Company Overview

Loblaw is in the grocery store industry in the services sector. Loblaw has shown throughout their history that they can freshen up their stores and add services that their customers ask for in order to keep their customers happy. It's this kind of dedication to customer service that keeps them at the top of their industry in Canada.

Today, Loblaw's goals are to improve on their Joe Fresh clothing line by expanding into e-commerce to draw in more customers. Also, they are focusing on bringing in more ethnic food in order to draw in new Canadians as customers as well.

Loblaw gives a brief overview of their company in this YouTube video aimed at potential new employees. Click here.

Company History

Loblaw’s first store was opened in 1919 by Theodore Pringle Loblaw and J. Milton Cork in Toronto, ON. In 1984, President’s Choice came onto the scene, which is Loblaw’s own brand of products available only in their stores. They also introduced a finance division known as PC Financial. (Retrieved from http://www.Loblaw.ca/LCLOnline/aboutUs.jsp August 31, 2012). In 2011, Loblaw included “584 corporate and 462 franchised stores in coast to coast.” (Retrieved from http://loblaw.ca/Theme/Loblaw/files/4.%20Investor%20Centre/Financial%20Reports/2011/Q4/Loblaw-2011-Annual-Report.pdf August 31, 2012). They also brought in an in-store clothing line, Joe Fresh.

Loblaw was acquired by the Weston family in the 1950s. They turned around the store and made it hugely successful by renovating the stores and running a new ad campaign featuring William Shatner. (Retrieved from http://www.weston.ca/PDF/GWL_History_Reinventing_Loblaws.pdf August 31, 2012). When they introduced no name and President’s Choice product, it really helped the company grow, due to lower prices.

Today, Loblaw is run by a new president brought in just last year, Vicente Trius. (Retrieved from http://business.financialpost.com/2012/05/18/Loblaw-business-strategy-needs-some-freshening-up/ August 31, 2012).

Company Production

Loblaw’s main product is groceries. One product that recently came up in Ontario with regards to supply and demand is local beef. Customers  wanted to have access to local, corn fed beef at Loblaw’s, and the grocery store chain began stocking that as a direct response to that demand. (Retrieved from http://www.loblaw.ca/English/Media-Centre/news-releases/news-release-details/2012/Locally-Sourced-Ontario-Corn-Fed-Beef-Now-Available-at-Real-Canadian-Superstore-Locations-Across-Ontario1130121/default.aspx August 31, 2012). This is also a great example of the kind of customer service that keeps customers coming back to Loblaw’s.

With Target preparing to make its entrance into Canada, Loblaw is planning to focus its target market on new Canadians, bringing in a new selection of ethnic foods. The company also plans to target online shoppers through their Joe Fresh brand. (Retrieved from http://www.moneyville.ca/article/1138028--loblaws-focuses-on-new-canadians August 31, 2012).

Loblaw falls under the secondary stage of production. This includes bringing in the produce and products, supplying the staff to stock the product and maintain the shelves, and also supplying the staff to assist customers in their shopping and processing them at the till.

Company Costs and Profits

Loblaw’s pricing for its main products – groceries – vary based on the type of product and location. That being said, the no name brand and President’s Choice brand products are known to be priced lower than many other brands, and these are the brands and pricing that keep customers coming back to Loblaw stores.

Some fixed costs for Loblaw are the mortgages on the stores, the salaries of executives, and insurance costs.

Some variable costs are the cost of produce, the transportation costs to get the products to the stores, labour, fuel, and utilities

Loblaw saw an increase in revenue in 2011 from the previous year, reporting an increase of revenue up 1.3% from last year. Their operating margin is the same as last year at 4.4%.

(Retrieved from http://loblaw.ca/Theme/Loblaw/files/4.%20Investor%20Centre/Financial%20Reports/2011/Q4/Loblaw-2011-Annual-Report.pdf August 31, 2012).

The Competition

Loblaw’s strongest competition is Sobeys, however they are still the biggest grocery chain in Canada. As shown in the table below, Loblaw holds 20% of the grocery store market share in Canada.

(Retrieved from http://business.financialpost.com/2012/05/18/loblaws-business-strategy-needs-some-freshening-up/ August 31, 2012).

Loblaw’s competitive advantage is that they boast low prices with the no name and President’s Choice brands, they offer banking services right in store with PC Financial, and they also sell clothes with Joe Fresh. You can also find gifts, furniture, utensils, serving plates – essentially, shopping at Loblaw offers a one-stop-shopping experience, without the big-box store feel of say, Walmart or Costco.

 

Summary

Loblaw has shown that they can change and adapt to keep up with changing customer needs. They have shown innovation over the years in adding a financial services division and a clothing line to their stores, which keeps them ahead of the pack with regards to other grocery chains, while still maintaining the feel of shopping in a grocery store instead of a big box store.

Some weaknesses that may cause Loblaw to lose some customers in the future is that more people may want  to shop at the big box stores, like WalMart, as people are getting busier and busier and trying to multitask. However, if they keep growing and changing to keep up with the times, they will likely add new products and services  to keep their customer base, and draw new customers as well.