Loblaw grows its digital shelf

Experts weigh in on the grocery banner expanding its PC Express offerings into pet, home and baby products.

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Loblaw is looking to out-do its competition, having recently launched an online marketplace that allows it to expand its baby, toy, home, kitchen and pet categories through PC Express.

The marketplace enables users to shop brands beyond grocery, including ones like Umbra and Lennox. In addition to earning PC Optimum points, products will be delivered direct to home, or made available for in-store pickup. The grocery banner first piloted its PC Express click-and-collect and delivery service at three stores in 2014, as part of chair Galen’s Weston’s efforts to “blanket” the country and bolster its e-commerce offerings in response to a changing retail milieu.

The new platform allows it to further compete against the likes of Amazon, and is complemented by the recently announced PC Insiders program, which is a fee-based subscription food delivery program.

Strategy reached out Loblaw for comment, and was told the move is based on the belief that consumers are looking for increased convenience. This sentiment was echoed by Loblaw VP of digital Hesham Fahmy, who says “Canadians will welcome the chance to buy complementary products from complementary brands,” citing young parents looking for diapers and formula, also opting for associated products like cribs and blankets.

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Tirtha Dhar, Associate Professor at the University of Guelph’s department of marketing and consumer studies says the new product offerings, which include home furnishings, are bulky items that aren’t frequently purchased, so the online marketplace enables Loblaw to offer products that it previously couldn’t allocate physical retail space. “In many cases, you don’t even need to physically maintain these products, as there are instances when they could be directly delivered from a manufacturer, so you really don’t need to maintain that kind of infrastructure” Dhar says.

While some analysts like Dalhousie University’s Sylvain Charlebois have questioned the actual convenience of “click and collect” services, Dhar believes there’s consumer demand for an online buying experience, not wanting to wait the requisite 1-3 days for delivery, but rather to collect immediately.

What the market is experiencing overall, Dhar adds, is an offline/online convergence with the likes of Amazon, for example, moving into physical spaces. However, he sees Walmart as the direct competition for Loblaw. “Its business model is the one Loblaw is trying to build,” Dhar says, adding that Loblaw has driven traffic through grocery, while Walmart sells “everything else.”

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The grocery side of the equation is simply not enough to compete against growing retail giants, according to Jason Dubroy, VP, managing director, shopper marketing, TracyLocke (a division of DDB). The grocer recently reported sluggish same store food sales, with increased basket sizes being offset by lower traffic, with Dubroy saying that “the trend for many grocers, including many U.S. operations, is to extend their reach to find external sources of income to maintain and grow top-line margin while taking advantage of the investment in online and loyalty infrastructure.”

According to Dubroy, Loblaw wants to keep shoppers within its own closed loop ecosystem and that it has migrated in-store and into online media with the introduction of Loblaw Media (the company piloted this digital ad service powered by first-party customer data from its PC Optimum loyalty program, targeting members who opt in to receive personalized ads in exchange for points). This, Dubroy says, helps to potentially extend the retailer’s ecosystem outside of traditional grocery as offering PC Points for complementary categories and brands makes sense.

“Walmart, Amazon, Wayfair and eBay are already entrenched players in this space, and even Google has revamped its Google Shopping e-commerce platform to maintain relevance. Loblaw wants and needs its share of the pie to continue to maintain their digital retail footprint,” Dubroy says.

When it comes to product categories, he says baby is an important one for most shoppers and represents an entirely new segment to shop, one that shoppers are already trained to look for online. Pet is also one of the more popular online categories as many shoppers look to have large format pet food shipped to their homes rather than carrying it from the store, he adds.

As society continues its march towards an “economy of convenience,” Dubroy says, Loblaws has continually needed to reinvent itself to match, citing its reinvention of Shoppers Drug Mart to become more like neighbourhood general stores.