Loblaw Companies Limited Harvard Case Solution & Analysis


  • Bargaining Power of Buyer *HIGH to MEDIUM*

The retail industry is also subject to grouping, which more precisely means buying groups amongst retailers. Usually smaller stores pool up and then negotiate with the suppliers. As the buyers come in-group; hence, they can form a greater alliance and end up on a bargained supply from the supplier. There are no switching costs in this industry virtually and there are many buyers from corporate giants to small grocers. As consumers here have high degree of price sensitivity in this industry, which is subjective and speculative depending again on the time when the retail store was established.

  • Bargaining Power of Supplier *LOW to MEDIUM*

The retail industry lacks in its ability to forward integrate as it has warehouse-manufactured goods ranging from well-known brands to no brands. Therefore, it is practically impossible for the distributors to produce all. Integrated firms are seen to sell independently; whereas, some retailers owned their very wholesalers or vice-versa. This makes the Canadian market free of mergers and acquisitions. Retailers have high negotiating power and low switching costs for some of the product offerings but are high for a many of the other products. Nevertheless, the national retailers hold efficiency in maintaining supply chain to ensure that the consumer demand is entertained.

  • Threat of substitutes *MEDIUM*

The threat of substitutes is medium in this industry despite of many available substitutes in the market. Both public and private labeled brands are substitute to each other depending on the budgetary constraints of the consumer. However, this threat can mitigate this threat by offering a wide array of product diversifications.

  • Threat of new entrants *LOW*

It is seen that the threat of new entrants is low in the retail industry as Canadian consumers buy from nationally established and trusted retailers. It is also seen that customers are loyal in this industry depending on the history of the retail store. However, there are barriers to entry in this market irrespective of the size of the business.

  • Rivalry among existing firms *HIGH*

The retail industry is characterized by large economies of scale generated from consumer bulk purchases. In addition to this, the industry is subject to price wars initiated by both the national and international retailers. Market saturation in the Canadian Grocery market is high and dense and ranks best amongst the world’s grocery market. Revenue generation in the industry is reflected by three genres, which are penetration, frequency, and basket size. Penetration refers to increase in the household base shopping in the stores, frequency refers to the number of trips per customer to the store and basket size is the expenditure increment per trip.


Loblaw has many competitors in the real and virtual both worlds. There are 1791 supermarkets, 8342 convenience stores, 3906 affiliated independents and 10109 unaffiliated independents in the Canadian grocery business. Loblaw at present is in competition with Sobeys, Metro, A and P and the Canada Safeway. Other than these there are wholesale clubs, who have cost differentiation in their business strategy, which focuses on small business owners limiting head to had competition with other retailers. In addition to this, the specialty chains that operate in small stores in niche segments such as the widespread organic food segment and the ethinc groceries. The market for this segment seems to grow at a fast pace, which poses direct threat on the retailers. Conveneience stors are another competitor for retailers that are shop fills. The convenience store complemented by a supermarket helps consumers fill up between shopping trips. Nevertheless, the virtual world is also not behind, posing threats and opportunities both for retailers. According to AC Nielson studies, 57% of the Canadains use internet, which means that now retailers need to have a virtual existence so as to gauge consumers’ insight o their virtual stores...................................

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