Loblaw Companies Ltd

Abstract: Loblaw Companies Limited (Loblaw) is Canada's food and pharmacy leader and the nation's
largest retailer. With nearly 2,500 corporate, franchised, and associate-owned locations, the company
employs nearly 200,000 full- and part-time employees. Loblaw has a growing digital business, including
online grocery orders picked up at stores, and ecommerce service or sales related to Loblaw's pharmacy,
beauty, apparel, and lifestyle offers.

Keyword: Going through the case we have found 2 keywords, by focusing these keywords the case will
be solved. These keywords are:

1.Efficiencecy.

2.Acquisition.

Problem/Situation: Loblaw Companies Ltd has Lack of adequate global distribution capability and
experience in managing general merchandise inventory. Loblaw Companies Ltd all Stores are
underperforming because of Weak management and Complicated corporate structure.The problem that
Loblaw Company is facing is that Wal-Mart has decided to expand into Canadian market with the
introduction of wholesale mega stores. This will initiate price wars amongst the local grocery stores as
the entrance of Wal-Mart/Sam’s club wholesale stores will give more options to consumers so as to
choose from an array of products. Now a strategy needs to be devised for Loblaw to compete with this
giant multinational retailer in order to sustain its market share and competitive positioning. Moreover,
before recommending an alternative, it should be kept in mind that the consumer preference for food is
changing in the industry; therefore, the demand for readymade organic food is high.

Background: Loblaw isn's technologically advanced to maintain its employees, suppliers and
management. Because of usability of having advanced technological resources Loblaw is unable to
reduce the cost of their day to day running expenses. On the other hand the rate at which Loblaw is
acquiring stores are low, as a result their market growth is low.

Loblaw employs sophisticated distribution methods that as-sure customers’ favorite products are always
in stock -from “Just in Time” fulfillment and delivery, to advanced order processing systems. The
company’s 40 technical sup-port employees are in constant contact with distribution center personnel,
keeping them apprised of any interrup-tions or downtime of critical inventory systems. Likewise,
distribution center workers alert the support group of is-sues that indicate an inventory application is
down, such as feeds not coming in for pick lists.

Or,

Loblaw’s technical support group monitors and runs thecompany’s numerous business process
applications, includingsoftware used by the inventory, distribution, and billing de-partments. Should any
of these systems fail, the support group must communicate as quickly as possible with key personnel,
especially those in the distribution center to avoid delays in order fulfillment. The technical support
group had historically relied on man-ual pages and phone calls to communicate, but they ultimately
decided it simply wasn’t an adequate method for such time sensitive tasks. The company needed a
wireless system that rapidly communicated critical information and, as will be discussed in more detail,
could demonstrate its ability to scale with Loblaw as the company expanded its use of wireless
technology.

Option & Action: The recommended alternative for Loblaw is to expand its business. Doing so will help it
position itself more firmly in the market where consumers are hesitant to try out new stores. Moreover,
taking advantage of the fact that Wal-Mart is not having expertise at perishables which is the market
demand, Loblaw can move a step ahead in fulfilling consumers’ demands. President’s choice and
financial services related to Presidents choice will help Loblaw in expanding its customer base and
increasing customer penetration, frequency and basket size. As the company can offer points on every
purchase, which customers can redeemed in the form of free groceries or discounts on other products.
As more demand for organic food is increasing, what customers need to do is, they need to focus on
shelving more of the readymade meals and organic food. For promoting what its shelf contains, Loblaw
needs to promote itself by availing the widespread use of internet amongst Canadians. In addition to
this, they need to take notice of its debt financing, which can harm the company in future. As most of
the assets of the company are company owned, hence, they need to make use of these to the fullest.
With an excessive market establishment in the market place, expansion into new horizons will help the
company to boost its sales even more. Increasing the store size to accommodate the need of more
products can be done. Further, they need to overcome the distribution and supply chain management
issues in the market place. The implementation of an ERP program will help the company to achieve its
supply chain efficiency. In addition to this, Loblaw needs to focus on organic products, which is the
demand of time. These should be in terms of groceries and also in meat items. Nevertheless, the
company has a good image in the mind-set of consumers, which is hard for Wal-Mart to replicate.

There is a competition between various food retailing sectors such as Wal-Mart and Loblaw companies
Ltd. Buyer power is high and cost leadership and operational efficiencies are critical. It has become a
challenge to compete with Wal-Mart. So Loblaw companies should take actions. Loblaw companies have
to focus on customer preferences and different demands. They can lead low cost operations, stores
wide product range and can ensure good quality value added services.

Conclusion: The major threat is that competitions are growing stronger while Loblaw's consumer
satisfaction is decreasing due to the company poor performance. Loblaw's best opportunity is to
capitalize it's 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.
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https://www.thecasesolutions.com/loblaw-companies-limited-10051

SWOT Analysis for Loblaw Companies Ltd

Loblaw’s Strengths:

1. Strong brand name

Loblaw’s Weaknesses:
1. Lack of adequate global distribution capability
2. Lack of experience in managing general merchandise inventory
3. Stores are underperforming
4. Weak management
5. Complicated corporate structure
6. High prices of products relative to key competitors
7. No clear strategic direction
8. Too much underutilized plant capacity

Loblaw’s Opportunities:

1. Expanding into new geographic markets

2. Entering into joint ventures that can expand the firm’s market coverage

3. Online sales

4. Growing its discount segment, becoming the low-price leader

5. Openings to exploit emerging new technologies

6. Proven products innovation capabilities.

7. New management team and new business plan.

8. Openings to win market shares from competitors

Loblaw’s threats:

1. Walmart experience in global market has continually pushed its general merchandise

dominance forward while developing its food business.

2. Intense competition

3. Canadian food market had been growing at less than 1% a year.

4. Canadian market is attracting foreign investors