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Unformatted text preview: is developed in the company’s own
facilities and then sent to leading manufacturers for production. To be selected for private-label
production, manufacturers must have quality maintenance systems. The success of President’s
Choice has spread to the United States where licensing arrangements are in place with several
major U.S. retailers.
Unlike many of its competitors, Loblaw has no frequent-customer program. Instead, customers
are encouraged to open an account with President’s Choice Financial and use the bankcard to
accumulate President’s Choice Points, which are redeemable for groceries.
Loblaw earns customer loyalty by being better than its competitors in the quality and pricing of
its products, the attractiveness of its stores, and the relevance of its product range.18
15 First Marathon Securities Ltd. Loblaw Companies – Company Report, July 22, 1997.
Loblaw Companies Limited 1997 Annual Report p. 7.
First Marathon Securities Ltd. Loblaw Companies – Company Report, July 22, 1997.
Loblaw attends to the quality of all its products. However, particular emphasis recently has been given to expanding the range of
fresh produce items. The company is seeking perishables superior to its competitors and has established and enhanced its
procurement operations in California, Florida, and Texas.
17 9 n KPMG/University of Illinois
Business Measurement Case Development and Research Program July 1999o Performance
The success of the Loblaw strategy is reflected in its increasing market share and stock price. In
1997, Loblaw captured 20 percent of the Canadian market, although market share varied by
province. In March 1998, Loblaw opened its first store in Montreal (Quebec) and plans further,
gradual expansion into that market. Growth is anticipated in Alberta and British Columbia by
adding additional stores and same store sales have been increasing in part due to competitors’
strikes in the recent years. The significant capital investment in Atlantic Canada has led to
market share increases as well as improved profitability. By competing throughout Canada in
retail and wholesale operations, the company manages its exposure to regional and industry
economic risk. Traditional Competitors19
1. Canada Safeway
Headquartered in Calgary, Alberta, Safeway entered Canada in the early 1930s as the first
modern supermarket and by the 1950s had become the dominant grocer in western Canada. In
1996, damaging labor disputes with unionized workers in British Columbia (BC), followed a year
later by industrial action in Alberta, cost the company market share. Nevertheless, the company
still holds 28 percent of the BC market and 31 percent of the Alberta market largely because of its
superior real-estate base.
Safeway is more vertically integrated than its competitors (e.g., in dairy, bakery, and processed
fruit and vegetables) and operates 14 manufacturing or processing plants in Canada. New stores
focus on the 35-50,000 sq. ft. format because of the company's emphasis on community links.
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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