Introduction to Canada Loblaw factory inspection consultation

Loblaw is the largest retailer in Canada and a company listed in Toronto, Canada and New York, USA. Loblaw has more than 1,500 stores (as of the end of 2006) with sales of $28.6 billion. Its profit in 2006 was $219 million and it currently has 139,000 employees. It operates multiple retail brands and more than 6,000 private label products. Similar to Wal-Mart in the United States, the company is also a family business, and the Weston family still owns 63% of the shares.

In August 2007, I accompanied some domestic retail professionals on a survey of the company and personally experienced its once glorious development history and its determination to regain its glory in the face of new challenges.

Creation Process

Loblaw was originally a food chain in Ontario, Canada. In 1956, it was wholly acquired by George Weston Limited and became the predecessor of today's company. Its parent company, George Weston, was founded in 1882 and is one of the largest food processing and sales groups in North America. It has close ties with the British royal family. The company has two important branches, one is Weston Foods, which mainly engages in the production and processing of food and beverages, and the other is Loblaw, which operates in the retail industry.

In the 1950s and 1960s, Loblaw made a large number of acquisitions. After completing the acquisition of National Tea Co. in Chicago, Loblaw became the third largest retailer in North America at the time and successfully listed in Toronto in 1966. However, in the early days of mergers and acquisitions, since most of the acquired companies were independently operated and managed, there were many problems such as chaotic management, conflicting businesses, and the inability to exert scale advantages, which led to a decline in the overall efficiency of the company. In the early 1970s, Loblaw was almost on the verge of bankruptcy.

Faced with this situation, Loblaw began to renovate its stores after some personnel adjustments. One of the key points of the reform was to strengthen the fresh food business. Through large-scale procurement, intensified promotions, improved preservation technology and other means, Loblaw established its leading position in fresh food products. At the same time, Loblaw also reorganized the assets of the National Tea Company, which was suffering from serious losses, and reversed the loss situation. In addition, it also improved the effective use of shelf resources by implementing measures such as category management. During this period, Loblaw also founded the "No Frills" discount store, which only sold the company's own brand products and high-end brand products, and achieved great success.

In the 1980s, Loblaw made a series of revolutionary changes. The number of its own-brand products expanded rapidly, mainly household goods, reaching 300 in 1981. After the development of one of its own-brand diapers, it posed a great threat to competitors. The sales share of Pampers in this category in the local market dropped from 85% to 18%. Another successful case was that Loblaw developed its own-brand cola in 1994, which directly led to a loss of 45 million Canadian dollars for Coca-Cola Canada that year.

In the late 1980s, Loblaw began to pay attention to environmental issues and gradually developed a series of environmentally friendly private-label products (Green goods), which were welcomed by consumers and clearly differentiated its corporate image from other retailers. During this period, Loblaw also became the pioneer of large supermarkets in Canada, with the area of ​​its large supermarkets exceeding 8,000 square meters. In order to avoid operational risks, the company adopted more self-built methods.

Through a series of efforts, Loblaw has become Canada's largest retailer and a household name in Canada in the late 1980s. At the same time, through the practice of multi-format differentiated operations, Loblaw has as many as 14 brands, covering people with different consumption levels and different regions.

In 1994, Wal-Mart entered Canada, and Loblaw began to face fierce competition. To meet the challenge, Loblaw began to implement a national expansion strategy, and gradually transformed from a traditional supermarket chain to a comprehensive retailer. In order to compete with Wal-Mart's supercenter, Loblaw began to develop supercenters and added related services, such as wine cellars, dry cleaners, financial service centers, fitness centers, pharmacies (clinics were added later), etc.

During this period, Loblaw also acquired Provigo, another supermarket company in Montreal (this was the largest acquisition in Canadian history), but due to the provisions of Canadian antitrust laws (a company's local market share cannot exceed 75%), Loblaw had to sell some stores to its competitors. At the same time, the acquisition of this company also brought a heavy burden to Loblaw's later development.

