Strategic Issues Faced by Loblaw Companies Limited: Analysis Report

This report provides a comprehensive analysis of the strategic issues confronting Loblaw Companies Limited. The analysis identifies challenges related to inventory and distribution management, consumer service, and competitive pressures within the Canadian grocery market. The report employs Porter's Five Forces analysis to assess competitive rivalry, the threat of new entrants, buyer and supplier bargaining power, and the threat of substitutes. Key issues include the impact of food inflation, consumer dissatisfaction, and the need for improved inventory control. The report proposes alternative solutions, such as enhanced inventory management and the development of competitive strategies focused on superior consumer service. It recommends leveraging Loblaw's brand equity, promoting organic and ethnic food segments, and improving consumer service to maintain a competitive edge. The conclusion summarizes the key findings and reinforces the importance of addressing these strategic issues to ensure Loblaw's continued success.

Running head: STRATEGIC ISSUES FACED BY LOBLAW COMPANIES LIMITED
Strategic Issues Faced by Loblow Companies Limited
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1STRATEGIC ISSUES FACED BY LOBLAW COMPANIES LIMITED
Executive Summary
Being a strategic advisor to CEO of Loblaw Companies Limited, it is the role to analyze the
strategic issues along with related reasons faced by the company along with its impacts on the
company profitability. The company is dealing with severe consumer service issue resulting in
branding issue and loss of sale indicating inventory and distribution management issues. To offer
consumers with desired products and to manage sales in harsh economic conditions, the
company must consider regularly checking its inventory levels along with attaining real-view of
perpetual inventory indicating the trend of consumer demand.

2STRATEGIC ISSUES FACED BY LOBLAW COMPANIES LIMITED
Table of Contents
Introduction..........................................................................................................................3
Role Identification...............................................................................................................3
Problem Identification.........................................................................................................3
Problem Analysis.................................................................................................................4
Proposed Alternative Solutions...........................................................................................5
Recommendations................................................................................................................6
Conclusion...........................................................................................................................6
References............................................................................................................................8

3STRATEGIC ISSUES FACED BY LOBLAW COMPANIES LIMITED
Introduction
Loblaw Companies Limited is a subsidiary of George Westion Limited that is the owner
of Holt Renfrew (Loblaw Companies Limited - Home., 2019). The objective of the paper is to
analyze the strategic issues faced by Loblaw Companies Limited through evaluating the strategic
issues faced by the companies, analyzing them with relevant theories along with recommending
alternative solutions to deal with such issues.
Role Identification
Being a strategic advisor to CEO of Loblaw Companies Limited, it is the role to analyze
the strategic issues along with related reasons faced by the company along with its impacts on
the company profitability (Boothman, 2016). In addition, this role is also focused on developing
several recommended solutions along with proposing the most suitable solution among them to
the CEO in order to deal with the issue. This is such that the company can sustain its strategic
position in the grocery industry.
Problem Identification
From analyzing the case of Loblaw Companies Limited it has been analyzed that it is
dealing with issues related with successfully competing in the marketing aligned with recent
market trends. Due to drastic food inflation, it adversely impacted the fresh production along
with impacting revenue margins of the company because of inflated price of all its offerings.
Increase in prices resulted in consumer dissatisfaction and in responding to same the company
restricted any future price increase from its suppliers rather than the ones that needs high input
costs (Brown, Hicks, Petersen & Leclerc, 2018). This indicates Loblaw Companies Limited was

4STRATEGIC ISSUES FACED BY LOBLAW COMPANIES LIMITED
struggling to maintain competitive advantages in the grocery market. Due to its poor supply
chain, the consumers are shopping less are less frequently as fuel inflation has drastically
impacted the shopping habits of these consumers. The company is dealing with severe consumer
service issue resulting in branding issue and loss of sale indicating inventory and distribution
management issues.
Problem Analysis
Porters five forces analysis tool is implemented in order to analyze the strategic issues
faced by Loblaw Companies Limited.
 Competitive rivalry: This is high in Canada because of existence of several established
competitors like Sobeys, Metro and Wal-Mart within retail grocery industry those can
offer consumers with products at competitive prices (Charlebois, Dimitropoulos, Haskins,
& Foller-Carroll, 2015). The largest competitor for the company is Wal-Mart as it offers
low priced offerings and this can be a major concern with constant increase of food
prices. Loblaw is serving a narrow market and serves just in less geographical locations
that can pose a competitive threat for the company.
 Threat of new entrants: This threat is considered to be low for the company as it takes
increased number of resources to get established as a retailer along with attaining band
reputation within the inflective market condition. However, Loblaw has a complex
management layer along with high cost of restructuring that is impacting the companies’
sustainable position in the grocery market of Canada (Gordon, 2017).

