Kroger Ends Deal with SouthStar
A total of 690 warehouse employees will be out of work because Kroger Co (NYSE:KR) ended its contract with SouthStar LLC. This forced SouthStar to end operations at the warehouse facility for Kroger in Keller, Texas.
With Kroger being the only contract that SouthStar had for providing warehouse services, once the deal ended, SouthStar had to end all operations at the facility, leading to the hundreds of Texas job cuts.
A letter released this week by SouthStar President Chris Mclaughlin claimed that the Kroger decision was “unexpected.” The SouthStar warehouse layoffs will start on December 10 and take place over about a two-week period.
Kroger is replacing SouthStar with Penske, a logistics company that will now run the warehouse. Penske already provides services to Kroger at several other locations across the United States. The Keller warehouse supplies Kroger’s 93 stores in North Texas.
Kroger is one of the biggest companies in the U.S., as well as one of the country’s largest employers in the private sector. But the company has fallen on hard times in 2017. While it does operate about 100 stores in the Dallas-Fort Worth region, Kroger has undergone a retooling of sorts as it seeks to bounce back while its stock has plummeted almost 33% over the course of 2017.
Several Kroger’s locations have closed down across the country in 2017, leaving hundreds of people unemployed. The company finds itself vulnerable to online retailers and competing brands, much like many other traditional brick-and-mortar retail companies.
While Kroger is set to invest millions of dollars in revamping as many as a quarter of its 3,000 stores across the country, the company is still trying to find a way to adapt to the changing landscape of the retail industry.
The SouthStar warehouse layoffs are not necessarily tied to Kroger’s troubles, but the grocery retailer is looking for ways to stem the bleeding, whether that’s via store closings, layoffs, or through other contract renegotiations in order to cut costs.
And Kroger is not the first grocer to prompt job cuts in Texas. In June, Associated Wholesale Grocers, Inc closed its Fort Worth distribution center, leading to 208 layoffs.
Some grocery companies have been cracking down on late shipments, with Kroger fining suppliers $500.00 for every order that is more than two days late to its warehouses. This has upped the ante on warehouse operators and shippers to be more efficient, especially considering the state of Kroger, which is looking to cut costs and increase efficiency wherever possible.
“Keller warehouse that supplies D-FW Kroger stores hit with major layoffs,”Dallas News, November 27, 2017.
“Kroger ends local warehousing contract, nearly 700 North Texas jobs cut,” Dallas Business Journal, November 27, 2017.