The president of Loblaw Cos. Ltd. is vowing to put a renewed focus on the customer as the grocery chain gets ready to do battle against U.S. discount juggernaut Target Corp.
“It’s about bringing more customers into our stores,” Vicente Trius told analysts during a conference call Tuesday.
Loblaw lost some competitive momentum in late 2010 and early 2011, executives said, but the company been working hard to regain that ground, and has recently seen increased customer counts.
“It doesn’t happen overnight. It’s about building a more solid customer proposition,’ Trius said. “This is about bringing better service to build our business. I like the traction that I see.”
Trius said the chain also plans to add more ethnic fare, introduce a new loyalty card in 2013 and sell Joe Fresh merchandise online.
Trius and other executives assured analysts and investors that a years-long overhaul of the grocery store operator’s supply chain is finally paying off, with almost 99 per cent of the grocery store operator’s products available on the shelves for customers.
“Product availability is 98.8 per cent,” Trius said. “The product is there.”
Loblaw has said it’s still not done with the overhaul. It will spend $70 million this year to bolster its information technology and supply chain and $40 million to continue developing its marketing efforts.
The Toronto company doesn’t expect profits from operations to be able to cover the expenses it will book in 2012 and as a result expects net earnings per share to be down year-over-year, with more pressure in the first half of the year.
That supply chain overhaul will be crucial as Target launches its first stores in Canada next spring, analysts say.
“The food and grocery sector in Canada is already pretty darn tight with the incumbents and Wal-Mart expanding,” said Ed Strapagiel, executive vice president of KubasPrimedia, a retail consulting and research firm.
Last year was difficult for supermarkets and food stores across Canada. Sales were up just 0.4 per cent for the industry sector.
Budget-conscious consumers traded down to cheaper brands rather than spending on premium names. They also used more coupons to reduce their grocery bills.
“It’s pretty challenging all around in the food business,” Strapagiel said.
Trius talked about the importance of customer connection, the supply chain, and getting fresh offerings to the shelves.
“Fresh is about the quality, it’s about the experience, it’s about what really brings the loyalty. It’s about how you source, how fast you deliver at the right speed to ensure freshness. We call it field-to-fork. Sometimes I call it field-to-stomach.”
The grocery chain, which operates across Canada under numerous banners including Loblaw, Real Canadian Superstore, Zehrs, Provigo, No Frills and Atlantic Superstore, launched the revamp in 2007 in an attempt to resolve supply difficulties that had resulted in stock not reaching stores efficiently.
Loblaw wants to lead in offering products to new Canadians, Trius said, adding that $1 out of every $3 going forward will be spent by new Canadians.
“This is a country that’s a mosaic and this is a huge opportunity when I look at the market. What an opportunity with new Canadians and what an opportunity with all Canadians,” he said.
He also said Loblaw wants to build on its success of the Joe Fresh clothing brand in other categories such as children’s goods, home essentials and beauty products.
Loblaw will grow by adding more square feet yearly but also by looking opportunities for smaller stores as more Canadians opt for condominiums, he said.
Loblaw also wants to grow e-commerce through its Joe Fresh brand by 2013 and have a “best-in-class loyalty card.”
“I want to know our customers better. I want to be able to communicate to them better.”
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