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Current strategy expansion upgrading and store

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Unformatted text preview: Strategy Expansion, Upgrading, and Store Attraction Loblaw continues to pursue market growth and increasing shareholder returns. Central to the company’s strategy has been aggressive expansion of new stores and upgrading existing stores. Significant investments in new store real estate and a continual store update and renewal program together with ensuring the product and service offerings within each of the stores are vast, compelling and provide great value to our customers, have been the cornerstones of growth for the business. (Annual Report, 1997) Loblaw has opened new stores at a rate far exceeding that of its competitors. Over the past seven years it is responsible for 40 percent of the industry’s investment in new stores. In 1997 alone, it added 18 percent to its square footage in western Canada and 8 percent in the East.8 Similar expansion is planned for 1998 are summarized in Box 2. Box 2 EXPANSION PLANS AT LOBLAW Source: 1997 Annual Report 1997 Review 1998 Outlook Eastern Canada • 39 new corporate and franchise stores • 31 stores renovated or enlarged • 8% increase in retail square footage Eastern Canada • 35 planned openings or major expansions totaling 1.5 m square feet • 25 planned renovations or minor expansions • 7 planned new stores in Montreal, Quebec Western Canada • 5 Superstores and 9 conventional stores opened • 7 Wholesale Clubs opened • 18% increase in retail square footage Western Canada • 5 planned openings of The Real Canadian Superstore • 5 planned openings of The Real Canadian Wholesale Club • 12 conventional stores planned the next few years. The changes in 1997 and those planned for Loblaw consistently has invested in refurbishing and upgrading its stores. Improvement in décor and layout has been a high priority since Richard Currie became President. Stores in existing markets are enlarged and modernized regularly. Total investment in new stores and upgrading of existing stores totaled $517m in 1997, a sum in excess of net earnings.9 In determining where to build or relocate stores, management follows careful analysis of demographics and consumer spending patterns. Loblaw assesses national market demand (projected potential sales) for each of its existing and potential sites. 8 Loblaw Companies Limited 1997 Annual Report and First Marathon Securities Ltd. Loblaw Companies – Company Report, July 22, 1997. 9 Loblaw Companies Limited 1997 Annual Report Consolidated Cash Flow Statement. 6 n KPMG/University of Illinois Business Measurement Case Development and Research Program July 1999o A noticeable trend has been the movement to larger stores. Over the past five years, Loblaw has increased its average store size by 36 percent, that is, from 32,000 to 43,600 sq. ft.10 In the West, the average store size is over 100,000 square feet. In 1997, sales per square foot improved by 2.9 percent11 compared to the prior year. Larger stores, in general, are more profitable than smaller stores because of the greater variety of nonfood items th...
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