Another side of Loblaw

Loblaw has endured some harsh criticism over the past five years. First, a failed mass merchandise program at its superstores led to a massive writedown in inventory (the result of a vast overreaction to Wal-Mart). Next, a faulty supply chain led to out-of-stocks for months on end. Then came the mass dismissals and departures of most of the experienced grocers at head office.

Loblaw was also faulted for demanding more funds from suppliers, for abandoning the industry's main charity, The Grocery Foundation, and for precipitating the demise of the Canadian Council of Grocery Distributors.

Yet there are things that Loblaw does very well. And the company deserves credit for a number of good deeds away from its grocery aisles, which I'll touch on in a moment.

The slashing of costs and subsequent heavy spending to update Loblaw's supply chain (including millions spent on consultants) will be the legacy of outgoing president Allan Leighton who was noted for an authoritative and aggressive style while fixing the infrastructure. His replacement, global retail veteran Vicente Trius, may bring all-important execution and operational skills to the company, areas where Loblaw has fallen short over the past few years.

Yet despite all the glitches, there are areas where Loblaw excels, including providing funds for communities as well as efforts to help the environment. Not that other grocery companies fall short in their charitable and green programs–they don't. For example, Sobeys' $1 million funding of a cancer research unit. But Loblaw has found a few special ways to contribute to society.

Loblaw has provided $3 million in funding for the Chair in Sustainable Food Production at the University of Guelph. In addition, the company's iconic President's Choice brand sponsors a number of community activities, such as the Super Dog competition. And the President's Choice Blue Menu brand sponsored Canadian athletes at the 2010 Vancouver Winter Olympics.

Since 1989, Loblaw's charitable arm, President's Choice Charities, has raised about $50 million from employees, customers and Loblaw itself. PC Charities exists to help physically and developmentally challenged children in Canada, and a portion of the funds go to the Breakfast for Learning program and its counterparts in Quebec and Newfoundland and Labrador. Customers at Loblaws and a liated stores were recently asked to donate $2 at checkout to help food banks. It's estimated that more than $1 million was raised. The main reason Loblaw left The Grocery Foundation was to concentrate on its own PC Charities, which have helped thousands of families over the years.

On sustainability, Loblaw was named one of Canada's greenest employers for reducing the environmental impact of its day-to-day operations. It was the second consecutive year the company made the list, put out by Mediacorp Canada. Among Loblaw's green accomplishments: a commitment to source all seafood sold in retail from sustainable sources by the end of 2013; a reduction of 3.2% in electricity use per square foot compared to 2009; improvement of fleet fuel efficiency by 2.3%; and a reduction of 2.3 million kilograms of packaging contained in Loblaw control brand products.

Oh sure, all grocery distributors in Canada have major and worthwhile charitable and community endeavours. But they have avoided the industry thrashings Loblaw has received. With a new president coming to Loblaw, it seems like a good time to tell another side of the story.