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Loblaw is expanding the responsibilities of its president, Sarah Davis, beyond her day-to-day oversight of the retailer’s performance.

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Following a pilot program launched 12 months ago, Loblaw is rolling out its PC Insiders subscription programme nationally.

Targeting loyal shoppers with additional benefits

The PC Insiders programme is being made available to over 16m members of the retailer’s loyalty program, PC Optimum. For an annual fee of $99, or $9.99 a month, members will have access to a range of perks, including free online delivery for its non-food websites and free pickup for its grocery click and collect service. PC Insiders is available across 16 of the retailer’s banners, including Loblaws, No Frills, Real Canadian Superstore and Shoppers Drug Mart.

Source: Loblaw

Range of benefits to members

PC Insiders has been developed to reward customers that shop across a range of the retailer’s brands, both in-store and online. Benefits include:

  • 20% back in PC points on family essentials including diapers, infant formula
  • 20% back on all PC Organics and PC Black Label Collection private label ranges
  • 20% back in PC points on all Joe Fresh products in-store and online at joefresh.com
  • 20% back in points for all luxury ‘beautyBOUTIQUE’ products on shoppersdrugmart.ca
  • Free Click & Collect pick-up service at for its online grocery service, PC Express
  • Free shipping on all shoppersdrugmart.ca and joefresh.com purchase
  • $99 PC travel credit once a year when booking a trip on pctravel.ca
  • Exclusive offers on PC Insiders Collection products

Optimising Loblaw’s ecosystem

PC Insiders aims to optimise the retailer’s ecosystem, offering benefits which incorporate its physical and online stores, financial services, travel services and private brands. Offering a 20% discount off PC Organics products and baby diapers and formula will help the retailer to attract younger families into the programme. The retailer is developing enhanced data and analytical capabilities to enable it to optimise this programme further and deliver greater personalisation.

Creating a compelling payments and rewards offering

The benefit of a fee-based subscription program is that it helps to lock in shopper loyalty, and limit cross-shopping across other online services. This is likely to help drive higher spending at Loblaw among members of the programme. The intersection of loyalty and online is an area where Loblaw is aiming to build a leadership position. This aligns with its strategic plan to create a compelling payments and rewards offering.

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We look at the prospects for the online grocery channel in Canada as major retailers step-up their investments.

Forecasting 21.0% CAGR through to 2023

Although the online grocery channel has seen an increased level of activity this year, it represents only a small proportion of the overall grocery market, estimated at 0.8%. This is forecast to grow to 1.8% by 2023, with a CAGR of 21.0% expected over the period.

Source: IGD Research

Loblaw: building sector leadership with store pickup

Loblaw has set the pace in the channel. Its store pickup program reaches 70% of Canadians, serviced out of over 520 stores and 28 spokes, including 19 Shoppers Drug Mart stores. Its home delivery partnership with Instacart extends to 60% of Canadians, with the service available in 18 markets. Following a successful pilot of its membership-based program, PC Insider, this year, a larger scale roll-out is planned in 2019. The retailer is also testing a pickup service through its No Frills and Maxi discount banners.

Walmart: partnering to win in urban locations

Walmart has also been pushing hard with its ecommerce programmes. In the latest quarter, sales increased over 20%, underpinned by the expansion of grocery pickup to 40 additional locations. The retailer has also formed new partnerships to help it reach customers in urban locations, where it has relatively fewer stores. In Toronto, it has partnered with Penguin Pickup to open co-branded pickup locations for online grocery orders in the downtown area.

In Vancouver, it has partnered with Spud.ca to use its Food-X food delivery platform to offer grocery home delivery in Metro Vancouver. Walmart Canada has also announced plans to offer home delivery through Instacart.

Sobeys: building capabilities with Ocado partnership

At Sobeys, works has begun on its first Customer Fulfillment Centre (CFC) which is being developed in partnership with UK-based Ocado. The retailer expects to launch its grocery ecommerce solution into the Ontario market in the spring of 2020. This partnership, which utilises Ocado’s automated robotic technology is expected to help the retailer deliver a compelling, lower-cost proposition at scale, enable it to reach new catchments and offer an extended range of products. This will build on its established ecommerce business in Quebec.

Metro: developing omnichannel meal solutions

Having focused initially on Quebec with both grocery pickup and delivery, the retailer is turning its attention to the Ontario market in 2019. In line with the broader brand proposition, the retailer has aimed to build a differentiated, customer-centric proposition, keeping fulfillment and delivery in-house. However, the retailer has extended its ecommerce presence by making a majority investment in Miss Fresh, a leading meal kits company. The retailer has also started to pilot hot food delivery in a programme with UberEats in Montreal.

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We review Loblaw’s third quarter performance and how it’s investing in developing its data and ecommerce capabilities.

Solid performance in third quarter

Loblaw delivered a solid performance in the third quarter as it focused on delivering its commitments of stable trading, addressing cost headwinds and investing for the future. The retailer’s Q3 revenue increased by 1.8% to $14.5bn, with retail segment sales up 1.7% to $14.1bn. Same-store sales increased by 0.9% within food retail and by 2.5% within drug retail. The latter was underpinned by strong front store same-store sales growth, up 4.3%, with all categories performing strongly. Adjusted net earnings increased 2.4% to $562m.

Source: IGD Research

Optimising data capabilities

The retailer is benefitting from the enhanced use of data within the business, particularly its promotional tools, helping to drive traffic to its stores. This is also generating a more profitable basket mix, enabling further investment in the offer. With 15m members within its PC Optimum loyalty program, the retailer continues to push ahead with its personalisation initiatives. These include executing promotions and offers to grow basket spend across different customer segments. 

Aggressive ecommerce roll-out

Loblaw’s focus on simplifying the business and streamlining processes has also enabled it to invest in growth opportunities. This is a major, multi-year program across the business with seven different streams. Its online business is a key area of investment, where the retailer’s tech team has grown to over 1,000 members. It continues to push ahead with its grocery ecommerce programs, with 70% of Canadians currently with access to its click and collect program. This is being serviced out of over 520 stores and 28 spokes, including 19 Shoppers Drug Mart stores. Its home delivery partnership with Instacart extends to 60% of Canadians, with the service available in 18 markets. The retailer is also testing a click and collect proposition within its No Frills and Maxi discount formats.

During the quarter it also relaunched its beauty website, doubling its online assortment. It also opened six new-generation, enhanced Beauty Boutiques as it aims to gain share in the key category. While the retailer contimues to see an opportunity to grow its drugstore network, new food space growth will be minimal going forward.

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Presentations

07/02/2019
This in-depth guide to Canada includes data on demographics, economic overview political outlook, as well as the Canadian retail market, top retailers, challenges and market share definitions.
04/02/2019
An essential summary of trading priorities, latest developments, and other key commercial insights for Loblaw.
10/01/2019
Following a year of accelerated change in the North American grocery market, we look at the five key trends set to shape it in 2019.
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