Loblaw Companies Limited: Preparing for Wal-Mart Supercenters

2155 Words Dec 23rd, 2011 9 Pages
Case 16

1. The grocery industry is a commoditized industry, which makes it difficult for grocers to sustain through differentiation. Buyer power is high and thus, cost leadership and operational efficiencies are critical. There is fierce competition amongst various grocery stores, with the main players such as Loblaw and A&P holding multi-banner stores in various market segments. Traditional grocery stores also lose some of their market share to drug stores, convenience stores and other retailers who have entered the industry. Threat of substitutes from fast-food and take- away outlets is not as prevalent, since many grocery stores have started stocking ready-to-eat meals and have deli services available for consumers. Competitive
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There is of course still work for Loblaw to do with their pricing, however that will come with time because when the company is doing better, they will be able to lower their prices even more. They are putting up a good fight though! Loblaws prices for certain items were only a mere 10-15 cents higher than that of Wal-Mart which demonstrates that they are climbing the ranks and will eventually pose as a threat to WalMart.
Being pure Canadian company is also a core competency because many people enjoy supporting their country even if it means spending an extra 10-15 cents. These key factors (low prices, better quality products, great customer service, and being Canadian) will help Loblaw rise to the top again.

5. Lederer's plan to combat the threat of Wal-Mart Supercentre grocery stores turned bad on the company Consolidating its distribution centres, which supposedly made the supply chain more efficient, resulted in the departure of many of the chain's general merchandise buyers who were unwilling to move. There were numerous delays and coordination problems as suppliers had trouble shipping their goods to stores on time, and Loblaws was forced to mark it down in order to liquidate excess inventory. Expanding its inventory to general merchandise, supposedly to make a one-stop location like Wal-Mart Supercentres, was considered by many

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