Loblaw is committed to providing Canadians with a wide, growing and successful range of products and services to meet the everyday household demands of Canadian consumers. Loblaw is known for the quality, innovation and value of its food offering. It offers Canada’s strongest control (private) label program, including the unique President’s Choice, no name and Joe Fresh Style brands. In addition, the Company makes available to consumers President’s Choice Financial services and offers the PC points loyalty program.. Competing against Wal-Mart is a challenge that no company want to face. Loblaw offers Canada’s strongest private label program, including the unique President’s Choice, no name and Joe Fresh Style brands. In addition, the Company makes available to consumers President’s Choice Financial services and offers the PC points loyalty program.

1. “Loblaw Companies Limited: Preparing
for Wal-Mart Supercenter”
Kipenzi Herron and Emilsen Holguin
Bus 511 Business Strategy and Policy
Dr. Adolfo Gorriaran
January 2010

2. Agenda
 Loblaw Mission and Vision Statements
 Loblaw History
 Corporate Strategy
 Industry Overview
 SWOT analysis
 Wal-Mart Market Entry
 February 2007: 100-day review
 Summary
 Discussion Questions
 References
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3. Loblaw Mission and Vision
 Loblaw’s mission is to be Canada’s best
food, health and home retailer by exceeding
customer expectations through innovative
products at great prices.
 Loblaw is committed to a strategy
developed under three core themes:
Simplify, Innovate and Grow.
2006 Annual Report, http://www.loblaw.com/en/lcl_ar06e/downloads/lcl_ar2006_e
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4. Loblaw History
Loblaw was acquired by George Weston Ltd.
 Loblaw was built as a food empire through the purchase of
grocery manufacturers, retailers and wholesalers
 Credited with inventing premium private brands in North
America
 In 2005, Loblaws was the largest supermarket chain in
Canada, with an estimated market share of 34.9%
 In 2008, Loblaw has 609 corporate and 427 franchised stores
in every province and territory in Canada (21 banners).
 Loblaw’s President’s Choice and name control brands are the
#1 consumer packaged good brands by sales in Canada.
2006 Annual Report, http://www.loblaw.com/en/lcl_ar06e/downloads/lcl_ar2006_e
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5. Corporate Strategy
 Creation of private labels
 Consolidated of distribution centers
 Closure of unprofitable stores
 Maximized the use of Loblaw’s fleet
 Uniform pricing strategy
 Standardized store design
 Renegotiated union contracts
 Introduction of general offerings
2006 Annual Report, http://www.loblaw.com/en/lcl_ar06e/downloads/lcl_ar2006_e
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6. Industry Overview
 Canadian supermarket industry was valued at $73
billion in 2006.
 The grocery business was less fragmented, more
competitive, multicultural and dominated by national
companies.
 Canada has a well-developed discount grocery sector
with very high standards.
2006 Annual Report, http://www.loblaw.com/en/lcl_ar06e/downloads/lcl_ar2006_e
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7. Industry Overview (continue)
 The Province of Ontario is a key market in Canada and the
biggest market for Loblaw. Ontario’s sales declined 4.3% in
2006.
 Although sales in 2006 grew 2.49%, the growth was slower
than the traditional year-to-year increase of around 4.8%.
 New stores are increasing the average size of supermarkets in
Canada.
 National and regional chains are getting a wider range of
store innovations and an increased spotlight on private labels.
2006 Annual Report, http://www.loblaw.com/en/lcl_ar06e/downloads/lcl_ar2006_e
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8. SWOT: Loblaw’s Strengths
 Strong brand name
 Position of market share – sales number continue growing
 7000 Private-label products (No Name and President’s
choice)
 President’s Organic product
 President’s Choice Bank and its loyalty program
 Large amount of fixed assets versus low amount of debt
 Economy of scale and large knowledge and experience in
Canadian market
 Wide geographic coverage (all Canadian provinces)
 Social responsibility initiatives, close to the community.
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9. SWOT: Loblaw’s Weaknesses
 Operating margin dropped to 1% in 2006.
 Return on average total assess of only 2.30% in 2006.
 Stores are underperforming
 Complicated corporate structure and weak management
 Plagued with problems in its distribution systems: broken buyer-
supplier relationships, delayed delivering goods, out of stocks
 Loblaw is not doing fresh food as well as the others are right now
 Customers accustomed to prices driven by regular sale promotion
 Customers find difficult to navigate the superstores
 Lack of experience managing general merchandise inventory
 21 banners
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10. SWOT: Loblaw’s Opportunities
 New management team and new business plan
 Commitment to strategy: Simplify, Innovate, Grow
 Growing its discount segment, becoming the low-price leader
 Openings to exploit emerging new technologies
 Proven product innovation capabilities
 Large on financial resources to grow the business and pursue
promising initiatives
 Four-year contract with unions and elimination of 20% of its
administrative workforce
 Lack of customer awareness about general merchandise deep
discount pricing strategy
 Joe Fresh Style line of clothing
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11. SWOT: Loblaw’s Threats
 Goodwill is continuously dropped in value
 Market/book ratio has been decreasing since 2002
 Intense competition
 Major Union problems
 Grocery sales are growing slower than others year’s average
 Canadian market is attracting foreign investors
 Wal-Mart experience in global market has continually pushed
its general merchandise dominance forward while developing
its food business.
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12. SWOT: Conclusions
 Although the Loblaw faced significant hurdles, the company has
an attractive set of strength and resources to restore its
profitability and growth.
 We have identified as alarming weak, its problems with
distribution systems and tolerated poor management. A retailed
store’s distribution system and management are key success
factors.
 The major threat is that competitors are growing stronger while
Loblaw’s consumer satisfaction is decreasing due to the
company poor performance.
 Loblaw’s best opportunity is to capitalize its experience on food
market. Loblaw’s commitments to simplify, innovate, and grow
under the application of a new business plan is the best
opportunity that the company has to be a front-runner again.

