Loblaw Companies Limited
The grocery industry has a relatively high market commonality; a lot of grocery stores are somewhat related in terms of technologies used, labor force and the products or services offered in the stores. Differentiation with other competitors is key for survival in this highly competitive industry.
External Environment
Demographic Segment
Canada’s demographic trend is very unique due to the increasing number of immigrants and its aging population. Ethnics come to Canada mainly from China, South Asia, Middle East, Central and South America, and Caribbean. The increase in immigrants create a demand for the grocery industry to carry a broader line of products that cater to its multicultural customer base. Furthermore, Canada’s aging population creates a whole new market as consumer product choices change. Income distribution has evolved drastically past decades with the increase in duel-income families. A focus on health in recent years, paired with higher discretionary income, has fueled a growing industry of organic and nutrition-infused products. People cook less at home and seek more faster and convenient source of foods. Although 70% of Canadian meals are consumed at home, they are more likely to be delivered, ready-to-eat takeouts, or catered on-site. In addition, savvy consumers are well-informed and demand one-stop shopping to not only purchase food products, but also non-food items such as daily household items.
Grocery Industry
Porter’s Five Forces Model of Competition (See Appendix)
The Canadian grocery industry is highly competitive and has high barriers for new entrants. Canadians pay the lowest prices for food in the world. Furthermore, Loblaw, Sobeys, Safeway, Metro, and A&P take up nearly 70% of Canadian grocers’ market share. With so many dominant players in the industry, the grocery store suppliers’ bargaining powers are relatively low, depending on the scale of the stores. Furthermore, the customers’ bargaining powers are very high since
External Environment
Demographic Segment
Canada’s demographic trend is very unique due to the increasing number of immigrants and its aging population. Ethnics come to Canada mainly from China, South Asia, Middle East, Central and South America, and Caribbean. The increase in immigrants create a demand for the grocery industry to carry a broader line of products that cater to its multicultural customer base. Furthermore, Canada’s aging population creates a whole new market as consumer product choices change. Income distribution has evolved drastically past decades with the increase in duel-income families. A focus on health in recent years, paired with higher discretionary income, has fueled a growing industry of organic and nutrition-infused products. People cook less at home and seek more faster and convenient source of foods. Although 70% of Canadian meals are consumed at home, they are more likely to be delivered, ready-to-eat takeouts, or catered on-site. In addition, savvy consumers are well-informed and demand one-stop shopping to not only purchase food products, but also non-food items such as daily household items.
Grocery Industry
Porter’s Five Forces Model of Competition (See Appendix)
The Canadian grocery industry is highly competitive and has high barriers for new entrants. Canadians pay the lowest prices for food in the world. Furthermore, Loblaw, Sobeys, Safeway, Metro, and A&P take up nearly 70% of Canadian grocers’ market share. With so many dominant players in the industry, the grocery store suppliers’ bargaining powers are relatively low, depending on the scale of the stores. Furthermore, the customers’ bargaining powers are very high since