Loblaw’s ecomm sales jumped 160% in Q4

Same-store sales also continue to climb at the company, which is investing into its digital grocery and health offerings.
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As revenue continues to climb at Loblaw during the pandemic, the company reaffirmed its commitment to investing some of those gains back into strengthening the digital side of its business.

Revenue at the company was $12.4 billion in Q4, a 7.1% year-over-year increase, bringing revenue growth to 9.7% for the full year.

Same-stores sales in food grew by 8.6% in Q4, with a 10.6% increase in its Market division and 7.4% in its Discount division. Shoppers Drug Mart had same-store sales growth of 3.7%, marked by a 5% increase in pharmacy and 2.8% jump in front-of-store. As in previous quarters since the start of the COVID-19 pandemic, the company said the crisis has “positively impacted” same-store sales, with decreases in store traffic at grocery continuing to be offset by larger basket sizes.

Outside of bricks-and-mortar, ecommerce sales increased 160% year-over-year, up 178% for the full year.

In its annual report, also released today, the company cited “Everyday Digital Retail” as one of its three strategic growth initiatives and a major area of ongoing investment. In 2020, digital retail delivered $2.8 billion in sales, the company says, with $2 billion of that coming from grocery alone. Long-term, the company sees “sustained leadership in digital retail” as being a way to offer a comprehensive omnichannel solution to consumers, with it being a headwind to profitability in the medium term.

From here, the company is focusing on improving profitability in its digital business by finding efficiencies, sales and margin incrementally, but also using the data it collects through point-of-sale and loyalty to offer “more relevant and measurable promotion and advertising opportunities.”

The company also cited new technology as helping profitability in digital. In Q4, Loblaw acquired digital ad targeting technology from Eyereturn Marketing, allowing the company’s in-house media offering to be less reliant on third-party providers.

Loblaw’s other two areas of strategic focus are payments and loyalty rewards, and connected healthcare.

In healthcare, Loblaw plans to leverage its network of pharmacies and healthcare professionals to extend its on-site and virtual services across Canada, with an investment of $20 million to further digitize pharmacy operations, increase its pharmacy services and continue to improve its PC Health app. After beginning a trial for the app in Atlantic Canada in October, the company began a national rollout across Canada near the end of Q4 – giving more people access to an app that connects users with medical professionals, as well as rewards them with PC Optimum points for engaging in healthy behaviours.

On the payments and loyalty front, Loblaw said in its report that PC Optimum has continued to introduce utility for customers to “strengthen the loyalty loop and increase share of wallet.” The company also launched the PC Money account last year – its return to everyday banking after CIBC stopped providing services for PC Financial in 2017 – with plans to roll out its PC Money app this year.

In addition, the company said investments in data, insights and efficiencies have delivered more than $1 billion savings over the last three years, and it expects it to continue to generate $200 million in savings annually going forward.

Loblaw also said it had $445 million in COVID-19 related costs in 2020, $180 million of which was related to compensation costs, including the since-discontinued “hero pay” and a one-time bonus totalling $25 million.