RetailAnalysis
13 April 2017
Loblaw plans $1.3bn network investment

Loblaw will invest $1.3bn in developing 30 new stores and remodelling 500 existing stores across Canada this year.

Space growth moderating in Canada to 0.7% to 0.8% annually

While the investment will span most of the retailer's formats, it will also include the continued roll out of click and collect for online groceries, improved health and wellness services and the addition of fresh food ranges at selected Shoppers Drug Mart locations. The level of investment is broadly consistent with previous years. Space growth in Canada has moderated over recent years for the leading five grocery retailers. Having peaked in 2013 with a 5.7% increase in new space, driven by Walmart's acquisition of former Zellers locations, this fell to 1.0% last year. Over the next five years, these retailers are forecast to add 0.7% to 0.8% in new space annually.

Formats evolving in response to consumer trends

Format investments have been a key element of Loblaw's growth and repositioning plans. This was initially driven by its 'Inspire' format program, and more recently its 'Neighbour' format stores. Both of these have driven an up-weighted focus on fresh and prepared foods as the retailer responds to trends in the market. In Western Canada, it continues to see solid opportunities for its discount format, No Frills. The continued roll out of ecommerce comes as the retailer passes the 100 store mark for this program. Loblaw has adopted a very measured approach to the roll-out, focusing on continually refining the offer and processes, and building a pathway towards profitability.

Tapping into convenience-based missions

The introduction of a wider food offer has been instrumental in driving growth at Shoppers Drug Mart since its acquisition in 2014. In urban locations, in both Toronto and Regina, the retailer has been testing an enhanced food offer, with a focus on fresh and prepared ranges. This has enabled the retailer to tap into the growing demand for food-to-go and meet convenience-based shopping missions. While many of the ranges were new to this concept, a number of the products have also been incorporated into the retailer's CityMarket format stores. 




Stewart Samuel, Program Director, IGD Canada
Based in Canada, Stewart heads up all of IGD's research and coverage on Loblaw. He is also responsible for shaping IGD's research program across North America. Contact Stewart at stewart.samuel@igd.com for further insight on the region.
@Stewart_IGD

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