Loblaw refines Superstore concept
The new Loblaw Superstore in Milton has been redesigned to improve flow through the entire establishment.
Firm tests new name, new design and a new emphasis on back-to-basics groceries
One of Galen G. Weston’s biggest headaches when he took over the reins at Loblaw Cos. Ltd. last year was figuring out what to do with its struggling superstores. The grocer had built a lot of them over the past few years to take on discounter Wal-Mart but they performed poorly, particularly in general merchandise.
To the surprise of many on Bay Street, Mr. Weston opted to overhaul, rather than scrap, the big-box approach for the chain’s Real Canadian Superstore.
Today the company opens its new pilot prototype in Milton, Ont., revealing a new push on fresh foods and groceries, and a scaling back of electronics and furniture.
It’s got a new name - Loblaw Superstore - and a wide aisle at the centre of the groceries section to pitch special deals, much like in a Wal-Mart store. It’s got revamped backroom operations to help ensure that goods get onto the shelves on time. That’s a problem that still persists in many of its stores.
“They’re rejigging what they want to sell in the store,” said analyst Anil Passi at Dominion Bond Rating Service. “They’re getting rid of inventory that doesn’t sell, things that are a little more distant from food and the kitchen.”
But the big box is clearly in the big picture under Mr. Weston’s vision for Loblaw.
The bottom line? “A big step forward but no guarantees of success,” is how analyst Irene Nattel put it in a report after touring the new store.
Still, as Loblaw aggressively lowers its superstore prices, one of its biggest risks is getting locked in a price war with Wal-Mart, she said. Few retailers ever win that war with the global powerhouse.
The new superstore’s prices are up to 15 per cent lower than those at the Loblaw store it replaced, one analyst said.
Mr. Weston faces his steepest challenge in Ontario, where he needs to protect Loblaw’s close to 45-per-cent share of the food market. Loblaw built its most recent superstores in that province.
Geoffrey Wilson, a spokesman for Loblaw, said it will test the Milton store over the next three months and, if successful, start redesigning other superstores in 2008. The chain is also piloting the name change, to Loblaw Superstore, to put more emphasis back on the familiar Loblaw banner.
While downsizing electronics, toys, books and seasonal goods, the new store puts a spotlight on Loblaw’s private label Joe Fresh apparel, which now makes up all the clothing offerings and includes a new children’s line.
Loblaw said in a handout to analysts that it is adding more staff to the section, although it didn’t say by how much. The company has targeted $1-billion of Joe sales over the next three years, which Ms. Nattel called an “aggressive” goal.
The store’s home section is the most dramatically restyled in the superstore, she said. It has “artful” product displays and uses an array of fixture heights to create an interesting visual change from section to section. “The revised presentation created a ‘wow’ that is sorely lacking elsewhere,” she wrote.
Health and beauty products take on a new prominence at the centre of the new superstore. The aim is to create the environment of a regular drugstore with 20-per-cent lower prices, Loblaw said.
It shrunk the takeout food area by about 10 per cent, dropping fried foods in favour of healthier fare such as salads. In the grocery aisles, it created shorter, wider aisles to make shopping - and restocking - easier. It added 30-per-cent more freezer space to try to cash in on the growing trend of consumers’ picking up frozen meals.
There are even changes to the checkout, with a belt that provides 166-per-cent more checkout space and pegged to improve labour efficiency by 10 per cent, the company said. To speed the checkout process, the store has scrapped displays of food or general merchandise in the area.
And touting itself as being Canada’s first “bagless” supermarket, it doesn’t provide plastic bags but rather green cloth bags or bins.
This column was written by Marina Strauss, Retailing Reporter for The Globe and Mail