Loblaw prepares for the post COVID-19 shopper
New shopper behaviours are emerging as a result of the pandemic and they could be here to stay
While extreme stockpiling has subsided, Loblaw president Sarah Davis said the grocery company is still facing “new consumer behaviours and an altered, continually changing trading environment” in the COVID-19 era.
“Today, we must not only anticipate a return to past shopping consumer habits, but also plan for the fact that many recent changes will not reverse entirely,” said Davis, during a quarterly earnings call with analysts Wednesday morning.
Loblaw is spending about $90 million every four weeks on efforts to keep its stores safe for customers and employees, said chief financial officer Darren Myers. That figure includes temporary wage increases and social distancing measures, which the company said would remain in place until the pandemic is over.
In the early days of the COVID-19 pandemic, when the government first asked Canadians to consider staying home, Loblaw saw a rush to retail that “nobody could have anticipated,” said Davis.
“In a matter of days, customer counts and basket size spiked four-fold; sales of paper, frozen and meat products skyrocketed, e-commerce traffic tripled, restaurants closed and our prepared meal business and recipe making categories took off,” she said.
Canada’s largest grocery company reported a profit of $240 million for the 12-week period ended March 21. It said food retail same-stores sales rose 9.6%.
All Loblaw stores benefitted from pantry loading in the back end of Q2, but the company’s market division was the biggest benefactor. Prior to COVID-19, discount in Canada was growing at a faster rate than conventional grocery, said Davis. What customers want now is shorter lines and the higher product assortment a conventional store offers so they can one-stop shop, she said.
Consumers are also less price sensitive, Davis said, noting grocery benefits from money that would have been spent at restaurants and other places that have been closed during the pandemic.
Though the company continued to “provide as much value to customers as we did pre-COVID,” adjustments were made to its promotions to ensure customers weren’t rushing to the store, said Davis. For instance, Real Canadian Superstore extended its weekend-long “No tax” sales event to seven days.
Meanwhile, the PC Express click-and-collect business has reached levels during the COVID-19 pandemic that the company didn’t expect to see for two to three years. To meet demand, Loblaw increased labour, opened up additional time-slots and is refining how the service functions at high capacity, said Davis. Currently, the average wait time for e-commerce orders is six days, she said.