Here’s How Loblaws Is Adapting to Evolving Shopping and Eating Habits
As the world continues in its apparent permacrisis, supply chains are not the only part of online retail feeling the bite.
The Russian invasion of Ukraine, the fallout from the COVID-19 pandemic, and the nascent cost of living crisis are all conspiring to make food products harder to acquire and more expensive. This pattern is most apparent where these crises cross over to put multiple pressures on certain items simultaneously such as we are seeing with cooking oil or the price of and availability of fuel.
With customers forced to meet these challenges head on when planning their budgets and/or their weekly shop, retailers must also make sure they are sensitive to these situations when carrying out their daily business.
Loblaw
One area of retail which is particularly appropriate in this current situation is the supermarket sector. As inflation continues to push up the price of food products at an alarming rate, supermarket chains are noticing a surge in demand for staple items.
One of the core reasons for this is a trend towards eating at home. Restaurant and takeout prices are also being affected by the rise in food costs, with many outlets forced to pass this expenditure on to their customers. Therefore, customers with less disposable income in their own pockets are turning towards supermarkets – especially those at the discount end of the pricing spectrum – to meet their gastronomic needs.
As a supermarket brand in which 60% of its store network is made up of discount outlets, including No Frills, Provigo, Valu-Mart, and Real Canadian Superstore, Loblaws has been on top of this trend since it first emerged following the worst days of the COVID-19 crisis.
"Rising food prices are affecting shoppers’ decisions," reports The Globe and Mail. "At the height of pandemic-related lockdowns in the past two years, customers flocked to conventional grocery stores, limiting their outings by seeking locations for one-stop shopping. But in the past six weeks Loblaw-owned discount stores such as No Frills have seen a surge in traffic. And a recent push to promote the retailer’s own No Name discount brand in stores has led to an increase in private-label sales."
To help it better meet the needs of customers, Loblaws has a dedicated team which is responsible for breaking down the cost of every item it sells. This breakdown includes the cost of raw ingredients, packaging, labor, and shipping. This means, when a request comes through to increase the price on an item, this data can be analyzed to make sure such requests are appropriate and Loblaw can continue to deliver the best value to its customers.
Ecommerce
This focus on pushing back against food price inflation comes off the back of Loblaws making significant investment in its ecommerce capabilities during the COVID-19 pandemic which it could now deploy to meet the needs of customers during the cost-of-living crisis.
Perhaps the potentially most impactful of these is the micro fulfilment center (MFC) in Toronto Loblaw opened in the early days of the pandemic. The center deploys an automated system to pick and pack grocery orders for Loblaws’ PC Express system. With this innovative technology at its disposal, PC Express was able to open up additional availability for orders by increasing the pick rate to 500+ per hour.
Loblaw also took on thousands of personal shoppers, increased the number of available slots for its click and collect service, and increased capacity through the deployment of other technological solutions across the country. For those seeking non-food brands, Loblaw Marketplace is continuing to add third-party sellers and plans to have 300,000 products listed across multiple categories by the end of the year.
"There are some challenges ahead, especially over the next few quarters, but the team is crystal clear about where it needs to go and is more energized than ever," said Loblaw Chairman and President, Galen G. Weston. Part of that strategy has also included a review of approximately 17 initiatives Loblaw has been working on over the past few years to determine which have the greatest potential to deliver positive results."
Final Thoughts
The modern retail customer continues to face great challenges and the cost-of-living crisis perhaps has the greatest potential to transform shopping habits. Ecommerce brands, especially those operating in essential sectors such as the supermarket space need to remain sensitive to these challenges and make sure they are delivering the greatest value possible to cash-strapped customers.
With its ecommerce developments and by ensuring any price increases are fully justified, Loblaws seems to be taking those responsibilities seriously.
You can hear Loblaws General Manager for Joe Fresh Ecommerce, Noah Golberg speak at eTail Canada 2022, taking place in September, at the Hyatt Regency Toronto, ON.
Download the agenda today for more information and insights.