Clubmarket presents: Salary cuts for workers and a new car for the CEO
Discount supermarket chain Clubmarket is taking cost-cutting measures. Company officials have told TheMarker that the company has announced salary cuts of 5-10 percent for senior employees. The officials also said that employees had expressed resentment after they learned that CEO Yacov Ginzburg had traded in his Volvo for a high-end Volkswagen Tuareg jeep.
The decision to cut salaries came at the same time that the company replaced the assistant director of sales and marketing. Former-assistant director of sales and marketing Gershon Weisman resigned from his position at Clubmarket after three and a half years and will be replaced by Doron Frankenstein, former-assistant director of sales and marketing at the new Hamashbir Letzarchan department store chain. Frankenstein left his position at Hamashbir at the end of March, 2005.
Recently, suppliers and creditors have said that Clubmarket has been delaying its payments to them. Clubmarket said that the late payments are part of a hard-line strategy to increase the chain's credit ceiling in accordance with current market conditions. The chain said it has positive cash flow.
Clubmarket's owners, the Borovitch-Mozes-Rosen Group, prefers not to publish the private company's profit and loss figures. However, the ACNielsen marketing research company said that the chain's sales decreased by five percent in 2004 in comparison with 2003. ACNielsen figures also revealed that Clubmarket's general market share decreased to 13.4 percent in 2004, down from 14.4 percent in 2003.
Clubmarket recently established a new sub-chain called Imperia which incorporated branches of the Jumbo and Hatzi Kupah sub-chains.
Clubmarket's spokesman responds, "Fact number one: The general manager does not have possession of any car which is owned by Clubmarket - his car is leased - and as every one knows, the leasing companies replace all of its employee-cars after three years. Yacov Ginzburg actually chose a car with lower monthly leasing fees than the vehicle that he drove in the past.
"Fact number two: With regard to the salary - here, too, the story is different. The chain changed the structure of employee compensation to compensation based on productivity and payment of premiums. The expected outcome is that good employees will earn higher wages than they are presently earning. In other words, this was a management decision designed to improve the quality of work to an even higher level. We believe that this system is worthy of praise rather than condemnation."