2019 Brand of the Year: Loblaw zeroes in on shoppers

How Canada's largest retailer is building its entire business and portfolio of brands around the customer.

No Name TV

This week, strategy is rolling out profiles of the 2019 Brands of the Year. To read about the long-term plans and build-building strategies behind the rest of this year’s winners, click here.

This story originally appeared in the October 2019 issue of strategy.

Loblaw Companies has been laser-focused on knowing everything it can about its customers and how they shop. But despite the intel it has from its 18 million member-strong loyalty program, there is one thing president Sarah Davis is unsure of. “I don’t actually know [if a person] could tell you every brand we own in their town,” she says. “But we’re in every community in Canada, and that community knows what our companies are doing there, banner by banner.”

With roughly 30 different retail banners, three private label brands, a fashion label and a financial company, it wouldn’t be surprising if Canadians couldn’t associate all of them with the parent brand. But running through that full portfolio is the same underlying approach to brand-building. Many companies talk about being “customer centric” as part of their mission and long-term strategy, but Loblaw has turned that into a core tenent of its business and marketing.

In 2018, the company created a “chief customer officer” role to look at every aspect of its business through a consumer lens, around the same time it launched a “Customer Centre of Excellence” in its Brampton, Ont. head office. The dedicated team works on research projects and analyzes customer data to uncover insights about a shopper’s day-to-day challenges and concerns, as well as their relationship with Loblaw’s brands.

PCExpress_CLIPB“We’ve gotten savvier with our data on our customers, specifically when it comes to how we use it to make what we do more impactful for them,” Davis says. “It’s not just about making ads stand out. It’s using data to develop insights that allow us to market ourselves in a way that makes people feel like we understand them, which makes them excited about shopping with us… It’s not about using archetypes of customers. We want to be specific to the individual customer and have what is relevant to them.”

The biggest shift in Loblaw’s marketing department, according to SVP of marketing Uwe Stueckmann, has been the creation of Loblaw Media. In April, the company piloted a digital ad service powered by a prodigious amount of first-party customer data from its PC Optimum loyalty program, targeting members who have opted in to receive personalized ads in exchange for extra points. It also allows Loblaw to add value to its vendor partnerships, with Stueckmann adding that the company has executed more than 1,000 campaigns with its partners using the service so far.

But Loblaw Media has changed the company’s marketing beyond letting it target its own ads (though Stueckmann says that has been valuable, as has the measurement capabilities that come with it). It also gives the company another way to put the customer first.

“Loblaw Media has turned the whole marketing process on its ear,” Stueckmann says. “In the past, much of our work would have been getting the creative right first, and then buying media to get it in front of the right audience. That process is totally reversed now. We start with finding the right audience and then develop creative against that audience. And it’s not segments in a broad, demographic way. We are starting with really tightly defined behavioural segments of people actually buying stuff at our stores.”

Davis says the through-line in Loblaw’s marketing, regardless of banner, audience or insight, is that the ideas are all centred around how shopping makes a customer feel. And despite Loblaw operating so many different banners across the country, Stueckmann says getting to those insights is not about being broad. It’s about understanding what makes its core customers happy to shop at each banner on an emotional level, and then amplifying it.

“If we use No Frills as an example, it’s not just about the first answer you get from customers, which is always that [the retailer has] the lowest prices,” Stueckmann says. “If you get to the second and third answers, it’s about feeling smart and being proud of making choices that save money. Tapping into that emotion with something that celebrates their choices allows the customer to celebrate themselves, too.”

The No Frills “Haulers” campaign – which aimed to instill pride in people who found bargains at the discount banner – is one of several platforms Loblaw built on this year with fresh creative. The company also continued the President’s Choice “Eat Together” platform – which reminds people of the importance of enjoying food with loved ones – and released more funny spots featuring comedian Martin Matte for Quebec discount banner Maxi (that campaign was handled by agency Lg2, whereas other campaigns have been led by John St.). Shoppers Drug Mart has also pushed into more influencer- and experiential-led programs to promote its beauty and health offerings.

In the spring, Loblaw launched its first-ever masterbrand campaign, encouraging people to come together around their love of food. The creative assured Canadians that even if they were a picky eater (or did things that would make the stereotypical foodie’s skin crawl, like slathering a steak in ketchup), anyone who cares that much about how they eat must have a passion for food. Creative for “Food Lovers Unite” was also tweaked based on where it appeared, with the end logo changed to a regional banner, like Zehrs in southern Ontario or Provigo in Quebec.

While No Frills championed bargain hunters, fellow discount banner Real Canadian Superstore’s “Shop Like A Mother” campaign also emphasized its customers’ attitude when it launched in the spring. But for a target that is less likely to find joy in a bargain, the work focuses more on shopping the way they want, be it eating in the aisles or buying lobsters with saved-up loyalty points.

As for No Name, what began in June with a Twitter account that posted cheeky, minimalist descriptions of products like evaporated milk (“not an empty can”) and all-purpose tomato sauce (“main purpose: sauce”) grew into a full-fledged campaign by September. The creative used descriptions in meta ads that highlight how the simplicity of its products also means food that is free from additives.

Stueckmann says the company has moved away from traditional retail ads that are promo- and product-focused, instead building a long-term emotional connection. He adds that there has been an effort to buck the trend of “marketers getting sick of our ads before consumers,” with plans to continue building its platforms, instead of chasing what’s shiny and new.

Presidents Choice - 90,000

Outside of media, the marketing team at Loblaw has had a number of other changes to help build its house of brands. The company has grown its in-house content and production capabilities, which Stueckmann expects to continue as market demand for content increases. Loblaw has also taken the agile development methodology from the tech world and applied it to marketing, empowering the department to make its own decisions and self-organize into their own teams. That has resulted in things like the two-person team that creates the much-loved content for the No Name Twitter account.

While many major Canadian grocery chains struggle to consistently post positive quarterly results, Loblaw is not one of them. The company recently reported 1.3% year-over-year same-store sales growth in food retail and 3.1% in drug retail for the first half of 2019, along with a 3% growth in revenue.

However, those results might have been higher, had it not been for sluggish same-store sales growth in food retail in Q2. Data algorithms that had improved profitability and margins in its market division were applied to other areas, like discount. But focusing on higher margins resulted in fewer promotions to draw customers in-store at a time when they were experiencing inflation and had become more cost-conscious. Davis told investors in an earnings call that changes to its data strategy would be coming. She later told strategy that the changes have been more along the lines of minor tweaks than a major overhaul “so when we see things like inflation in the market, we can make sure our data and models account for the impact on the way people shop.”

Serving “the way people shop” has also been a driving force for Loblaw to push into new service offerings. The company’s delivery and click-and-collect offerings have been expanding across Canada since it was first piloted in 2017, with delivery through Instacart available at over 250 grocery stores and 60 Shoppers Drug Mart locations. It’s also the Canadian retailer launch partner for Loop, TerraCycle’s sustainable packaging program that delivers products in refillable containers. The partnership not only adds to the retailer’s environmental initiatives – which include programs to reduce food waste and updating its stores to reduce emissions – but it also offers another platform for customers to shop the way they want.

“There are always customers who want to go into the store themselves,” Davis says. “There are others who are time starved or just don’t enjoy it and would rather do it online. We are a mass merchant that tries to appeal to all Canadians, so that means having a lot of different options so people can get what they want, the way they want, at the time that they want.”