After the brand with the yellow packaging without a name, here come the stores without a name. The search for low prices to reduce the grocery bill has become so popular that Loblaw decided to create a whole new store concept even cheaper than its own Maxi.
This smart choice builds on the reputation of the no-name house brand, which is already well-known to consumers and associated with reasonable prices. No advertising will be necessary to let consumers know what to expect when they walk through the doors of the grocery store.
But customers may still be surprised on their first visit.
Because there will be no milk. Or fresh meat. The no-names simply won’t be equipped with refrigerators. Not to mention that the assortment will only have 1,300 products, which compares to 20,000 in a standard supermarket and 4,000 at Costco. Nearly 60% of the products will display a private label, mostly no-name, but also President’s Choice. The rest of the offer will be made up of the usual national brands.
These decisions allow the company to reduce its operating costs, simplifying management as much as possible and reducing losses.
For the vast majority of consumers, it mainly means that a second stop will be necessary to complete their purchases, in another grocery store. If the prices are not low enough to justify the detour, it could be seen as a determining inconvenience. But those who look for sales have already acquired this habit of visiting more than one store and this is, clearly, the target clientele.
Price perception, of course, will be crucial.
On this subject, the retailer has committed to selling its products “up to 20% less than the normal retail price of a comparable product” in other low-cost supermarkets such as its own Maxi, Super C or Walmart. More precisely, three out of four items will offer a discount of more than 10%, indicated Loblaw president Per Bank to The Canadian Press. This means that the discount will not exceed 10% on a quarter of the food items.
Prices 20% lower would put us back roughly in 2021, in many categories.
Other strategies that will help Loblaw keep prices as low as possible include reduced hours of operation (10 a.m. to 7 p.m.) and no flyers. The Ontario giant will also minimize the cost of fitting out its smaller stores (less than 10,000 square feet) by reusing shelves and cash registers.
PHOTO PROVIDED BY LOBLAW
Interior of one of three no name stores opening in Ontario next month
All these peculiarities allow us to understand how much every detail counts in the price structure of a supermarket. Despite all the compromises, such as the absence of refrigerators, the limited choice of products and a small number of employees, prices will not be reduced by 40 or 50% as some dream of.
Loblaw’s announcement comes at a time when pressure from consumers and even politicians to stabilize or reduce food prices has been felt for a year now.
In September 2023, Industry Minister François-Philippe Champagne called on the bosses of the country’s five major supermarket chains – Loblaw, Sobeys, Metro, Costco and Walmart – to ask them to present a “very concrete” plan to curb the rise in the price of groceries. They had three weeks to comply. The government even threatened to impose tax measures on them if the results of the exercise did not meet expectations.
True, Loblaw had quickly announced a price freeze on 1,500 no-name brand products that lasted four months. But it is clear that Mr. Champagne’s exercise did not produce any truly innovative solutions. In this context, the creation of no-name grocery stores comes as a breath of fresh air in an industry that has lacked imagination.
President Per Bank is giving himself six months to evaluate the success of his concept, which will be available starting in September in three Ontario cities.
PHOTO CHRIS YOUNG, CANADIAN PRESS ARCHIVES
Loblaw President Per Bank
If it works [les magasins no name]we will accelerate, and if not, we will pivot and, most importantly, we will learn from this experience and apply it elsewhere.
Per Bank, president of Loblaw
It is therefore too early to talk about expansion in Quebec, but it is not excluded.
Mr. Champagne’s office acknowledges that creating a new store concept is “certainly the biggest, flashiest move” so far to respond to consumer pressure, and that it could be “a relevant solution.” But before rejoicing, they’ll have to wait until they set foot in a no-name to see the prices.
This caution is in order. As everyone knows, the expression “up to 20% off” can easily create disappointment.