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Unformatted text preview: position in that industry. Grocery Industry
The grocery industry in Canada is competitive and dominated by eight major chains that hold
approximately 75 percent of the traditional food distribution market.1 Loblaw Companies Ltd.,
with 1997 sales of (Cdn)2 $11.01 billion and 70,000 employees, is the market leader in Canada
(see Figure 1) and the eighth largest in North America.3 Figure 1
Relative Market Shares of Leading Grocery Chains Atlantic &
9% Loblaw Companies
7% Oshawa Group
16% MetroRichelieu Inc.
8% Provigo Inc.
14% Source: Canadian Grocer
The figures are derived by applying revenue statistics from The Canadian Grocer to the industry statistics
provided by Statistics Canada (see Table 1). 1
2 3 First Marathon Securities Ltd. Loblaw Companies – Company Report, July 22, 1997.
All dollar amounts contained in this case are denominated in Canadian dollars (Cdn). At December 31, 1997, one Canadian dollar
was equivalent to .69840 U.S. dollars.
Loblaw Companies Limited 1997 Annual Report and www.loblaw.com/ABOUThom.htm assessed October 22, 1998. 2 n KPMG/University of Illinois
Business Measurement Case Development and Research Program July 1999o The industry has shown little growth in recent years (see Table 1) and faces increased
competition from nontraditional retailers such as warehouse clubs4 (e.g., Costco), drug chains,
mass merchandisers (e.g., Wal-Mart), and Internet companies. Furthermore, customers are
increasingly moving away from traditional food items in favor of food-away-from-home
purchases. In response, grocers are investing heavily in new distribution and logistics
technologies in order to lower costs and provide better service. They also are changing the
balance of products favoring fresh produce and ready-made meals. Loblaw, the market leader,
has been at the industry forefront in introducing several of these changes. Table 1
Growth in Food Distribution Market ($Cdn, millions)
$ 000s 1994
$ 000s 1995 Percent
Change $ 000s Percent
$ 000s 1997 Percent
Change $ 000s Percent
Change Supermarkets and
grocery stores 47,690 49,749 4.3 % 49,909 0.3 % 49,264 -1.3 % 52,198 5.9 % Other food
stores 3,385 3,720 9.9 % 4,153 11.6 % 4,188 0.8 % 4,141 -1.1 % Total 51,075 53,469 4.7 % 54,062 1.1 % 53,452 -1.1 % 56,339 5.4 % Source: Statistics Canada 4 A warehouse club offers products at low cost but solely in large quantities/sizes. They tend to be membership based. 3 n KPMG/University of Illinois
Business Measurement Case Development and Research Program July 1999o Loblaw
Loblaw holds approximately 20 percent of the market for food sold through conventional food
outlets. It has significant presence in all provinces except Quebec (a predominantly French
speaking part of Canada), where it has market share of less than 1percent.5 It is the market leader
in Ontario (33%) and in Manitoba and Saskatchewan (46% each). It has 18 percent of the Alberta
market—behind Safeway (31%)—and 8 percent of the British Columbia (BC) market trailing
Overwaitea (31%), Safeway (28%), and the Oshawa Group (11%).6 Two thirds of Loblaw sale...
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- Fall '08