schulich mba sgmt 6000 loblaw
DESCRIPTION
TRANSCRIPT
Group:
Kiran Chadaram Nianjiu Li
Vi Ngo Sebastien Rosner
Varun Sharma Jeremy Wong
History of the Firm
Business Definition
• Founded in 1919; Loblaw Grocetarias
• By 1947, 113 stores in Ontario; sales of $50M
• Controlled by third generation of Weston family
• Largest food distributor in Canada
• 24th largest grocery retailer in the world
• Sales of $23.1B in 2002
• 122,300 employees
Industry Definition & Strategic Problem
Business Definition
• Canadian grocery retail industry
• Mature industry; low margins (0.5 - 2%), modest growth (4% per year), and strong price competitions
• Loblaw’s existing strategy has been successful: drive down costs + product & store differentiation
• Wal-Mart, largest retailer in the world, may bring Supercentres to Canada
• If Wal-Mart competes in Canadian grocery, maintain current strategy or adopt new strategy?
Loblaw leads the market with 32%
market share
PESTLE Analysis
Environmental Analysis
• Canada: lowest food prices in the world; 2% inflation
• Rise of double income families
• Immigration and ethnic grocery
• Organic foods
• Online grocery shopping
• Standardization for ERP systems and ECCnet
Porters’ 5 Forces
Industry Analysis
• Suppliers: national brands and “loss leaders” vs. shelf space, promotion execution, and private labels
• Consumers: low switching cost, price sensitivity vs. brand loyalty
• Competitors: high concentration, top 5 chains, low margin & strong competition in all segments
• New Entrants: small independents, acquisition by global giants
• Substitutes: fast-foods, restaurants, take-outs
Key Success Factors
Industry Analysis
• Operational efficiency ! lower costs, lower prices
" Integration: supply chain, logistics " Information Technology " Process innovation
• Accessibility & geographic presence
• Product & service offerings ! customer loyalty
" Differentiated or value-added " Breadth of selection and stock availability
• Brand equity ! customer loyalty
Resources, Capabilities, & Core Competencies
Firm Analysis
• Brand equity and loyalty; President’s Choice
• Experience and expertise in fresh groceries; rigid integration
• Real estate ownership; operational flexibility and location
• Low costs from scale advantage
• Multi-banner & multi-format; covers all price points and segments
• Regional appeal and community character retained
• Differentiated products & services
• PC customer loyalty programs; shoppers data
A Quick Look at Wal-Mart
Competitor Analysis
• Largest retailer and 6th largest grocery retailer in the world
• Cost leadership; "Every Day Low Prices" strategy
• Scale economies and superior resources (e.g. finance, IT)
• Questionable labour practices and issues with UFCW
• Bargains hard with suppliers
• Limited expertise in perishables
• Failed to penetrate German and Japanese markets (why?)
Wal-Mart’s Value Chain & Value Proposition
Value Chain
Sales Infrastructure Procurement
Outbound Logistics Operations
Infrastructure Technology
Procurement Inbound Logistics
Marketing Operations
Procurement
Loblaw’s Value Chain & Value Proposition
Value Chain
Sales Infrastructure Procurement
Outbound Logistics Operations
Infrastructure Technology
Procurement Inbound Logistics Customer Service
Operations
Procurement
Zero-Sum Game
Industry Lifecycle
Includes: Low margin Slow growth Price competition
Alternatives & Business Strategies
Strategic Recommendations
• Challenge Wal-Mart’s cost leadership?
• Avoid head-on competition? Differentiate?
• Exploit Wal-Mart’s weaknesses/Loblaw’s strengths
" Loblaw’s resources & capabilities; core competencies
" Relevant to success factors?
" Imitable or unique? Transferable or replicable?
" Sustainable competitive advantage?
Think about the fates of Target and
K-Mart
Expanding the Pie?
Strategic Recommendations
Include: Ethnic grocery Organic foods Local sourcing
Cooking classes
So what actually happened?
Loblaw Today
• 2006: Launch of Joe Fresh brand
• 2009: Acquired largest Asian food retailer T&T for $225M CDN
• 2011: Opened store in Maple Leafs Garden Over 1,100 new control label products • 2012: Banished artificial colours and flavours from PC products
• 2011 market shares: Loblaw 29.9%, Wal-Mart 4.3%
• Now 181 Wal-Mart Supercentres in Canada
Loblaw continues to dominate the
Canadian grocery
business
… according to Wal-Mart
The World
thank you! merci!