LOBLAW 4

[robharris]

What actions would you recommend in response to Wal-Mart’s entry into
the grocery business in Ontario? Which actions would you carry out
first?

[Gini Stieger-Lawson]

Loblaw is having problems with distribution due to changes in the
structure of their purchasing department and distribution channels.
These problems lead to delayed deliveries. Customers complained of
spoiled produce and products past their shelf life.

In response to Wal-mart's entry into the grocery market, the first
thing Loblaw needs to do is strengthen their supply chain. This
includes improving supplier relationships. Lodlaw lost 50% of their
purchasing agents when the corporate office was moved. Second, Lodlaw
should focus on what the customer wants, low prices and quality
(reliable) products on the shelf. Third, logistics management along
with supply chain information systems. Improvements in the supply
chain and logistics will reduce response time and improve stocking and
inventory management.

[Stephanie Kruthaupt]

I would recommend that Loblaw go to a matrix management structure
immediately - to address the distribution issue and identity crisis
issue that they are currently having. They seem to have lost focus on
whether or not they want to be a grocery store, a fresh market type of
grocery store, a one stop shop, or a clothing retailer. So first
action should be to implement a new corporate structure for Loblaw,
separating the company into three distinct divisions, groceries,
general merchandise and logistics and appoint VP's who report directly
to the CEO to these divisions to oversee communication expertise and
mete companywide objectives. The new structure would bring Loblaw
into a matrixed company platform to give the scale that will enable
future growth and a focus on different business units for performance
and profitability evaluations. The three divisions would have
separate focus - all on being experts in their respective areas. This
would hopefully help them use best practices across the organization
while remaining focused. Sharing the good; not sharing information
that wouldn't be helpful to that department.

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[Priscilla Scotland]

Yes! this structured approach would create greater efficiencies
overall stemming from improved communications, and make each division
a leader in the Canadian market to be benchmarked against and Walmart
would be less of a threat.
Priscilla.Scotland

[snk...@yahoo.com]

Shannon Rathel
I agree with everyone and their recommendations. Especially
Stephanie's response to restructure the organization into a matrix
management structure. This would not be difficult or take a lot of
time and like Pricilla said, would create expertise in each respective
department and greater efficiencies. I do feel that distribution
problems would need to be addressed seperately and as soon as
possible.

On Nov 18, 4:39 pm, robharris <rob.harris....@gmail.com> wrote:

[Patrick Casey]

I think at the time of the case Loblaw needed to develop a planning
committee to really understand Wal-Mart's entry and if and how the
could compete or prevent Walmart from taking market share. It seems
that they rushed to copy Walmart in an effort to engage in a direct
competition with the Real Canadian Superstores. It appeared that they
put the cart before the horse and implemented changes before they were
really ready for them. They had a good thing going and the changes
they made to compete damaged the image of the company. I think the
first thing they should have done was to step back, review, look at
strengths and weaknesses and carefully plan out how they would
proceed. I then agree with Stephanie that a matrix style of
management would be effective.

Patrick Casey

On Nov 18, 4:39 pm, robharris <rob.harris....@gmail.com> wrote:

[r_nei...@yahoo.com]

First off, I agree with Priscilla, Shannon, and Stephanie's points of
view. I think that after reading the case and knowing what Loblaw did
with distribution channels and the pure reactionary structure change
to Wal-Mart's entry that these are actionable courses of action.
However, I would propose a new thought. At the onset of Wal-Mart's
potential entry, I think I would suggest a "wait and see" approach.
Wal-Mart appears successful in most markets they enter. Notice I said
most markets. Wal-Mart is not the company that never "does anything
wrong." By Loblaw observing how the Ontario market responds to Wal-
Mart's entry may be benefical. I think Wal-Mart will show inital
success in the market, but is this just novel success? Will Ontarians
continue to flock to Wal-Mart and their operational structure, or will
the newness wear off and consumers return to "what they know and are
comfortable with?" Only if Wal-Mart shows continued success should
Loblaw begin to implement changes in order to compete with this new
competitor.

[erzim...@yahoo.com]

I believe the food business is the best thing Loblaw has going for
it. With Walmart stepping in, Loblaw needs to keep majority market
share in food. Along with some of this internal restructuring and
just keeping the shelves full, they need innovation in their store
design specifically around the food areas. They want modern layouts
and need to project images of quality. The food business started to
stagnate for them. They need to build consumer confidence and make
sure there are reasons people are coming there over Walmart. Fresh
produce but also other new products need to be abundant. A slightly
higher price point above Walmart could be acceptable if consumer
willingness to pay is increasing. Their higher end brands should be
promoted more. They could have more interaction, through in store
demonstrations or teaching consumers more on healthy living and how
Loblaw is supporting it.

On Nov 21, 9:09 pm, snkl...@yahoo.com wrote:

[Curtis Lucas]

I would immediately push for an overhaul and reconfiguration of the
supply and distrubtion chain with a focus on fresh high quality
grovery offerings. When I read this case I keep wondering what we as
a cohort would do if we heard whole foods was opening and ALDI style
discount chain. I think Loblaw need to refocus on its competencies
and quit trying to be things that are outside its scope of practice.
Build a plan based on your competencies and use those competencies to
drive your business model while developing new competencies.

On Nov 22, 10:08 am, "erzimme...@yahoo.com" <erzimme...@yahoo.com>
wrote:

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[Priscilla Scotland]

So do you think that Loblaw would be successful in eliminating general
merchandising altogether, but starting up services focused on food
like catering from their fresh bakeries or wine tasting clubs?
Priscilla Scotland

On Nov 22, 10:08 am, "erzimme...@yahoo.com" <erzimme...@yahoo.com>
wrote:

[Jonathan Nutter]

The biggest thing I think they need is an identity. Everything that
you all have said is part of Loblaw bouncing around trying to figure
out what and who they are. 50% of their sales are discount and that
is trending up. That makes them a walmart competitor, but do they
want to be? A complete overhaul as suggested by Curtis would be
needed to compete in that market, but it would also be expensive.
They could also move upmarket and become a Canadian equivilent of
Target. This would require them to leave their traditional grocer
business and become more of a general merchandise, however it would
not require them to update their logistics stream. They could do
both, focus on general merchandise while they overhaul their grocery
distrabution system.

[tiffany neff]

Nutter I have to agree with you that may be an option, but wouldn’t
that be just as expensive as an overhaul to compete in the market? And
how do we know they may not have to eventually overhaul their
distribution chain to become a more general merchandise business and
be competitive in the industry? Any suggestions of thoughts?

[Patrick Casey]

I think regardless of what route they choose they need to look at
adjusting the distribution chain. It may not require an overhaul, but
it definitely needs attention. As Loblaw grows and acquires new
grocery stores they need to incorporate them into the distribution
chain, not just add what that grocery was already doing. We have seen
in many of the past few classes that distribution/logistics/supply
chain can have major impacts on profits. Whether they overhaul the
whole thing, look at spoke and hub options like Walmart, or just beef
up the information systems so all stores and warehouses are talking
with each other, something definitely needs to be done. Their focus
on preparing for Walmart definitely took the attention away from their
current distribution chain and the output slid greatly. I think small
changes can get them back on track, but an overhaul may be in the near
future.

[Emily Hackett]

Pat is right. They need work on the distribution chain now. It has
got to be the number one priority.
But Nutter is right too.
Pick what you are. No company can sell everything to everyone. (Even
though Walmart is trying very hard). Loblaw's needs to understand
their target market and go from there. If you try to please (sell to)
everyone, you end up pleasing (selllng to) no one and unhappy (out of
business).