Loblaw Company Limited is currently Canadian’s market leader in the grocery sector including holding the 24th spot of the world’s top grocery retailer. While Loblaw seems to be doing very well due to the fact that they have a big portion of the market share, but it may not be for long when Wal-Mart becomes one its major competitors. Wal-Mart has decided to expand its business by entering the grocery sector in the Canadian market. Loblaw’s current issue is the affect that the entrance of Wal-Mart in the grocery sector will have on their current position and if they can remain in business with their presence. Loblaw needs to decide what their next move will be in order to stay competitive with its newest competitor, who seems to dominate in most of the sectors it partakes in. Recommended Decision
It is recommended that Loblaw continues what they are currently doing and in the process improving their services. They need to focus on their current strengths and work on fixing its weaknesses. Decision Options
In order to remain competitive in a market segment that Wal-Mart is entering into, Loblaw should do at least one of these suggestions: * Improve its distribution system,
* Compete with Wal-Mart by following some of the same strategies and adding non-food items to the store, * Add new services such has online grocery shopping and self-serve check-outs, or * Continue with what they are currently doing and improving while in the process Decision Criteria
The reasoning behind my decision of Loblaw doing what they are currently doing and improving at the same time, is the fact that they are doing very well and by changing it may affect their current financial position. It has been proven that stores that try to compete with Wal-Mart have suffered, such has K-Mart. Other companies, like Best-Buy and Staples, have been able to stay competitive and increase their net income without having to bring in new departments to their stores. It is possible for Loblaw to continue what they are currently doing but it will require them to make some improvements. Proof of Recommended Option
Although the entrance of Wal-Mart in the grocery sector is new in Canada it isn’t new to our neighbours to the South, the United States. Although they have took a big majority of the market and is the number one top food retailer it has not prevented other grocery retailers to compete with them. Kroger’s, Supervalu, and Safeway are just some of the few grocery retailers present in the states. These retailers have been able to maintain and increase their sales every year since the presence of Wal-Mart. Some factors that have helped in this is that Wal-Mart stores are mostly situated in the farthest part of town because of their needs of big pieces of property, which made these stores more favourable due to the fact that they were situated in more favourable areas, and the demand for food increases on an yearly basis, which there was more room for competitors. None of these previously mentioned stores have added new departments to their stores which prove that there is no need to compete against Wal-Mart. It would be beneficial to Loblaw to continue what it is currently doing due to the fact that it has many strengths, as seen in Exhibit 1, and that is what has made them the number one grocery retailer in Canada. Control Label Products
Currently Loblaw has its own private label product under the name of President Choice. As stated in the case, Loblaw has been able to persuade its consumers towards its control labelled products instead of the well known brand name products because of the lower prices. Once you start liking a certain product, especially when it’s at lower price, it’s a lot easier to pry yourself from trying other similar products, due to the fact that you already know you love the product and you don’t want wasting money on a product that you aren’t sure if you’re going to like....