Loblaw Companies Limited Harvard Case Solution & Analysis

  • COMPETITOR ANALYSIS
  •  Wal-Mart

Wal-Mart is an international competitor to the Canadian grocery market. As Loblaw is seen to be the market leader in the Canadian market and is facing threat from Wal-Mart, therefore, they both need to be assessed with respect to the rivalry. Wal-Mart is a leading retail chain in the world, which uses superstores that average around 116,795 square feet per store. The size of the stores is kept enormous to ensure maximum number of brands in the store. With their everyday low pricing technique it can be assessed that Wal-Mart seeks the benefit of economies of scale by facilitating bulk purchases through the EDLP technique. Generating $245 billion in revenues, Wal-Mart holds the status of being the largest retailer in the world, employing 1,383,000 employees. With great value in leading grocery brands, Wal-Mart lacks expertise in perishables. They also have an active status in the promotions and advertisements of their brand to offer low prices for their consumers. With an attitude that is not prone to change, Wal-Mart seeks pleasure and success at operating with the same technique. They hold the best ERP and the supply chain management that has helped it to sustain a dominant position in the retail market worldwide.

  •  LOBLAW

Loblaw is already a well-established retail chain in Canada with the market share that is greater than the combined share of all the other national retailers. Loblaw has a differentiated strategy that keeps it apart from the other national retailers of Canada. With an average store size of 48,900 square feet, Loblaw utilizes its full capacity. Loblaw focuses largely on grocery items with not holding all products on their shelves. Loblaw’s focus is on attracting all types of consumers from the ones who are price sensitive to the ones who are insensitive. They have President’s choice for the branded product shelving and the No Name for unbranded products. Loblaw focuses more on providing high quality to the consumers. Therefore, the target customer for Loblaw is the price insensitive one. Loblaw also has hand on the President’s choice financial institute where it offers financial service to its clientele. With an employee base of 122,300 employees, in 2002 Loblaw has generated sales of $23.1 billion.

  • LOBLAW versus WAL-MART

It can be seen that both the companies have their own target market and have a clear and strong position in their very markets. When compared with each other, Loblaw is seen to have more success in the Canadian market. The market trend is moving towards high demand for organic foods and therefore, Loblaw is going to do well at that as they hold expertise in this area whereas Wal-Mart doesn’t have expertise in this area. Although, the Wal-Mart is retail giant worldwide it needs time to establish in the Canadian market as Loblaw Sobeys Metro A&P etc. have widespread trust of end consumers and suppliers alike.

  • COMPANY’s INTERNAL ANALYSIS :SWOT ANALYSIS
  • Strengths

a)      High customer loyalty through their Control Label Program

b)      Owners of the company are the major shareholders

c)      The real Canadian superstores, which are low cost shops in Ontario

d)      Holds both high quality branded products under President’s choice and unbranded products under No name

e)      Well established brand name and reputation in Canadian Grocery market

f)       Leader in the Canadian supermarket and the largest food distributor in Canada.

  • Weaknesses

a)      Weak distribution management and supply chain networks

b)      Fewer efforts to promote the brand or invest in marketing

c)      Focusing more on price insensitive customer

d)      The forecasts about the customer demand is judgement driven leading to empty shelves and product unavailability.

  • Opportunities

a)      Growing use of internet with 57% of the people having access to internet

b)      Installing ERP for better supply chain management and efficiency

c)      Developing internal inventory system to overcome product unavailability

d)      Focus shifting towards more purchases in ready to cook meals

e)      Rising dual income families giving rise to increase in consumption patterns

f)       Wal-Mart’s less expertise in perishables

  • Threats

a)      Canadian market size doesn’t offer high margins and doesn’t offer a large market size

b)      Competitors offer products on a relatively low rate

c)      European firms do not want to enter the market for mergers and acquisitions

Sam’s club wholesale megastores launch in the Canadian Market by Wal-Mart Canadian Corp....................................

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