It is also Canada's largest supermarket operator, with annual sales totalling C$21.5bn (£8.7bn), twice that of its nearest competitor Sobeys.
Loblaw's own label, President's Choice, is Canada's third most recognised brand. Its nine wins in the Sial d'Or new product competition in Paris has kept it in the public eye as has the fact that the label is available to non-Canadian, non-competing supermarket chains.
It isn't quite correct to credit Loblaws' with these achievements. Loblaws is actually the name on only 84 supermarkets in the provinces of Ontario and Quebec. The holding company, Loblaw Companies, is the real giant in Canadian food retailing, supplying nearly 1,100 stores under many banner names from coast to coast in Canada, a distance of 7,000km. Such reach is possible through four major subsidiaries of Loblaw Companies  Westfair Foods, covering Canada's four western provinces; Atlantic Wholesalers, covering the four East Coast provinces; Provigo in the province of Quebec; and Loblaw Companies East (often referred to as National Grocers) in Canada's most populous province, Ontario.
Major chains operate wholesale
Each subsidiary operates as a semi-autonomous division with its own distribution centres. National procurement is handled at the Toronto head office. The subsidiaries also have their own names on their stores, eg: Real Canadian Superstore and Extra Foods in the west; Atlantic Superstore and Save Easy on the east coast; Provigo, Maxi and Loblaws in Quebec; and Loblaws in Ontario.
A uniquely Canadian phenomenon finds all major grocery chains in the country operating wholesale divisions supplying all of Canada's 6,500 franchised independent grocers. Loblaw Companies is no exception, with each division having its own groups of franchised independents to supply. Of Loblaw Companies' 1,100 stores, 425 are franchised independents. The balance are Loblaw Companies' corporate stores.
Says president John Lederer: "We own nearly 95% of all our large stores and that gives us tremendous flexibility." Lederer has been president of Loblaw Companies for 18 months, after serving as executive vice-president to now retired president Richard Currie. He is known as a master merchandiser and the company claims to have a store format for almost every customer, allowing different Loblaw formats to compete successfully in a neighbourhood.
Buying power, a robust own label programme, merchandising and execution are also part of the successful mix. Together they have led Loblaw Companies to sales increases from 8% to 8.5% year-on-year and an annual profit which topped C$560m (£227m) this year. All of this in a competitive market where the grocery prices to consumers are now the lowest in the world. It is Canada's low food prices that have been credited with keeping Wal-Mart out of the grocery business in Canada in any substantial way. "Loblaw's operations revolve around six pillars of strategy," says Geoffrey Wilson, vice-president, industry and investor relations for the company. "The first pillar is that we invest all the cashflow back into new stores, renovated stores and the like. This is one of the most significant drivers of our top line growth.
"The second pillar is our multi-banner approach. We operate conventional, discount, corporate and independent supermarkets, which allows us to maximise market share per store."
Wilson says the third pillar is that it owns real estate. "That gives us the flexibility to put in offerings like banking, pharmacy or whatever without having to ask the landlord's permission. It also allows us to switch banners to suit location."
Loblaw banners in Ontario include conventional Loblaws stores, discount No Frills stores, and independents such as Valu Mart, Fortinos and Your Independent Grocer.
"A strong private label programme is essential," says Wilson, "and that would be our fourth pillar. It allows us to take control of our shelves."
The fifth pillar for Loblaws offers an expanded assortment of everyday household needs, which includes general merchandise, cosmetics, home office supplies and President's Choice Financial.
And for the past six years Loblaw has offered a no-fee banking service and low-interest mortgages for its customers under President's Choice Financial. This is tied to a loyalty card which offers points redeemable for groceries, gas and travel. Two years ago, President's Choice Financial obtained a licence to operate as a trust company (class two bank), and since then President's Choice Financial has issued its own Mastercard. Purchases made on the Mastercard also generate points redeemable at Loblaw stores.
Loblaw also has a limited online presence. From a warehouse west of Toronto selected online shoppers can order groceries for delivery. "It's an experiment," says Wilson. "The cost factor to pick, pack and deliver prevents a profitable operation."
The sixth pillar is execution, execution, execution, which has the reputation in Canada of being, as they say, "flawless".
The newest prototype Loblaws fascia  four stores have opened in Ontario with several more planned  is 120,000 sq ft with 20,000 sq ft devoted to general merchandise such as bath and bedding products, kitchenware and general household goods. But food comes first. The new stores have at least 40,000 sq ft devoted to perishables, including massive fresh produce sections, fresh bakery, fresh meat and seafood, expanded deli (which includes hot take-out and meal replacements) and dairy. They also feature a health section that includes organic foods, which leads into an expanded health and beauty aids department. Grocery aisles and frozen foods occupy another 40,000 sq ft.
