Reference no: EM133508453

CSR AND THE CLOSURE OF A NEIGHBOURHOOD SUPERMARKET

On January 14, 2012, Loblaw Inc. closed its SaveEasy supermarket in the Churchill Square shopping centre in St. John's, NL. There had been a supermarket on the site for 55 years, originally operated by a local business but later acquired by Loblaw Inc. The Churchill Park residential area was developed after World War II and included a small-scale mixed retail square and open spaces.

The Square was located on the edge of the Memorial University of Newfoundland campus, which had about 20,000 students, faculty, and staff. By 2012, there was a predominance of retired persons living in apartment buildings and individual homes in and around the Square. The SaveEasy supermarket closure left a gap in the retail makeup of the Square. As one resident pointed out, the Square had a lot to offer including medical and dental offices, restaurants, clothing stores, and a pharmacy, post office, bank, hairdresser, coffee shop, pub, sports outfitter, and dry cleaner-but now no food store.

Most of the students did not own cars and many retirees either did not own cars or were unable to drive. As the nearest supermarkets were now a distance of about two kilometers away, both these groups were inconvenienced by the closure of the neighborhood supermarket. The closure was consistent with the trend in food stores. The Churchill Square SaveEasy was a small-scale supermarket that, when built, replaced smaller local grocery stores. Recently, the model for supermarket stores used by Loblaw and other food retailers was to centralized, full service stores as they followed the big-box store trend. Loblaw's centralization of its stores resulted in the closure of several other stores in St. John's. Residents objected to the closure and contacted Loblaw. The information they received was that the store was not very profitable and the building was deteriorating, requiring expensive repairs.

The Deputy Mayor expressed concern over the closure of SaveEasy grocery store in Churchill Square and asked that the Mayor write Loblaw expressing concern. In addition, the Deputy Mayor suggested that Council meet with Loblaw on the matter. A petition with hundreds of signatures was tabled at a City Council meeting, which read:

We the undersigned deplore the closure of SaveEasy in Churchill Square. We urge City Council not to approve any other kinds of uses of the location. A food store is absolutely essential to the neighborhood, particularly for seniors and students.

A copy of the petition was forwarded to Loblaw. These initiatives had no impact.

Many residents and students felt that Loblaw was not being a good corporate citizen and referred to a quotation from the corporation's 2014 Corporate Responsibility Report: "We strive to be an exemplary corporate citizen ... " The report described Loblaw's CSR commitment that included respecting the environment, sourcing with integrity, making a difference in communities, reflecting the nation's diversity, and being a good place to work. In 2015, Loblaw was one of Mac/eon's magazine's Top SO Socially Responsible Corporations. Those opposing the closure felt that Loblaw was focusing more on its bottom line than on good corporate citizenship.

As the months passed, another issue arose relating to the closure: Loblaw would not allow another grocery store to rent or purchase the building, in effect keeping competition out.

Considerable discussion took place in the local media about Loblaw's unwillingness to give up the space, creating what was referred to as "economic black holes." Some people argued that City Council should have a vacant building policy requiring the owners to allow the structure to be occupied if some businesses were willing to rent or acquire the space. It was pointed out that Loblaw was not breaking any laws and was paying the taxes on the building. Others pointed out that Loblaw could not be expected to help its competitors. Meanwhile, the vacant store was a constant reminder of the inconvenience imposed on several stakeholders.

Questions

1. Who were the stakeholders and what was their influence?

2. Is it socially responsible to prevent the former store from being rented or sold to another business?

3. Should City Council take any action in this situation?

4. Was Loblaw being socially responsible? Does it have a moral obligation to keep the store open?