Loblaw Companies Limited: Preparing for Wal-Mart Supercenters

Case 16 1. The mart indus render is a commoditized industry, which ties it tall(prenominal) for grocers to sustain through differentiation. Buyer power is high and thus, cost leaders and operational efficiencies argon critical. There is fierce competition amongst various mart shops, with the main players such as Loblaw and A&P holding multi-banner breeds in various market segments. Traditional grocery stores in like manner lose somewhat of their market sh ar to drug stores, convenience stores and other retailers who grow entered the industry. flagellum of substitutes from fast- provender and take- away outlets is not as prevalent, since many another(prenominal) grocery stores have started stocking ready-to-eat meals and have deli operate available for consumers. Competitive pressures atomic number 18 increasing in the industry with the potential entry of Wal-Mart and innovative delivery methods such as the internet. 2. grocery store industry witnessed a lot of change s. Competitive pressures in the industry are increasing and several new competitors including wal-mart are move into the market.New methods of delivery such as the interned are fashioning it ticklish 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 batch spot responding to swiftly changing consumer tastes.Grocery managers therefore are challenged to provide the merchandise 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 The mass consumer market has been replaced by hundreds of highly diversified mini-markets for which grocery companies have to design cu stom made solutions. 3. Key Success Factors of the grocery industry include the following Low cost operations lead-in to level prices Convenient locations and large stores Wide harvest-tide ranges good musical note Value added services customer loyalty programsCutting-Edge technology, both(prenominal) front-end and back-end flavour at the above factors, there are many opportunities for Canadian grocers to amend on their services such as vertical integration as supplier/distributor, innovative technologies like RFID, and global expansion Loblaws unique patent resource is that they own 63% of their corporate stores strong estate properties. As menti id above, the grocery industry is heavily commoditized and competitive. The Canadian market leader, Loblaw, serves a considerable target market and integrates a low cost strategy with product and process differentiation.Through their multi-banner approach, they leverage their nerve competencies across multiple businesses. The bi ggest superior for the telephoner had been the multi format approach. The caller-up also holds about 60% of the real estate where they operate giving the benefit to change. The lodge refurnish the stores any 5 years when the industry norms are 7 years. 4. SWOT psychodepth psychology Strengths Strong Market Share Broad Product Portfolio Diversified shop Format Low prices with good quality items at all franchises corking customer service/customers have a assert in the confederacy Noticeably friendly workersConstantly looking for areas of improvement Array of services Canadian unlike foreign competitors like wallmart Weaknesses Low Online Operations particular Geographical Presence Opportunities Rise in Demand for Private Labels strategical Plans Rising Demand for Organic Products Opening new stores helps them become much competitive The unfortunate economy lead create a new wave of customers looking for cheaper prices Threats Expiry Of Agreement With Labor Union highly Competitive Market Wal-Mart Business Partnerships Higher prices on certain items makes them less(prenominal) competitive in those areas (electronics and household furniture).By the above S. W. O. T analysis, one hind end see that Loblaws KSFs are on treat and that they are headed in the right direction to bring them back on top. There is of course still work for Loblaw to do with their pricing, however that will come with time because when the company is doing better, they will be able to lower their prices purge much. They are putting up a good conjure though Loblaws prices for certain items were only a mere 10-15 cents higher than that of Wal-Mart which demonstrates that they are climbing the ranks and will eventually pose as a affright to WalMart.Being pure Canadian company is also a core competency because many people enjoy supporting their country even if it means spending an extra 10-15 cents. These key factors (low prices, better quality products, majuscule customer s ervice, and being Canadian) will help Loblaw rise to the top a make water. 5. Lederers project to combat the threat ofWal-MartSupercentre grocery stores turned bad on the company Consolidating its distribution centres, which vaticly made the supply chain more efficient, resulted in the departure of many of the chains general merchandise buyers who were unwilling to move.There were numerous delays and coordination troubles as suppliers had trouble shipping their goods to stores on time, and Loblaws was forced to mark it down in allege to liquidate excess inventory. Expanding its inventory to general merchandise, supposedly to make a one-stop location like Wal-Mart Supercentres, was considered by many customers to be below the standards of Loblaws. Lederer stopped investing in its convential supermarkets and focused on construct its major discount format, the real Canadian superstores. He spent 25 million dollars to motivate old employees to retire early as he turned traditional old stores into superstores. . This is a significant evaluation, because Loblaw is Canadas largest intellectual nourishment distributor, as well as one of the largest private sector employers. Loblaw operates on a lower floor names such as The Real Canadian Superstore, Fertinos, Provigo, SuperValu, Zehrs, Atlantic Superstore, Loblaws, and Your scanty lance Grocer. Along with food and household products, Loblaw provides consumers with other services, such as banking, plash stations, pharmacies, photo developing, dry cleaning, and fitness centers. A qualitative and quantitative analysis of Loblaw was conducted through secondary research, using both internal and external sources.This accounting focuses on the goods distribution and marketing aspects of Loblaw, by exploring its history, primary products, social responsibilities, and monetary position. Ratios of the past and present will be taken into consideration when researching and making recommendations. History Loblaw Compan ies Limited was incorporated in 1956 and it now employs over 122 000 underemployed and full-time employees throughout its 990 branches. As a subsidiary of George Weston Limited, it has supplied the Canadian market with innovative products and services for more than 45 years.The superstore idea was first introduced to