Ft superstores with 35 percent nonfood items are very

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Unformatted text preview: les of which 10 In the West, 100,000 sq. ft. superstores with 35 percent nonfood items are very successful. In Ontario and Atlantic Canada, the emphasis is on stores in the range of 50,000 – 80,000 sq. ft. 11 Loblaw Companies Limited 1997 Annual Report p. 6. 12 The complexity of category management is illustrated by the fact that there are 150 categories within dairy and frozen foods alone. For example, “cheese” is one category in that group. 13 First Marathon Securities Ltd. Loblaw Companies – Company Report, July 22, 1997. 7 n KPMG/University of Illinois Business Measurement Case Development and Research Program July 1999o tripled in 1997 as a percentage of total supermarket industry sales. In addition, Loblaw has introduced restaurants (owned by a third party) into some of its Toronto stores. Loblaw is a strong competitor because it can respond quickly to consumer spending patterns by aligning store banners and formats to changing neighborhood demographics. The range of banners (shown in Box 3) partly reflects the process of growth through acquisition. Loblaw strategically uses its banners to serve various segments of the market and to target different consumer categories. For example, the “No Frills” banner is a low price, modest-sized option. “Loblaws” is a larger, competitively priced format with a greater range of items in a more up-scale setting. These different banners and formats (i.e., size of store, range of products, and combination of price/service) are used in different neighborhoods. As the neighborhoods change, so do the banners and formats. The ability to switch banners and alter formats is underpinned by the flexibility provided by the long-standing preference within Loblaw for owning, rather than leasing, its real estate sites. Box 3 Banners of Loblaw Companies Ltd ™ Western Canada Total Eastern Canada Total Retail The Real Canadian Superstore The Real Canadian Wholesale Club Stores 40 Retail Loblaws Zehrs Markets Zehrs Food Plus Atlantic Superstore Atlantic SuperValu The Super Centre Atlantic Save Easy Dominion Stores 68 38 17 18 Extra Foods 19 68 Wholesale Shop Easy Foods Lucky Dollar Foods 64 206 Super Valu Extra Foods 37 15 Wholesale No Frills Atlantic Save Easy Fortinos Independent Valu-Mart 16 4 2 16 63 41 18 41 61 Competitive Pricing Distribution The ability to reduce distribution costs is critical in the grocery industry because distribution, shipping, and storage costs can be as high as 20 percent of the value of products.14 Loblaw has been successful in improving its distribution and warehousing productivity. In the East, productivity has improved for five consecutive years. Distribution flows are now almost double the volume achieved ten years ago using the same warehouse space. Current projects at Loblaw include “cross docking;” where goods delivered to warehouses are immediately configured into store deliveries and loaded onto store trucks the same day, and “flow-through;” where store orders are pre-configured by suppliers. Loblaw is testing the use of three-temperature trucks to combine shipment of groce...
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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.

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