Loblaw is Canada's largest grocery retailer, founded in 1919. It faces strategic challenges from the potential entry of Walmart into the Canadian grocery market. A PESTLE analysis found trends like rising double-income families and ethnic grocery shopping. Porter's 5 Forces revealed a mature industry with low margins, price sensitivity from consumers, and strong national brands. Loblaw has strengths like brand equity, fresh grocery expertise, and scale advantages that could be leveraged against Walmart's cost leadership strategy. The document considers strategies for Loblaw to either challenge or differentiate from Walmart.

2. Group:
Kiran Chadaram
Nianjiu Li
Vi Ngo
Sebastien Rosner
Varun Sharma
Jeremy Wong

3. History of the Firm
Business Definition
• Founded in 1919; Loblaw Grocetarias
• By 1947, 113 stores in Ontario; sales of $50M
• Controlled by third generation of Weston family
• Largest food distributor in Canada
• 24th largest grocery retailer in the world
• Sales of $23.1B in 2002
• 122,300 employees

4. Industry Definition & Strategic Problem
Business Definition
• Canadian grocery retail industry
• Mature industry; low margins (0.5 - 2%), modest growth (4% per year),
and strong price competitions
• Loblaw’s existing strategy has been successful: drive down costs +
product & store differentiation
• Wal-Mart, largest retailer in the world, may bring
Supercentres to Canada
• If Wal-Mart competes in Canadian grocery, maintain
current strategy or adopt new strategy?
Loblaw leads
the market
with 32%
market share

5. PESTLE Analysis
Environmental Analysis
• Canada: lowest food prices in the world; 2% inflation
• Rise of double income families
• Immigration and ethnic grocery
• Organic foods
• Online grocery shopping
• Standardization for ERP systems and ECCnet

6. Porters’ 5 Forces
Industry Analysis
• Suppliers: national brands and “loss leaders” vs. shelf space,
promotion execution, and private labels
• Consumers: low switching cost, price sensitivity vs. brand loyalty
• Competitors: high concentration, top 5 chains, low margin & strong
competition in all segments
• New Entrants: small independents, acquisition by global giants
• Substitutes: fast-foods, restaurants, take-outs

7. Key Success Factors
Industry Analysis
• Operational efficiency ! lower costs, lower prices
" Integration: supply chain, logistics
" Information Technology
" Process innovation
• Accessibility & geographic presence
• Product & service offerings ! customer loyalty
" Differentiated or value-added
" Breadth of selection and stock availability
• Brand equity ! customer loyalty

8. Resources, Capabilities, & Core Competencies
Firm Analysis
• Brand equity and loyalty; President’s Choice
• Experience and expertise in fresh groceries; rigid integration
• Real estate ownership; operational flexibility and location
• Low costs from scale advantage
• Multi-banner & multi-format; covers all price points and segments
• Regional appeal and community character retained
• Differentiated products & services
• PC customer loyalty programs; shoppers data

9. A Quick Look at Wal-Mart
Competitor Analysis
• Largest retailer and 6th largest grocery retailer in the world
• Cost leadership; "Every Day Low Prices" strategy
• Scale economies and superior resources (e.g. finance, IT)
• Questionable labour practices and issues with UFCW
• Bargains hard with suppliers
• Limited expertise in perishables
• Failed to penetrate German and Japanese markets (why?)

10. Wal-Mart’s Value Chain & Value Proposition
Value Chain
Sales
Infrastructure
Procurement
Outbound Logistics
Operations
Infrastructure
Technology
Procurement
Inbound Logistics
Marketing
Operations
Procurement

11. Loblaw’s Value Chain & Value Proposition
Value Chain
Sales
Infrastructure
Procurement
Outbound Logistics
Operations
Infrastructure
Technology
Procurement
Inbound Logistics
Customer Service
Operations
Procurement

12. Zero-Sum Game
Industry Lifecycle
Includes:
Low marginSlow growth
Price
competition

13. Alternatives & Business Strategies
Strategic Recommendations
• Challenge Wal-Mart’s cost leadership?
• Avoid head-on competition? Differentiate?
• Exploit Wal-Mart’s weaknesses/Loblaw’s strengths
" Loblaw’s resources & capabilities; core competencies
" Relevant to success factors?
" Imitable or unique? Transferable or replicable?
" Sustainable competitive advantage?
Think about
the fates of
Target and
K-Mart

14. Expanding the Pie?
Strategic Recommendations
Include:
Ethnic grocery
Organic foods
Local sourcing
Cooking
classes

15. So what actually happened?
Loblaw Today
• 2006: Launch of Joe Fresh brand
• 2009: Acquired largest Asian food retailer T&T for $225M CDN
• 2011: Opened store in Maple Leafs Garden
Over 1,100 new control label products
• 2012: Banished artificial colours and flavours from PC products
• 2011 market shares: Loblaw 29.9%, Wal-Mart 4.3%
• Now 181 Wal-Mart Supercentres in Canada
Loblaw
continues to
dominate the
Canadian
grocery
business

16. … according to Wal-Mart
The World

17. thank you!
merci!