New to Loblaws stores (and to Canadian supermarkets) is a fully merchandised cosmetics section with trained assistants. Prices for brand name perfumes and make-up are below those sold in drug and department stores. A Home Office department is for the home computer user, there is a section for children's clothing and toys, and the mandatory President's Choice Financial kiosk. Each new store has a mezzanine level which features community meeting rooms, a cooking school and photo finishing.
The stores also lease space to Good Life Fitness Centres which offer supervised play areas for children.
Out-merchandising Wal-Mart
It is clearly a Loblaw philosophy to capture more of Canadian consumers' everyday expenditures. Since Canadians shop for groceries once or twice per week, and a good proportion of them shop at Loblaw, "we want to show them they don't need to go to the drug store to get cosmetics," says Wilson, "and they don't need to go to Wal-Mart for their toasters because we have them, too."
It is unlikely Loblaw would admit it, but one reason for adding more general merchandise is seen by most industry analysts as a way to keep Loblaw customers out of Wal-Mart stores. Certainly Loblaw can out-merchandise Wal-Mart in food. And Loblaw discount supermarkets can sell at or below the prices Wal-Mart supercentres charge in the US.
Because of US inefficiency and supermarkets' attempts to maintain margins, the US supermarket industry has suffered from the power of Wal-Mart's supercentres. Not in Canada, though, where an efficient grocery distribution system, developed over 50 years of peddling groceries to a wider-spaced and sparser population, by all-Canadian grocery distributors, has been refined by Loblaw to include a series of distribution centres and warehouses serving most of the country.
Unable to compete with Canadian grocers' discount formats, Wal-Mart in Canada is relegated to offering 2,000 to 4,000 sq ft of packaged groceries in a third of its 190 traditional general merchandise stores.
The new prototype Loblaw stores need C$1m in sales a week to break even, and all are exceeding that, some substantially. Says Wilson: "We're trying to encourage our regular customers to buy more, by providing more of their everyday needs."
Continuing popularity and sales increases suggest Loblaw is succeeding.
{{ANALYSIS }}
Loblaw's own label, President's Choice, is Canada's third most recognised brand. Its nine wins in the Sial d'Or new product competition in Paris has kept it in the public eye as has the fact that the label is available to non-Canadian, non-competing supermarket chains.
It isn't quite correct to credit Loblaws' with these achievements. Loblaws is actually the name on only 84 supermarkets in the provinces of Ontario and Quebec. The holding company, Loblaw Companies, is the real giant in Canadian food retailing, supplying nearly 1,100 stores under many banner names from coast to coast in Canada, a distance of 7,000km. Such reach is possible through four major subsidiaries of Loblaw Companies  Westfair Foods, covering Canada's four western provinces; Atlantic Wholesalers, covering the four East Coast provinces; Provigo in the province of Quebec; and Loblaw Companies East (often referred to as National Grocers) in Canada's most populous province, Ontario.
Major chains operate wholesale
Each subsidiary operates as a semi-autonomous division with its own distribution centres. National procurement is handled at the Toronto head office. The subsidiaries also have their own names on their stores, eg: Real Canadian Superstore and Extra Foods in the west; Atlantic Superstore and Save Easy on the east coast; Provigo, Maxi and Loblaws in Quebec; and Loblaws in Ontario.
A uniquely Canadian phenomenon finds all major grocery chains in the country operating wholesale divisions supplying all of Canada's 6,500 franchised independent grocers. Loblaw Companies is no exception, with each division having its own groups of franchised independents to supply. Of Loblaw Companies' 1,100 stores, 425 are franchised independents. The balance are Loblaw Companies' corporate stores.
Says president John Lederer: "We own nearly 95% of all our large stores and that gives us tremendous flexibility." Lederer has been president of Loblaw Companies for 18 months, after serving as executive vice-president to now retired president Richard Currie. He is known as a master merchandiser and the company claims to have a store format for almost every customer, allowing different Loblaw formats to compete successfully in a neighbourhood.
