Loblaw Companies Limited: Preparing for Wal-Mart Supercenters

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Case 16

1. The grocery industry is a commoditized industry, which makes it difficult for grocers to sustain through differentiation. Buyer power is high and thus, cost leadership and operational efficiencies are critical. There is fierce competition amongst various grocery stores, with the main players such as Loblaw and A&P holding multi-banner stores in various market segments. Traditional grocery stores also lose some of their market share to drug stores, convenience stores and other retailers who have entered the industry. Threat of substitutes from fast-food and take- away outlets is not as prevalent, since many grocery stores have started stocking ready-to-eat meals and have deli services available for consumers. Competitive pressures are increasing in the industry with the potential entry of Wal-Mart and new delivery methods such as the internet. 

2. grocery store industry witnessed a lot of changes. Competitive pressures in the industry are increasing and several new competitors including wal-mart are entering the market. New methods of delivery such as the interned are making it difficult and challenging for traditional based stores to comply. Customer preferences are diversifying and different demands are increasing. In addition to the price war that strike the markets. The maturity of the industry, characterized by flat demand combined with the growth aspiration of the dominant suppliers makes the industry a competitive battleground. Competitors work toward driving costs down while responding to swiftly changing consumer tastes. Grocery managers therefore are challenged to provide the marketing mix of tomorrow, emphasizing speed, flexibility, and early identification of trends directed at segmented and rapidly evolving markets. The mass consumer market has been replaced by hundreds of highly diversified mini-markets for which grocery companies have to design custom made solutions.

3. Key Success Factors of the grocery industry include the following: Low cost operations; leading to lower prices
Convenient locations and large stores
Wide product ranges; good quality
Value added services; customer loyalty programs
Cutting-Edge technology, both front-end and back-end

Looking at the above factors, there are many opportunities for Canadian grocers to improve on their services such as vertical integration as supplier/distributor, innovative technologies like RFID, and global expansion Loblaw's unique tangible resource is that they own 63% of their corporate stores real estate properties. As mentioned above, the grocery industry is heavily commoditized and competitive. The Canadian market leader, Loblaw, serves a broad target market and integrates a low cost strategy with product and process differentiation. Through their multi-banner approach, they leverage their core competencies across multiple businesses. The biggest winner for the company had been the multi format approach. The company also holds about 60% of the real estate where they operate giving the benefit to change. The company refurnish the stores every 5 years when the industry norms are 7 years. 4. SWOT ANALYSIS:


Strong Market Share
Broad Product Portfolio
Diversified Store Format
Low prices with good quality items at all franchises
Great customer service/customers have a say in the company
Noticeably friendly workers
Constantly looking for areas of improvement
Array of services
Canadian unlike foreign competitors like wallmart


Low Online Operations
Limited Geographical Presence


Rise in Demand for Private Labels
Strategic Plans
Rising Demand for Organic Products
Opening new stores helps them become more competitive
The unfortunate economy will create a new wave of customers looking for cheaper prices


Expiry Of Agreement With Labor Union
Highly Competitive Market
Business Partnerships
Higher prices on certain items makes them less...
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