discount format. "The aim is to improve in-store efficiency by deploying staff more flexibly in a broader range of jobs: turning specialists into all-rounders," the company said.
The proposed organisational changes will also help to reduce wage coststo a more competitive level appropriate for a discount format, Laurus added.The organisational changes are expected to result in the loss of 750 jobs at the Edah stores, which will reduce wage costs by around €14 million a year.
For the Super De Boer format, the emphasis is now on the optimum organisational structure for a format with a large fresh produce offering, Laurus said. The introduction of the new structure will mean a reduction in the number of department managers per store and the loss of at least 300 jobs at store level. These changes are expected to save around €7 million a year in wage costs.
"The Superfit efficiency project at Super De Boer, which has been initiated by Laurus with the support of management consultants McKinsey International, is still in progress. Laurus intends to implement these changes, both those relating to the organisational structure and those arising out of the Superfit project, during the summer."
For Konmar, measures are in preparation to reduce contractual hours, with an expected reduction in wage costs of €6 million following the loss of at least 240 jobs. "Because Laurus intends to apply the experience gained with the Superfit project at Super De Boer to Konmar Superstores, these changes, both those relating to the organisational structure and those arising out of the Superfit project, will not be implemented until after the summer," the company said.
Laurus has been involved in a bitter price war with main domestic rival Albert Heijn (part of the Ahold group) over the last few months as Dutch consumers tightened their belts, and this has inevitably taken its toll. Like-for-like sales in the first quarter were down 7.7 per cent, while reported sales were 12 per cent lower at €1.07 billion, reflecting the sale of a number of underperforming stores as the group restructured.
This restructuring has also involved a revamping of the remaining store portfolio, and the initial results have been encouraging. Sales at two new format Edah Lekker & Laag stores have risen substantially - by tens of per cent - and the pilot is to be extended to include four other stores in the near future. Two new Konmar Superstores fared so well that a further seven outlets have added to the revamp list.
