Dive Brief:

• Mass merchant Meijer is reportedly restructuring its corporate information technology services department in the coming months, which could affect up to 10% of IT staff, a source directly familiar with Meijer's IT department who was not authorized to speak publicly told MiBiz. 

• “Our focus on being as efficient as possible is key to our ongoing success in a highly-competitive retail environment,” Frank Guglielmi, Meijer senior director of communications, wrote in an email to MiBiz, declining to discuss specific details regarding the restructure.

• According to the source, about 46 employees could be laid off, and a potential 25 others could be transferred to CapGemini, a French firm many companies turn to for IT outsourcing needs, MiBiz reports.

Dive Insight:

It’s no secret that the grocery retail market is undergoing massive changes as the sector is increasingly disrupted by online players and delivery services. Some of that is driven by Amazon, which is acquiring Whole Foods and pushing new concepts like checkout-free Amazon Go. Brick-and-mortar stalwart Walmart has also been edging into price wars and working on beating Amazon to market with cashierless checkout. No-frills German grocers Aldi and Lidl are doing their part, too.

In this environment, regional operator Meijer is not standing still. Just a couple of months ago, Meijer announced plans to open a small format store targeting urban markets, a new frontier for the suburban operator and a model it has struggled to adopt before, but one it must pursue as competitors make similar moves. Meijer also recently expanded a grocery home delivery program it’s running with Shipt to several new markets in Michigan.

However, much of a grocery retailer’s ability to fully adapt to this new environment will have to do with how quickly and efficiently they can develop and manage new technologies. Some companies may grow their IT staffs, others may increase their reliance on outsourcing, while still others do a bit of both, moving some IT functions and staff to an outsourcing firm while growing other internal IT teams focused on certain customer-facing efforts and competitive projects considered core to the business.

It's not yet clear which camp Meijer falls into, but the changes being reported by MiBiz could very well be part of a broader strategy we'll see play out into next year. If jobs are cut internally and some IT efforts handed off to CapGemini, company watchers will be looking for some correlating benefits — perhaps quicker rollouts of new technologies and capabilities. Such IT shifts don't always work. Target, for example, increased reliance on outsourcing for a time, but then started rebuilding IT as an internal core competency. Now, it's Meijer's turn to develop a new kind of IT strategy.