THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Wednesday, March 20, 1996 TAG: 9603200501
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY STEPHANIE STOUGHTON, STAFF WRITER
DATELINE: NORFOLK LENGTH: Medium: 85 lines
When Kmart Corp. closes its aging discount store off Military Highway on April 3, about 150 people will lose their jobs. But some of those employees wonder why the company won't transfer their positions to the Super Kmart being built down the road.
``I don't feel very good about the whole thing,'' said a Kmart supervisor who has been with the company for 17 years. ``I considered myself to be a company person. But now, it's definitely a slap in the face.''
Store employees can re-apply for new positions, like anyone else, at Super Kmart, spokesman Stephen Pagnani said. But senior Kmart employees fear Super Kmart may want to hire less experienced workers for lower pay.
While employees see the decision as an act of disloyalty, the corporation sees it as a way to make cuts and survive in an increasingly competitive industry, a retail analyst said. To put it bluntly, the company wants to start anew with Super Kmart, and the old Kmart employees aren't necessarily welcome, said Kenneth M. Gassman Jr., a retail analyst with Davenport & Co. of Virginia.
``They really want a fresh start, lots of new faces,'' Gassman said. ``They don't want employees with old, bad habits.''
While the company expands Super Kmart, it is closing older, traditional discount stores with stagnant sales. Store 3091, along Military Highway in Norfolk, falls into that category.
The store is nearly 23 years old and its performance is lagging, Pagnani said. The worn outlet would have been closed regardless of Super Kmart's expansion in South Hampton Roads, he said.
``The reason we're not doing transfers is that Super Kmart is not a replacement store for the closing store,'' Pagnani said. ``It's a separate project. Completely separate.''
Some employees don't see it that way, and neither do some other big retail chains.
``If you are opening stores in the area - profitable stores - I don't see why you can't transfer employees,'' said the Kmart supervisor. The supervisor and several other Kmart employees interviewed asked that their names not be used because they don't want to hurt their chances of getting jobs at Super Kmart.
Analyst Gassman says he has heard of other retailers not transferring employees to newly built stores.
But among the nation's biggest discounters, the practice apparently is uncommon. Bentonville, Ark.-based Wal-Mart routinely closes old stores and transfers employees to jobs at new stores, spokesman Brandon Parker said. Like Super Kmart, Wal-Mart is now in the process of closing some of its older, traditional stores and building more profitable ``hypermarts,'' gargantuan outlets that include both discount stores and supermarkets.
``Really, the concept doesn't change,'' Parker said. ``The only thing that changes is we add the grocery store to it.''
Minneapolis-based Target Stores has similar transfer policies. And if employees don't want to move to new locations, they are offered severance packages, a Target spokeswoman said. But most of the workers opt to transfer, she said.
With its older and smaller stores, Kmart has been punched around by the likes of Wal-Mart and Target Stores.
In South Hampton Roads, Kmart wants to take back its market share with a new name: Super Kmart. Company officials want to open several of the mammoth stores in the area, including Norfolk and Virginia Beach. The company also was looking at several other sites across the region.
Kmart's Pagnani said he wasn't aware of plans to close more Kmart stores. But company sources said one or two additional stores in this region may be shut down.
In the meantime, Kmart employees who wait for jobs at the nearby Super Kmart may lose their health benefits. Their benefits will expire in early June, but Super Kmart probably won't open until the fall.
``I think it's terrible what they're doing to people - just to let them go,'' said Mary Cogley, who has shopped at the Kmart store about 15 years. ``I've got a friend there who has a terminal illness. . . . It's not like any other health insurance is going to care for her.''
For many Kmart employees, the layoffs mean re-entering the job market at a time when they would be preparing to retire.
One employee, who has been at the store for more than 15 years, says she doubts Super Kmart or any other local retailer will match her current salary.
``They're not going to hire me for that,'' she said. ``A lot of people will not hire me full time.'' by CNB