westbound Canada in 1979. Loblaw operates in a highly competitive industry, challenged by many other supermarkets, such as Safeway. Organizational Structure The organizational twist of Loblaw Companies Limited is classified according to the functions of to distributively one department. Areas of specialization include auditing, ecesis and compensation, pensions, environment, health and safety, and executive. Committee and team up authority govern this tall, hierarchical organization, where individuals within the several layers report back to their superiors in the chain of command.Ultimately each senior vice-president reports to the executive vice-president, who in turn reports to the president of the company, who is responsible to the get on with of Directors. The Board of Directors itself is divided into five committees, which represent each area of specialization. fond Responsibility Loblaw demonstrates its social responsibilities in the following areas Environment Loblaw has various company policies concerning the environment, one of which demands that various operating sectors develop and implement waste reduction.Reports are given to the environmental committee operated by a sect of bill of directors who are not forthwith employed by Loblaw. Attempting to project an environmentally friendly image, Loblaw announced in 2002, that all of their garden centers would be pesticide free by 2003. Their waste reduction initiative has seen positive results, as was the expression in 1999, when it reduced solid waste by 75%, total waste by 60% and water waste by 38%. Use of underground tanks has been decommissioned in addition PCBs and asbe stos have been outside from company operatives.Employees The philosophy that a companys success is directly affected by the attitude of the employees, is put into action when Loblaw concentrates on coordinate positive relationships with their employees. Employee benefits include life or health insurance, dental insurance, and a pension plan. A stock option plan and an Employee Share self-possession Plan (ESOP), which are administered through a trust, are also available. This allows employees to make five percent deductions from their regular earnings Loblaw then contributes 15% of each employees contributions to the ESOP plan.Recruiting, hiring, and training are all gulle on a store-by-store basis. Loblaw maintains health and safety programs in its stores to address health and body of work safety. This system is also subject to compliance audits. Community Charities such as Canadian Breast Cancer Foundation, Canadian Cancer Society, President cream Childrens Charity, Easter Se als, the Canadian Merit Scholarship and many more benefit from Loblaws donations. Loblaw has purchased Maple Leaf Gardens, further developing its roots in the city of Toronto. Customers Loblaw strives to have a good relationship with ts consumers through feedback, quality customer and product services. Programs such as the Presidents survival Financial MasterCard allow consumers to collect points, which are redeemable for goods within the store. Loblaw also attempts to get feedback from consumers through focus groups and surveys. However, Loblaw fails in the area of consumer responsibility by not allowing suppliers to indicate whether or not their products are genetically engineered. The company goes as far as to demand that companies selling genetically engineered goods keep down proclaiming so on their labels.Investors Loblaw is working towards being socially responsible to their investors by keeping them informed by releasing online annual reports and mailing them out. The comp any provides sustainable returns through dividends by reinvesting cash flow into the firms real estate and land. 7. loblaws was the largest supermarket chains in Canada. they undefended a serial of the real Canadian superstores in Ontario, where they expected wallmart to unfastened their first food superstores. These were built as low-cost, one stop shopping destinations.The real Canadian superstores were as the size of two football fields and sold a combination of groceries and non-food items. Lederer consolidated the the companies distribution centers from 32 to 26 facilities, in order to sum up the efficiency of the supply systems. He closed old warehouses and opened new ones in Brampton Ontario. Real Canadian superstore were located on walmart supercenters as if facing at war. Geographically wise they were allocated at same areas and when it comes to goods and commodities, the both handled non food items along with their usual groceries. The war did begin. 8. Galen Weston J r. as supposed to rescue the company by fixing the broken delivery system. He started by managing a pilot online grocery business in Ontario. Galen along with his team outlined a new business plan. He canvas the problems and found out that they have a big delivery problem and that they are still over-priced. He aimed to increase sales and earnings by cutting prices, offering more products, and improving customer service. Galen started working on investors and opening up in idols such as the maple leaf trough in downtown which he turned into a grocery store as to gain people due to their passion to the hockey team which was a symbol at the ountry. Moreover he succeeded in decorous number one again. 9. Recommendations for Loblaw A private label a store like Loblaws needs a particular way it can standout the competition. They could approach the strategy of having private labels in store. Cut down on general merchandise they should reduce low quality goods and focus on selling people groceries with good quality plus they should concentrate on groceries rather than electronics because too much diversity infects being the best at a certain field.Make the store attractive to the customers eyes try to beat wal-mart by obtaining a store that is clean, decorated, high ceilings, no open boxes, attractive lighting and displays. Make the stores easy to roam and let commodities that are of the same interest be on a route that customers dont pass by unwanted goods. Let people say this is the store I want to buy from. Supply chain forethought its clear that the supply chains logistics used by Loblaws should be changed. Empty shelves phenomena should become extinct because it makes good stores look cheap and unreliable. gain marketing marketing and advertisement should be extreme and excessive oddly when change happens, prices differ, and news are there. Promotions should reach customers well enough to gain or even regain their loyalty. People should know that the company accepted their mistakes and problems and solved them out. Downsize close unprofitable stores, this will reduce payroll and increase the funding to solve damaged issues. Off coarse this is the last streak companies look at but its helpful at the long run.