Buying power, a robust own label programme, merchandising and execution are also part of the successful mix. Together they have led Loblaw Companies to sales increases from 8% to 8.5% year-on-year and an annual profit which topped C$560m (£227m) this year. All of this in a competitive market where the grocery prices to consumers are now the lowest in the world. It is Canada's low food prices that have been credited with keeping Wal-Mart out of the grocery business in Canada in any substantial way. "Loblaw's operations revolve around six pillars of strategy," says Geoffrey Wilson, vice-president, industry and investor relations for the company. "The first pillar is that we invest all the cashflow back into new stores, renovated stores and the like. This is one of the most significant drivers of our top line growth.
"The second pillar is our multi-banner approach. We operate conventional, discount, corporate and independent supermarkets, which allows us to maximise market share per store."
Wilson says the third pillar is that it owns real estate. "That gives us the flexibility to put in offerings like banking, pharmacy or whatever without having to ask the landlord's permission. It also allows us to switch banners to suit location."
Loblaw banners in Ontario include conventional Loblaws stores, discount No Frills stores, and independents such as Valu Mart, Fortinos and Your Independent Grocer.
"A strong private label programme is essential," says Wilson, "and that would be our fourth pillar. It allows us to take control of our shelves."
The fifth pillar for Loblaws offers an expanded assortment of everyday household needs, which includes general merchandise, cosmetics, home office supplies and President's Choice Financial.
And for the past six years Loblaw has offered a no-fee banking service and low-interest mortgages for its customers under President's Choice Financial. This is tied to a loyalty card which offers points redeemable for groceries, gas and travel. Two years ago, President's Choice Financial obtained a licence to operate as a trust company (class two bank), and since then President's Choice Financial has issued its own Mastercard. Purchases made on the Mastercard also generate points redeemable at Loblaw stores.
Loblaw also has a limited online presence. From a warehouse west of Toronto selected online shoppers can order groceries for delivery. "It's an experiment," says Wilson. "The cost factor to pick, pack and deliver prevents a profitable operation."
The sixth pillar is execution, execution, execution, which has the reputation in Canada of being, as they say, "flawless".
The newest prototype Loblaws fascia  four stores have opened in Ontario with several more planned  is 120,000 sq ft with 20,000 sq ft devoted to general merchandise such as bath and bedding products, kitchenware and general household goods. But food comes first. The new stores have at least 40,000 sq ft devoted to perishables, including massive fresh produce sections, fresh bakery, fresh meat and seafood, expanded deli (which includes hot take-out and meal replacements) and dairy. They also feature a health section that includes organic foods, which leads into an expanded health and beauty aids department. Grocery aisles and frozen foods occupy another 40,000 sq ft.
New to Loblaws stores (and to Canadian supermarkets) is a fully merchandised cosmetics section with trained assistants. Prices for brand name perfumes and make-up are below those sold in drug and department stores. A Home Office department is for the home computer user, there is a section for children's clothing and toys, and the mandatory President's Choice Financial kiosk. Each new store has a mezzanine level which features community meeting rooms, a cooking school and photo finishing.
The stores also lease space to Good Life Fitness Centres which offer supervised play areas for children.
Out-merchandising Wal-Mart
It is clearly a Loblaw philosophy to capture more of Canadian consumers' everyday expenditures. Since Canadians shop for groceries once or twice per week, and a good proportion of them shop at Loblaw, "we want to show them they don't need to go to the drug store to get cosmetics," says Wilson, "and they don't need to go to Wal-Mart for their toasters because we have them, too."
It is unlikely Loblaw would admit it, but one reason for adding more general merchandise is seen by most industry analysts as a way to keep Loblaw customers out of Wal-Mart stores. Certainly Loblaw can out-merchandise Wal-Mart in food. And Loblaw discount supermarkets can sell at or below the prices Wal-Mart supercentres charge in the US.
Because of US inefficiency and supermarkets' attempts to maintain margins, the US supermarket industry has suffered from the power of Wal-Mart's supercentres. Not in Canada, though, where an efficient grocery distribution system, developed over 50 years of peddling groceries to a wider-spaced and sparser population, by all-Canadian grocery distributors, has been refined by Loblaw to include a series of distribution centres and warehouses serving most of the country.
Unable to compete with Canadian grocers' discount formats, Wal-Mart in Canada is relegated to offering 2,000 to 4,000 sq ft of packaged groceries in a third of its 190 traditional general merchandise stores.
The new prototype Loblaw stores need C$1m in sales a week to break even, and all are exceeding that, some substantially. Says Wilson: "We're trying to encourage our regular customers to buy more, by providing more of their everyday needs."
Continuing popularity and sales increases suggest Loblaw is succeeding.
{{ANALYSIS }}
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