Loblaws Swot Analysis - Case Study

SWOT Analysis

STRENGTHS

        Loblaw’s is Canada’s largest supermarket chain. This is a strength because being the largest food distributor, the large size will allow them to reach a price value discounts from manufacturers due to the amount of bulk quantities that they will order. This will also lead them to a cost reduction in transportation, warehousing and marketing as economies of sales will also be reached.

        The implementation of an expanded loyalty program, known as the PC Plus member card, has shown an improving increase in sales. The loyalty program has over five million members and with half of those members being registered online. In Ontario alone, there is about 40 percent of sales at all of its grocery store banners are by PC Plus members. This is seen as a strength because Loblaw’s is working alongside with a program that is trusted by its customers and members of the program itself. This has to do with the customers; Loblaw’s is offering a benefit for the customers which in the end will have a huge benefit on the company because now the PC Plus members are making more trips to the grocery store, buying bigger baskets and even shopping within more categories.

        Loblaw’s is not only a grocery store business but it also operates the clothing line called Joe fresh, the real estate trust Choice Properties and acquired the drugstore chain Shoppers Drug Mart, which was all finalized last month. On top of all that, Loblaw’s also owns 22 different banners which include Independent, Zehrs, Superstore, Wholesale Club, Value Mart, No Frills, Maxi, Loblaw’s and Provigo. This is a strength as Loblaws operates some of the country’s biggest and well known companies that are recognizable and trusted by consumers. These individual companies are well-known around the country, which makes it an advantage for Loblaws because well-known and trusted companies are ones that consumers lean towards more when going out shopping.

        Canadian brand, Joe Fresh, is one out of many best successful clothing lines in the highly competitive fashion industry; providing customers with friend and very affordable fashion in a retail setting where they show every week-to-week. This had Loblaws in competition with the US-based retailer, Walmart, approximately spending $40 million on customer-friendly initiatives such as pricing, store execution, and customer service to set itself apart from rivals like Sobeys and Walmart. This is considered a strength because the strategy paid off both financially and in terms with customer satisfaction. This execution has increased customer base and reputation and while doing all that Loblaws’ sales has increased.

Since the introduction of The Decadent Chocolate Chip Cookie, Loblaws has continued to provide the Canadian marketplace with a number of brands, such as PC GREEN, PC Organics, no name, and PC Blue Menu. But the company’s most successful brand creation is in fact, Joe Fresh. This is a strength because not only is Joe Fresh the largest apparel brand in Canada in terms of both unit and dollars, having Joe fresh in the grocery store sets the shopping experience apart from other grocery stores. Another reason why this is a strength is because Loblaws is now considered to be a grocery store that is demographically fitting for almost anyone who walks through their doors. It has something that appeals to families large or small, married or single people and includes men’s, women’s and children’s clothing. This is a huge positive outlook and situation on Loblaws because they managed to fit all the consumers needs and wants into essentially a “one-stop” shop.

        Loblaws’ clothing brand, Joe Fresh, is a brand that filters the trends and offers it to consumers. They distill it more and are a little more realistic about their customer base; doing all of this while providing affordable high fashion that is accessible and constantly changing to meet customers’ lifestyle. This is a strength as Joe Fresh is taking into consideration of what their customers want, need, and demand for. Customers realize that the company cares about their opinions and sees that they are the priority within the company, building a trusted and solid founded relationship between the customer and the brand. Consumer trust the brand and will continue to shop the brand, while spreading their thoughts by word-of-mouth of the brand, esentially increasing sales for the company.

Weaknesses

        Loblaws continued to lose market share to Walmart and Costco in the first quarter, and there are no signs the trend is slowing down. This is a weakness because they cannot compete with Walmart and Costco. Walmart is famous for their very low prices, while Costco offers bulk items for low prices. Loblaws cannot compete/offer Walmart's prices and cannot offer the same bulk as Costco for their price. Until Loblaws does something to attract more people to their store more than Costco or Walmart, Loblaws will continue to lose market share.