Unformatted text preview: ignificantly less than the 93.2 percent market share held in 1994.
A real threat to traditional grocers is the possibility of Wal-Mart, and other nontraditional outlets,
such as Shoppers Drug Mart and Save-on-Drugs, moving more broadly into the Canadian market.
Currently, Loblaw and Wal-Mart overlap only slightly. In the United States, however, Wal-Mart
is experimenting with its first full-fledged supermarket that could give the giant discount retailer
an even bigger piece of the huge grocery business. “Wal-Mart Food and Drugs Express” includes
a drive-through pharmacy, a deli counter, a produce section, and aisles for such merchandise as
health and beauty aids. One analyst predicts Wal-Mart will be the largest U.S. food retailer by
For the moment, Wal-Mart has denied rumors concerning its intent in Canada. However, WalMart has expanded the food sections at some stores in Ontario. The addition of refrigerated
grocery products—including milk, cheese, juice, and hot dogs—has some observers anticipating
the introduction of Wal-Mart’s “supercenter” format to Canada. Supercenters are divided
between groceries (32%) and general merchandise (68%).
Should Wal-Mart develop the supercentre (130,000 sq. ft.) concept within Canada, it is likely that
regional chains, such as A&P (Canada) and Metro-Richelieu Inc., would be harder hit than
national chains and/or those with robust private labels. Wal-Mart is renowned for its
technologically sophisticated distribution system and its ability to control its costs. Wal-Mart is
well known for its low distribution costs. Should Wal-Mart decide to enter the Canadian grocery
market, Loblaw will be ready with plans for squeezing inefficiencies from its cost structure
especially in the area of distribution. To enter Canada successfully Wal-Mart would need prime
locations, which in 1998 were not readily available, especially in the Ontario market. Loblaw is
monitoring the availability of advantageous real estate. Another possibility would be for WalMart to acquire an existing chain.
Other competitors include the large drug chains, such as Shoppers Drug Mart, who sell grocery
produce as loss leaders and use dry foods as a replacement for tobacco products. Relatively new
competitors are the warehouse clubs (e.g., Costco) offering a wide range of products with
minimal service at deep-discounted prices. According to AC Neilsen, the number of shopping
trips to warehouses increased in one year by 21 percent and spending increased by 19 percent
during the same period. 14 n KPMG/University of Illinois
Business Measurement Case Development and Research Program July 1999o Box 4 Internet Shopping
Internet shopping for groceries is
not extensive in Canada. In the
United States, NetGrocer (see
Box 4) has pioneered its
introduction (using FedEx for
delivery). As of December 31,
1997, statistics were not yet
available on the scale or
profitability of an online grocery
In 1997, a survey
conducted by The Canadian
Grocer found that 12 percen...
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This note was uploaded on 01/27/2014 for the course ACCY 405 taught by Professor Staff during the Fall '08 term at University of Illinois, Urbana Champaign.
- Fall '08