Loblaw store network gets $ 1.2B refresh
Having put most of its energy into a massive infrastructure and IT rollout over several years, Loblaw Cos. Ltd is once again turning to the business of refreshing its stores, sharpening its food assortment and building new locations as part of a $ 1.2- billion spending plan in 2015.
Loblaw will build 50 new stores, under its own banners and that of Shoppers Drug Mart, to boost its network of 2,300 locations across the country and also will renovate more than 100 stores. Loblaw estimates the projects will create about 5,000 jobs at its corporate and independently owned grocery outlets.
It comes as the investment pendulum swings from a heavy infrastructure investment toward customer- facing retail refurbishments.
In 2014, the company opened 22 corporate and franchise stores, closed 12, and divested two, resulting in flat square footage growth. In 2013, Loblaw opened 26 corporate and franchise stores and closed 13, resulting in a net square footage increase of 0.8 per cent.
“The majority ( of 2015 capital expenditures) are going into retail, where the portion ( spent) on infrastructure is reducing every year, and it’s continuing to reduce next year,” Loblaw chief financial officer Richard Dufresne told analysts on a conference call last week.
Or, as executive chairman Galen Weston put it, the company is now
You have to keep evolving. If you don’t do that, you start to lose relevance and your customers will take notice, and you will lose market share.
making “investments that Canadians will see with their own eyes.”
Grocery retailers need to refresh their formats regularly every few years in order to stay relevant in a hypercompetitive Canadian market, experts say, particularly as square- footage growth diminishes in the wake of two years of record grocery square footage expansion from Wal- Mart Canada.
Loblaw has been l aying t he groundwork for its top- tier grocery format by testing out new products and fresh food ideas at its store inside the former hockey palace Maple Leaf Gardens, selling a wide array of gourmet i tems, higher grade meats and f resh produce f or adventurous home chefs.
“Loblaw is one of the best in class retailers in Canada, perhaps in North America,” said Bruce Edward Winder, senior adviser at retail consultancy J. C. Williams Group in Toronto.
“Every three to five years you have to tune up your footprint as a retailer. You have to keep evolving. If you don’t do that, you start to lose relevance and your customers will take notice, and you will lose market share. Loblaw’s consumers are a little bit more affluent and have higher expectations of decor in a grocery chain.”
Other in- store changes include bringing Loblaw’s in- house Joe Fresh clothing brand to 50 more of its grocery stores this year.
Loblaw ’s building announcement comes as new building growth slows at Walmart, the country’s biggest mass merchant, which said last month it will increase its Canadian store count to 396 locations in 2015 from a current level of 394. Walmart plans to spend $ 340 million on building and renovation projects as it expands to 309 stores with a full grocery department, from a current level of 280.