Meijer reducing its IT payroll by 400 employees

Kent County

WALKER, Mich. (WOOD) — Meijer is making major cuts in its information technology department, laying off or transferring hundreds of employees.

Former employees told 24 Hour News 8 that 400 IT department workers are no longer employed by Meijer. They say 250 contract workers were laid off in July, 75 more were cut in August and another 75 received their notifications this week.

The former employees put their severance payments at risk to speak about what’s going on, so 24 Hour News 8 is not identifying them by name.

Not all those who have been cut as Meijer employees are jobless. Some are being sent to other companies that will do the jobs Meijer employees were doing — a process referred to as “rebadging” because those employed by Meijer wear red badges, while contract or contingent workers wear white badges.

White badges will be the new normal in the IT department, Paul Isely, associate dean at GVSU’s Seidman College of Business, suggested.

“In retail, as we have greater needs for what you might not be good at…” he said. “It might make sense to find someone who’s better than you can gather locally and outsource to it.”

Meijer has been preparing for the changes for a while as it looks at competition from retailers both brick-and-mortar and online. Terry Ledbetter, who became Meijer’s chief information officer in 2015, gave a presentation in May showing that the company’s so-called legacy systems need to change.

Meijer has been partnering with IBM for IT needs. The retailer also recently announced that the Chicago-based Jones, Lang, Lasalle would take over its facility management. DataFactZ, based on the east side of Michigan, is providing some specialized IT services. But the biggest partnership comes with France-based retail IT firm Capgemini.

In a written statement to 24 Hour News 8, Ledbetter said many of the 400 workers who are no longer Meijer employees are being transferred to IBM. Some employees are seeing a bump in their salary as a result, but others are being cut.

The company offered the employees a severance package equal to one week’s pay for every year of employment up to 26 weeks and Ledbetter said the company is working to make sure all employees are offered help.

Ledbetter said the changes are done with the consumer in mind.

“We are making changes to our ITS structure that will enable us to provide even more solutions in both the digital and physical space for Meijer customers,” he wrote.

While 400 seems like a big number, modern retailers run on IT systems and there will remain a significant IT presence at Meijer’s Walker headquarters.

Since its inception in the 1930s, Meijer has been synonymous with West Michigan retail. Meijer core values include customers first, competition and family, which helped propel it to a grocery giant with 224 stores in the Midwest. Now, Meijer finds itself in a hotly competitive sector with rivals coming from all sides — locally from SpartanNash, regionally from Costco and Sam’s Club, and nationally from Walmart. And internet giant Amazon’s alliance with Whole Foods is a looming threat to brick-and-mortar stores.

“If you entered the retail game with a certain set of characteristics that defined you, those characteristics likely aren’t working today,” Isely, the GVSU economics expert, said.

Meijer’s response over time has been to modernize and mechanize, most recently with the very popular partnership with Shipt for home grocery delivery.

“All of those things require that you be very dynamic, that you be willing to change,” Isely said. “You’re going to have to compete with the entire world now as opposed to just the store down the street.”

Isely said the changes can be painful but are necessary.

“Twenty years ago, you could just say, ‘I want to have it all here and I’m going to keep track of it and might not be perfectly efficient, but I’m making enough money that I can still survive,’” he said.

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