Facing difficulties, large-scale mergers and acquisitions have not brought rapid development to Loblaw, but have led to difficulties in its development in the past two years. In 2006, the company's performance saw the largest decline in more than 20 years.

There are four main reasons for this situation. First, the poor performance of Provigo supermarkets in Quebec, which the company acquired at a high price, has brought great financial pressure and operating burden to the company. Second, after entering the Canadian market, Wal-Mart has been actively expanding (300 stores in 2007 and plans to open 28 new stores in 2008), and has vigorously developed the operation of fresh goods. Its stores are very competitive, which poses a great threat to Loblaw. Third, Loblaw's competitors, Sobeys and Metro, which rank second and third in Canada respectively, have accelerated their development. They continue to lower commodity prices, improve product quality, and develop private-label products, snatching away some of Loblaw's customers. In addition, Loblaw itself has certain problems in improving its commodity structure and business management. Its added household products (such as electrical appliances) have poor sales. Some media even commented that these products are rarely seen leaving the store.

The decline in Loblaw's performance caused dissatisfaction among investors, who began to sell off their shares in large quantities, causing the stock price to fall sharply continuously. By December 21, 2007, the stock price fell to 33.3 Canadian dollars per share, reaching the lowest point in seven years, while its stock price was more than 70 yuan a year ago.

New breakthrough

In order to reverse the decline, Loblaw conducted a large-scale personnel reorganization in early 2007. Galen G. Weston, the young heir of the Weston family, 33-year-old Galen G. Weston succeeded his father W. Galen Weston as Loblaw's executive chairman and began to run the company. The new leadership core determined a 3-5 year restructuring plan and proposed a series of specific reform plans. In addition to the previously implemented measures of closing some loss-making stores (with the focus on the Provigo supermarkets it acquired), further improving the product structure, and selling overstocked inventory at a discount to speed up product turnover, it also includes: cutting management staff. In early 2007, Loblaw announced that it would cut nearly 15% of its head office and regional management staff in the next 9 months, with an estimated total number of about 1,000 people. Galen G. Weston, Loblaw's executive chairman, said, "We are a customer-oriented business, and we need to streamline business operating procedures. The changes are intended to ensure that we can more effectively support the company's store employees."

By laying off employees, the company can save 50 to 60 million Canadian dollars in direct expenses each year. The 3G principle was proposed, that is, great people. The company requires that the ability and quality of employees employed by the company should be higher than the industry average, and be able to provide customers with better services than other retailers. It reflects greater value, so that consumers can not only enjoy the benefits of low prices but also the convenience of services during shopping. Excellent products, develop more private-label products, and strengthen fresh food operations. Reorganize the supply chain to improve operational efficiency, close six "smaller and less efficient" warehouses in Ontario and Quebec, and move operations to a new logistics center. Increase service content, open in-store clinics in large supermarket stores based on the original pharmacies; add in-store financial service centers where consumers can handle loan, mortgage and other procedures. Actively participate in community and charity activities, such as in 2006 Loblaw organized a children's charity event and raised 7.4 million US dollars, which was donated to 765 families in Canada. In 2007, the theme of Loblaw's charity event was "Helping Children with Cerebral Palsy." Others include donating food to non-profit organizations, participating in the Canadian Heart Research Fund, and funding hospitals to improve medical equipment. It has improved its social image. It has paid more attention to environmental protection concepts, such as using paper bags or cloth bags instead of plastic bags. It has strengthened the application of technology, set up in-store price inquiry systems and a large number of self-service checkout counters (more than 20%).

Loblaw's reforms have achieved certain results. According to the latest news, Loblaw's sales in various regions of Canada have increased significantly, among which food and drugstore sales are very strong. Compared with the same period in 2006, the company's sales in the quarter around October 2007 increased by 1.4%, and store sales increased by 2.8%. Loblaw's third quarter profit was 117 million Canadian dollars. Although it is still on a downward trend, the speed has slowed down.