CASE #2) Operation Strategy: Loblaws VS Walmart

MBA 5040 – Strategic Operations Planning

University of Fredericton

Professor Dani Babb

January 15, 2024
Location Strategy

Loblaws
Loblaw's location strategy appears to be focused on the deliberate diversification of
marquee locations. Loblaw’s now operates 20 retail chains under the main business. The idea is to
have a variety of stores that cater to the region's demographic. Large-scale Real Canadian
Superstore sites, for example, were prospering in Western Canada in the early 1990s but had
limited success in Ontario. The aim was to shutter huge retail establishments that were not
successful and invest more aggressively in existing smaller profitable places, such as Zers and
Fortinos. (Weston.ca) If buyers in a given area have different objectives, such as low-cost versus
locally sourced, they can adapt to have a brand that reflects those values. You can target local
populations and learn about their priorities by using analytics effectively. Furthermore, it appears
that Loblaws is willing to admit when they have made a mistake and is quick to modify to reflect
the market better precisely.

Walmart
Walmart's placement strategy is defined by a one word: density. Walmart promotes
densely populated areas, such as urban areas or population clusters. They appear to target huge
commuting junctions and highly accessible sites with large available space to accommodate the
size of their stores, rather than the most central locations. 2006 (Fettig) This could be to keep
property values low in order to lower overall operational expenses, or it could be for
transportation efficiencies where goods can avoid congested areas. Furthermore, in order to
maximize efficiency when expanding a new territory, Walmart will open numerous locations in
close proximity to each other in a short period of time. The benefit of this is that companies may
save money on shipping by maximizing the number of deliveries that one vehicle can make in a
day. (Dtrab, 2019)

Online Grocery Pickup

Loblaws
In 2018, Loblaws had already built an e-commerce strategy and extended their PC express
online grocery pickup and delivery operation. The advent of the COVID 19 pandemic did
necessitate a major investment of up to 76 million dollars to ensure that demand could be met.
2020 (Acosta) Nonetheless, it appears to have been successful, as the company recorded "a
 280% increase in digital sales to $895 million." 2020 (Acosta) Loblaws processes PC Express
orders using current infrastructure by having personnel prepare the goods at the local shop.

Walmart
Prior to the COVID-19 epidemic, Walmart had already made major investments in e-
commerce. Walmart.com was established in 2000 to enable online shopping in the United States.
Walmart (n.d.) In 2018, they also expanded their online pickup service, beginning with 22
locations in Eastern Canada. These preparations have contributed significantly to the company's
success in adapting to the rising demand for grocery pickup services. They have formed alliances
with third-party providers such as Cornershop to outperform their competition, guaranteeing
order completion in less than 2 hours. (eTail, 2021) Walmart is planning to expand this service
beyond the pandemic because they believe it will be a growing trend even after the outbreak is
ended.

Competing with Walmart

One of the most debated aspects of Loblaws' success is the fact that they sell their own
brands such as No-Name and President's Choice. Shoppers are more likely to prefer these
products over other name brand products due to effective branding and prioritized retail location.
Loblaws can easily sell these brands at reasonable prices, and they benefit not only as a retailer,
but also as a supplier. Another advantage of owning their own product labels is that companies
may be extremely responsive to societal changes. They are no longer required to wait for
suppliers to adjust or become accessible. PC organic and PC Green are two examples of how the
corporation has quickly capitalized on small market trends that have grown into massive
marketplaces. Something else that I believe is worth highlighting is how they generate client
loyalty through service diversification and a good rewards program. They can promote using
those payment methods at their locations and gain additional knowledge into their customers'
specific shopping habits by offering low-cost banking and credit card services, as well as a
relevant rewards program. As a result, they may create highly focused marketing strategies. "We
begin by identifying the right audience and then develop creative for that audience." And it's not
in a broad, demographic sense. We're starting with very narrow behavioral segments of folks
who buy things in our stores." (Kolm, 2019) The diversification of their brand also allows for
significant marketing diversification. In addition to this form of marketing, appealing to
nationalism is a component in Canadian market success. As Canadian shoppers, we are
bombarded with foreign goods and services, primarily from the United States. In Canada, there
is a cultural purchasing nationalism in which many customers choose to support Canadian firms
over American ones.

Loblaws does an excellent job of informing its customers that they are supporting
Canadian businesses, which fosters loyalty that Canadians are prepared to pay a bit more for.

References:

Acosta, G. July 23, 2020. Loblaw's Online Grocery Sales Are Up 280% taken from
https://progressivegrocer.com/online-grocery-sales-280-loblaw.

Will Kenton (April 28,2022, 2019). Walmart effect explained taken from
https://www.investopedia.com/terms/w/walmart-effect.asp

ETail. (2021). Smart Distribution & Innovation in eCommerce at Walmart Canada. From
https://etailcanada.wbresearch.com/blog/walmart-canada-overhauling-ecommerce-distribution-
strategy retrieved January 10, 2021

Fettig, D. (2006). Thomas J. Holmes on the strategic placement of Wal-Mart taken from
https://www.minneapolisfed.org/article/2006/thomas-j-holmes-on-walmarts-location-strategy on
January 10, 2021.

Kolm October 7, J. (October 09, 2019). Brand of the Year 2019: Loblaw focuses on consumers
taken from https://strategyonline.ca/2019/10/07/brands-of-the-year-%202019-loblaw-zeroes-in-
on-shoppers/ on January 10, 2021.

R. Redman (2018) 24 October. Walmart is increasing its grocery pickup online in Canada taken
from https://www.supermarketnews.com/online-retail/walmart-expands-online-grocery-pickup-
canada on January 10, 2021.

Walmart (n.d.) website. Our Past taken from https://corporate.walmart.com/about/history on

January 10, 2021.

Weston.ca. (n.d.). Bringing Loblaws Back [PDF]. George Weston Limited, Toronto.GWL
History: https://weston.ca/PDF/GWL_History_Reinventing_Loblaws.pdf