13. Wal-Mart market entry
 Wal-Mart poses a serious threat to other grocers
 Economies of scale and scope
 Everyday low pricing
 Supplier influence
 State-of –art distribution system
 Wal-Mart built a super-centers and rapid
expansion forthcoming.
 In 2007 groceries accounted for 31% of total sales
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14. February 2007: 100-day review
“We are not delivering the right value for money and we are not getting the credit with the
customer for investments that we do make,” said chairman Galen Weston Jr.
Proposed actions by executing and analysts:
 Clear out excess inventory and improve stocking
 Strong offering of private labels, de-emphasize national brands and eliminate
redundant sizes
 Reduce space allocated to general merchandise. Devote more are to food or reduce
the size of stores
 Lower prices for selected items to retain its customers
 Improved differentiation between the smaller conventional Loblaw supermarkets and
the larger discount outlets
 Reconstruction of the famous Maple leaf Gardens in downtown Toronto
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15. Summary
Loblaw has begun to reorganize its
business strategy however it is evident
that change is imminent.
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16. Discussion Questions
 What are Loblaw’s challenges?
 What issues should Loblaw’s executives be most
concerned about? Why?
 What specific actions should Loblaw take to
improve its competitiveness against Wal-Mart?
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17. References
• Canadian Council of Grocery Distributors (CCGD)
http://www.ccgd.ca/home/en/index.html
• Loblaw Companies Limited, http://www.loblaw.com/
• 2006 Loblaw Annual Report,
http://www.loblaw.com/en/lcl_ar06e/downloads/lcl_ar2006_eng.pdf
• Thompson, A. A. Jr., Strickland, A. J. III, & Gamble, J. E.
(2009). Crafting & Executing Strategy: The Quest for
Competitive Advantage: Concepts and Cases, Sixteenth
Edition. New York, N.Y.: McGraw-Hill/Irwin
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