Employees of Empire Co., the parent company of Sobeys, have begun to speak out about the turmoil unfolding inside the grocery chain since a ransomware attack began plaguing its computer systems earlier this month.
Workers from across the country say some stores have run short of items because orders cannot be placed as usual, while at others, food that had gone bad initially either piled up or was frozen because it couldn’t be removed from the inventory system.
Pharmacies were unable to fill new prescriptions for a week, customers cannot redeem loyalty points or use gift cards, and staff were concerned last week they wouldn’t get paid because the payroll system is down.
“It’s basically been a mess.… The word that can best describe it — just a mess,” said one employee who works in the front end at a Safeway in western Canada.
The CBC has agreed to protect the identities of employees it has spoken to, as they are worried they’ll be fired if the company knows they shared internal information.
Ransom messages on computers
Empire announced in a news release Nov. 7 that an “information technology systems issue” was disrupting some services, including filling prescriptions at pharmacies. The company did not respond to questions from the CBC last week, but said in a statement Nov. 11 its pharmacies were once again fully operational, though stores were still experiencing challenges.
The company owns 1,500 stores across Canada, including Sobeys, Lawtons, IGA, Safeway, Foodland, Needs and other grocery outlets.
Several cybersecurity experts have said they suspect the company’s systems were hacked, and a ransomware attack — when hackers lock computer systems until money is paid — could be to blame.
The employees who spoke with the CBC said ransomware was indeed the cause of the problem.
“Somebody higher up got an email and basically clicked a link they weren’t supposed to,” said the front-end Safeway employee. “I don’t know the exact dollar figure, but I know it was like millions, like several millions.”
The troubles began overnight Thursday, Nov. 3 into Friday, Nov. 4.
When employees arrived for work on Friday, their computers took longer than usual to boot up, and when they finally did, “nothing came up other than this big white block in the middle of the screen that said ransomware, please comply before proceeding, or something like that,” said a worker in a meat and seafood department at a Safeway store.
“I saw the word ransom and that scared me right away.”
Orders at the whim of warehouses
Employees were told not to log in, to unplug certain digital scales, and not to use the scanning equipment that allows them to track inventory.
Without the computer systems and handheld scanners, called Telxon guns, stores have not been able to place orders, so in some cases, they have run out of certain items.
After the first day or so of the outage, warehouses began to send products to stores based on what they had available and estimates of what they may need.
A display case at Sobeys sits empty on Nov. 14, more than a week after a ransomware attack affected computer systems at the chain. Employees say the IT issue has affected their ability to bring in some items. (CBC)
“It’s hit and miss what the warehouse is going to send us,” said one employee. “So we’re getting all kinds of weird stuff that we haven’t seen in decades.”
Some stores have not received any orders of a certain product, while others have, so employees from one store have driven over to pick up the needed items from another.
At some stores, staff have been writing out price signs by hand because the system they usually use is not available.
“When we finally get our system back, everything’s going to be so out of whack because nothing is being scanned,” said an employee.
Scheduling and payroll
The computer issues have also disrupted Empire’s ability to maintain its usual scheduling and payroll systems.
“I literally went into work and there was like a schedule written down on a piece of paper and I’m like, what is this?” said a worker.
Some employees are being asked to write down their hours in a logbook.
Employees in the chain are paid every other week, and some were told last week they would not get paid last Thursday, their scheduled payday.
However, workers later told the CBC the company found a workaround: since the first week of the two-week pay period occurred before the ransomware attack, employees would receive the same amount of pay for the second week, even if they did not work the same number of hours. Each employee also received an extra $100 on Thursday to compensate for any extra hours they may have worked the second week.
Once the payroll system is functioning again, any worker who was overpaid will be expected to return overpayments.
Impacts on customers
Many customers are likely unaware of the difficulties employees are dealing with. But some impacts have been clear.
On the first day of the outage, some self-checkout machines weren’t working.
“The lineups at the tills, because people aren’t used to that and we pump a lot of people through these self checkouts — so, a lot of pissed-off customers over that,” said a Safeway worker.
Employees say some signs at Empire-owned stores are handwritten because they are unable to use some computer systems due to a ransomware attack. (CBC)
Customers have been unable to use gift cards or redeem Scene loyalty points, and stores have been unable to process Western Union transfers — causing frustration for some, one employee said.
The company has not officially told employees the cause of the outage. They have been instructed to simply tell customers it’s an IT issue.
“You kind of feel bad having to like just you know, water it down, what’s really going on, to customers,” said an employee. “You feel like you’re deceiving everybody because there’s more going on behind the doors than what they’re trying to make it out to be.”
Food security concern
Sylvain Charlebois, the director of Dalhousie University’s Agri-Food Analytics Lab, said he has noticed a lot of empty shelves at Sobeys-owned stores since the computer issue began.
But so far, Canadians do not seem to be particularly concerned about the issue, he said.
“If it gets worse, maybe at some point people will realize how significant a ransomware hitting the food industry can be,” he said. “This is the No. 2 grocer in the country dealing with cyber terrorism. That’s a big deal.”
Sylvain Charlebois is the director of the Agri-Food Analytics Lab at Dalhousie University in Halifax. (Submitted by Sylvain Charlebois)
He said the hack is worrisome from a privacy perspective, because the company holds personal data through credit and debit cards, loyalty programs and pharmacy prescriptions.
But the disruption is also significant from a food-security perspective. The food retail industry is a high-volume, low-margin sector, so a significant hit from a ransomware attack could bring an entire company down, Charlebois said.
That would mean part of the food distribution system could be disabled, and food prices would likely increase, at least temporarily.