5STRATEGIC ISSUES FACED BY LOBLAW COMPANIES LIMITED
 Buyers bargaining power: Buyers have high bargaining power due to inflationary prices
set by the company for its products. This is resulting in low switching cost for the
consumers those are looking for changing their grocery shops.
 Supplier bargaining power: Suppliers bargaining power is high as the Canadian grocery
market is dominated by a number of major players. Suppliers are demanding high prices
due to inflation for product supply that is impacting supply chain of the company
(Karton, 2018).
 Substitutes threat: This threat is low for the company for the reason that supermarkets
offer maximum products those are basic need for the consumers, particularly to the health
conscious ones those do not prefer visiting restaurants.
Proposed Alternative Solutions
Considering the strategic issues faced by Loblaw Companies Limited, certain alternative
solutions are developed for the company that can lead to preparing suitable recommendations for
the grocery retail company to attain strategic sustenance.
 Improved inventory management- To offer consumers with desired products and to
manage sales in harsh economic conditions, the company must consider regularly
checking its inventory levels along with attaining real-view of perpetual inventory
indicating the trend of consumer demand. This can facilitate the company in tracking its
sales base on which inventory manager strategies can be developed effectively (Mirvis,
Herrera, Googins & Albareda, 2016).
 Developing competitive strategies and focusing on improving consumer service
issues- In order to differentiate itself from its competitors the company must consider

6STRATEGIC ISSUES FACED BY LOBLAW COMPANIES LIMITED
developing high standards for its store services along with increasing its local exposure. It
is also important to maintain competitive edge in situation of inflationary price existing in
Canadian grocery industry. In ensuring the same, Loblaw Companies Limited requires to
regularly monitor competitors’ sale along with promotions in order to update its recent
strategy (Quarter, Mook & Armstrong, 2017).
Recommendations
In implementing the proposed solutions to improve the strategic issue faced by Loblaw
Companies Limited, certain effective recommendations are offered to the company are indicated
below:
 The company is recommended to employ its advantageous position of having high brand
equity within Canadian marketplace in order to attain increased market penetration and
high growth.
 To attain increased sales and for increasing consumer satisfaction, the company is
recommended to promote its organic and ethnic food segments at competitive prices with
employing potential product line extensions. This can facilitate the company in attracting
the consumer segment that values convenience over price.
 The company can improve its consumer service issues and increase its sales marketing
through promoting its premium priced food offerings by means of shoppers to win
consumers those are convenience driven and have low price sensitivity.

7STRATEGIC ISSUES FACED BY LOBLAW COMPANIES LIMITED
Conclusion
From analyzing the strategic issue faced by the company it has been analyzed that
Increase in prices resulted in consumer dissatisfaction and in responding to same the company
restricted any future price increase from its suppliers rather than the ones that needs high input
costs. In order to differentiate itself from its competitors the company must consider developing
high standards for its store services along with increasing its local exposure. It is also important
to maintain competitive edge in situation of inflationary price existing in Canadian grocery
industry.

8STRATEGIC ISSUES FACED BY LOBLAW COMPANIES LIMITED
References
Boothman, B. E. (2016). Distributive orders. The Routledge Companion to Marketing History,
131.
Brown, L., Hicks, E., Petersen, B., & Leclerc, A. (2018). Self-Assessment and Strategic Planning
at a Small Retail Food Co-op: Using the Sustainability and Planning Scorecard Kit in a
Crisis Context. Canadian Journal of Nonprofit and Social Economy Research, 9(1), 5-27.
Charlebois, S., Dimitropoulos, K., Haskins, C., & Foller-Carroll, A. (2015). Focus on Better
Together: How co-branding can create strong synergies within a global company. Journal
of Brand Strategy, 4(4), 388-402.
Gordon, A. (2017). Food safety–based strategies for addressing trade and market access issues.
In Food Safety and Quality Systems in Developing Countries, Volume 2 (pp. 21-46).
Academic Press.
Karton, J. (2018). Piecemeal Solutions to Demonstrated Problems of Unfairness: Control of
Price Terms in Common Law Canada. Control of Price Related Terms in Standard Form
Contracts (Springer, 2019).
Loblaw Companies Limited - Home. (2019). Retrieved from http://www.loblaw.ca/en.html
Mirvis, P., Herrera, M. E. B., Googins, B., & Albareda, L. (2016). Corporate social innovation:
How firms learn to innovate for the greater good. Journal of Business Research, 69(11),
5014-5021.

9STRATEGIC ISSUES FACED BY LOBLAW COMPANIES LIMITED
Quarter, J., Mook, L., & Armstrong, A. (2017). Understanding the social economy: A Canadian
perspective. University of Toronto Press.