Though it seemed invincible earlier this decade when I covered retail stocks, Loblaws has been in trouble for years now. Once the behemoth of Central Canadian supermarkets, a vacuum of management and unending supply chain woes have led to a protracted demise. At the same time, Sobeys and Dominion have strategically moved into condo-loaded downtown, opening pedestrian-friendly, well-stocked stores that don’t require a trek through a parking lot to reach them. They’ve well established throughout the rest of the GTA, too.
(As you might expect, the stock chart is ugly too.)
December’s Toronto Life had a lengthy article on the decline of Loblaws. Here’s the situation Galen Junior, the company’s new frontman (and CEO) inherited:
Loblaw’s stores were now beset by gaps on their shelves, unsold merchandise in their aisles, and increasingly grumpy customers and staff. Two thousand employees had been moved to Brampton in the fall of 2005. Half the general merchandise buyers, who had been based in Calgary, had quit. The dysfunctional system began to resemble a Soviet five-year plan. Store managers weren’t sure what the next truck shipment would bring. In January of 2006, Lederer admitted the cock-up and its cascading effect. Meanwhile the private labels, Loblaw’s jewels, were, as one observer put it, “sliding into anonymity.”
The company’s stock had fallen more than 20 per cent in 2005. Neither Lederer nor Galen Sr. took bonuses for the year. But things were still going downhill. Now much less of a believer, [retail analyst Perry] Caicco noted the company was neglecting its food offerings. “This has been caused by a lack of focus, a paucity of innovation and a diversion of resources and attention to the logistics crisis in the company.” One observer described the company’s general merchandise offering as “an unfocused over-inventoried flea market.”
So are things on the upswing? Well, here’s one indicator: a thread on Chowhound entitled “Loblaw=downhill” has generated over 100 posts, most of which were in the first 24 hours. (Note T&T is recommended more than once as a partial alternative.)
The few Loblaws stores I’m ever near are too big to shop in comfortably, so I limit myself to the Joe boutiques. The notorious Kensington Market Freshmart carries President’s Choice products, however, so I can confirm that the new naan is delicious. Thanks, guys.