“I have faith in the food industry. They would recalibrate and restart and things like that. But it would take a while,” Charlebois said.
“Cybersecurity is a huge vulnerability for our supply chains for sure, especially when it comes to food. You’re always a ransomware away from seeing food access becoming an issue in Canada.”
MONTREAL – Travel company Transat AT Inc. reported a loss in its latest quarter compared with a profit a year earlier as its revenue edged lower.
The parent company of Air Transat says it lost $39.9 million or $1.03 per diluted share in its quarter ended July 31.
The result compared with a profit of $57.3 million or $1.49 per diluted share a year earlier.
Revenue in what was the company’s third quarter totalled $736.2 million, down from $746.3 million in the same quarter last year.
On an adjusted basis, Transat says it lost $1.10 per share in its latest quarter compared with an adjusted profit of $1.10 per share a year earlier.
Transat chief executive Annick Guérard says demand for leisure travel remains healthy, as evidenced by higher traffic, but consumers are increasingly price conscious given the current economic uncertainty.
This report by The Canadian Press was first published Sept. 12, 2024.
Dollarama Inc.’s food aisles may have expanded far beyond sweet treats or piles of gum by the checkout counter in recent years, but its chief executive maintains his company is “not in the grocery business,” even if it’s keeping an eye on the sector.
“It’s just one small part of our store,” Neil Rossy told analysts on a Wednesday call, where he was questioned about the company’s food merchandise and rivals playing in the same space.
“We will keep an eye on all retailers — like all retailers keep an eye on us — to make sure that we’re competitive and we understand what’s out there.”
Over the last decade and as consumers have more recently sought deals, Dollarama’s food merchandise has expanded to include bread and pantry staples like cereal, rice and pasta sold at prices on par or below supermarkets.
However, the competition in the discount segment of the market Dollarama operates in intensified recently when the country’s biggest grocery chain began piloting a new ultra-discount store.
The No Name stores being tested by Loblaw Cos. Ltd. in Windsor, St. Catharines and Brockville, Ont., are billed as 20 per cent cheaper than discount retail competitors including No Frills. The grocery giant is able to offer such cost savings by relying on a smaller store footprint, fewer chilled products and a hearty range of No Name merchandise.
Though Rossy brushed off notions that his company is a supermarket challenger, grocers aren’t off his radar.
“All retailers in Canada are realistic about the fact that everyone is everyone’s competition on any given item or category,” he said.
Rossy declined to reveal how much of the chain’s sales would overlap with Loblaw or the food category, arguing the vast variety of items Dollarama sells is its strength rather than its grocery products alone.
“What makes Dollarama Dollarama is a very wide assortment of different departments that somewhat represent the old five-and-dime local convenience store,” he said.
The breadth of Dollarama’s offerings helped carry the company to a second-quarter profit of $285.9 million, up from $245.8 million in the same quarter last year as its sales rose 7.4 per cent.
The retailer said Wednesday the profit amounted to $1.02 per diluted share for the 13-week period ended July 28, up from 86 cents per diluted share a year earlier.
The period the quarter covers includes the start of summer, when Rossy said the weather was “terrible.”
“The weather got slightly better towards the end of the summer and our sales certainly increased, but not enough to make up for the season’s horrible start,” he said.
Sales totalled $1.56 billion for the quarter, up from $1.46 billion in the same quarter last year.
Comparable store sales, a key metric for retailers, increased 4.7 per cent, while the average transaction was down2.2 per cent and traffic was up seven per cent, RBC analyst Irene Nattel pointed out.
She told investors in a note that the numbers reflect “solid demand as cautious consumers focus on core consumables and everyday essentials.”
Analysts have attributed such behaviour to interest rates that have been slow to drop and high prices of key consumer goods, which are weighing on household budgets.
To cope, many Canadians have spent more time seeking deals, trading down to more affordable brands and forgoing small luxuries they would treat themselves to in better economic times.
“When people feel squeezed, they tend to shy away from discretionary, focus on the basics,” Rossy said. “When people are feeling good about their wallet, they tend to be more lax about the basics and more willing to spend on discretionary.”
The current economic situation has drawn in not just the average Canadian looking to save a buck or two, but also wealthier consumers.
“When the entire economy is feeling slightly squeezed, we get more consumers who might not have to or want to shop at a Dollarama generally or who enjoy shopping at a Dollarama but have the luxury of not having to worry about the price in some other store that they happen to be standing in that has those goods,” Rossy said.
“Well, when times are tougher, they’ll consider the extra five minutes to go to the store next door.”
This report by The Canadian Press was first published Sept. 11, 2024.
TORONTO – The U.S. Consumer Financial Protection Bureau has ordered TD Bank Group to pay US$28 million for repeatedly sharing inaccurate, negative information about its customers to consumer reporting companies.
The agency says TD has to pay US$7.76 million in total to tens of thousands of victims of its illegal actions, along with a US$20 million civil penalty.
It says TD shared information that contained systemic errors about credit card and bank deposit accounts to consumer reporting companies, which can include credit reports as well as screening reports for tenants and employees and other background checks.
CFPB director Rohit Chopra says in a statement that TD threatened the consumer reports of customers with fraudulent information then “barely lifted a finger to fix it,” and that regulators will need to “focus major attention” on TD Bank to change its course.
TD says in a statement it self-identified these issues and proactively worked to improve its practices, and that it is committed to delivering on its responsibilities to its customers.
The bank also faces scrutiny in the U.S. over its anti-money laundering program where it expects to pay more than US$3 billion in monetary penalties to resolve.
This report by The Canadian Press was first published Sept. 11, 2024.
