Loblaws will try a new concept
Grocery giant plans pilot store challenging Whole Foods,
TORONTO Grocery giant Loblaw Cos. Ltd. is taking on Whole Foods in a test pilot of a new retail concept called Nutshell Live Life Well, a stand-alone franchise catering to the health-conscious crowd.
The first location will open this fall in downtown Toronto, Loblaw company spokeswoman Julija Hunter confirmed on Thursday, and will include a broad assortment of prepared, fresh and packaged foods, a prescription pharmacy, natural health and beauty products, vitamins and supplements.
Loblaw’s news comes a month after the CEO of Austin, Tex.-based supermarket chain Whole Foods Market Inc., the world’s largest natural food retailer with nine stores in B.C. and Ontario, said it could open 40 or more Canadian locations as part of a bigger worldwide expansion.
Nutshell Live Life Well will make its debut in the midst of perhaps the most competitive year to date in Canadian grocery retail, in which all of the major players have seen their margins squeezed in a pricing war and the rapid expansion of grocery square footage from Walmart and Target.
“This is different than anything offered in a Loblaws’ affiliated store, corporate or franchise models,” Hunter said in an emailed statement.
“It will have a community-based and interactive orientation, more broadly focused on health and wellness, with an emphasis of natural value and health.”
Loblaw’s most recent and significant new banner concept was the 2009 acquisition of B.C.-based Asian food retailer T&T Supermarket Inc. for $225 million.
Nutshell Live Life Well also steps into the broader services arena coveted by Shoppers Drug Mart. An instore team known as “health nuts” will be on hand to help consumers connect with local health experts, Hunter said.
“Pharmacists and other local professionals will conduct events or seminars for customers on subjects such as diet, exercise, sleep and stress relief.”
In addition to carrying natural foods and foods from Loblaw’s inhouse brands such as PC Organics and Blue Menu, Nutshell Live Life Well will offer professional in-store health and wellness services, Hunter said, such as dietitians and naturopaths.
And while Loblaw’s substantial buying clout, private-label food lineup and the emphasis on “value” for merchandise suggests that Nutshell Live Life Well will position itself in price below Whole Foods, the market in general serves educated, middle and higher-income consumers in largely urban areas.
The look of the pilot location in Toronto is about as far removed from the industrial glare of a No Frills — Loblaw’s discount brand — as you could get. At 560 square metres — about a quarter of the size of the average Whole Foods, it boasts plenty of natural light, exposed brick walls and timber pillars.
“These stores are kind of like lifestyle stores, and they cater to the kind of people who care about the story of the food and have enough money to care about whether or not their chicken is suitably comfortable,” said Kevin Grier, senior grocery market analyst at George Morris Centre in Guelph, Ont.
“The competition and much of the growth in grocery recently has been on the low end — No Frills and FreshCo — and there is a race to the bottom in terms of pricing, particularly with Walmart. It makes sense for Loblaw to get into the higher end as well. They are trying to diversify and hit these various markets that they feel are underdeveloped and untapped.”
While Hunter could not comment on how long Loblaw would run the Nutshell Live Life Well pilot store before making a decision on rolling the format out to select markets, it brings Canada’s largest food retailer even further into the burgeoning market for natural health products.
“More and more retailers are moving into this extremely fast-growing sector to meet consumer demand,” said Helen Sherrard, president of the Canadian Health Food Association, a trade association dedicated to natural health and organic products. She said 70 per cent of Canadians use natural health products on a regular basis, fuelling a market worth $3 billion.
“The trend for Canadians has been to take a more proactive approach to their health,” Sherrard added, and many of them are increasingly seeking out natural products “that will aid in the prevention or treatment of an illness or condition, reduce health risks or for general good health maintenance.”