At the Scotia Capital Back to School Conference today, Loblaw’s president Vicente Trius said today’s marketplace calls for differentiation and Loblaw has the processes and pipeline to develop strong products with great appeal to its customers.
He spoke about how the retailer’s supply chain is more robust today and its distribution network has been rationalized since embarking on an infrastructure program four years ago. The company closed 11 warehouses nationwide and opened eight. Today it has 21 distribution centres.
“We have an efficient supply chain that is consistently delivering above 98.5 per cent of availability across all of our stores,” said Trius, adding the grocer is reducing inventories consistently.
Lending to the increased efficiency of its supply chain is the fact that the infrastructure of its technology platform will allow Loblaw to deliver a product from the time it’s sourced to the time it’s sold, efficiently. It will be completed by 2014. “Our first store will roll out in November,” he said. “This will give us an efficiency base to compete in the marketplace.”
Trius said the grocery sector can’t continue to be about promotions. “We’re building the proper journey on a value proposition that balances better the promotion towards consistent shelf pricing. Promotion after promotion isn’t sustainable for any retailer. Sooner or later it forces you to make the wrong decisions,” said Trius.
He pointed to Blue Menu, its health and wellness line, and the black label gourmet private label line as ways the grocer is differentiating itself. “Joe Fresh is the No. 1 apparel line in Canada and gives us a real competitive advantage.”
And when it comes to trends in health and wellness and the aging population, Trius said Loblaw has lots of areas it is seeing traction and success.
We have over 100 medical clinics that add value and service to our stores by providing more prescriptions to its pharmacies, he said.
Loblaw proactively acquired scripts from other retailers, and acquired 106 pharmacies from Zellers with “retention levels above our evaluation models,” said Trius, “in really delivering results in our locations where we transferred them in.”
The retailer launched the Guiding Stars nutrition scoring system a year ago, and it’s now being rolled out. And Loblaw is focusing on fresh products like never before, added Trius.
When it comes to ethnic consumers, Trius said the retailer has the No. 1 wholesaler in East Asian and South Asian products. “We have the supply chain and can source the products, we can bring them in,” he said.
He added that it’s important to have a good category review, and that ethnic products are included as part of that category review that crystallizes on the shelf and in planograms in stores. “It’s not about having a counter that says ‘international foods,’ ” said Trius, adding consumers see those products more and more as mainstream.
It will be a busy year ahead for the grocer. All products that contain seafood will come from sustainable sources and all President’s Choice products will be free of artificial colours and artificial flavours by 2013.
On grocery formats, Trius said Loblaw intends to deliver the lowest price consistently, while in conventional grocery the retailer is focusing on the store experience, with fresh products, local products and customer service.
Trius said online for retailers is now beyond e-commerce. It’s about how you interact with consumers and goes beyond click and collect, he said.
Trius said Loblaw would be launching a loyalty card next year that he says will have at least 10 million. “I can reach those consumers directly, understanding their needs,” he said.
He concluded by saying, the retailer is focused on building stores with exceptional service–from motivated staff, to lowest prices on shelf. “That’s how you build a solid retail business.”
Correction: an earlier version of this article said Loblaw has 11 distribution centres. It actually has 21. The article also stated President’s Choice products will be free of additives by 2013. In fact, President’s Choice products will be free of artificial flavours and artificial colours.