Loblaws says almost 99 per cent of products are on shelves after improvements

The Canadian Press ~ staff The Guardian
Published on February 28, 2012
Atlantic Superstore, Charlottetown
Photo special to The Guardian by Google Maps

The CEO of Loblaws, which owns the Atlantic Superstore, says a years-long overhaul of the grocery store operator's supply chain is finally paying off, with almost 99 per cent of the grocery store operator's products available on the shelves for customers.

"Product availability is 98.8 per cent," chief executive Vincente Trius told analyst at Loblaw Companies Ltd. (TSX:L) analyst day.

"The product is there," Trius said from Toronto via webcast.

Trius said Canada's largest grocery chain may need to improve its assortment of products, "but the supply chain delivers the product and the product is on our shelves."

Loblaws has said it's still not done with the overhaul - it faces a cash outlay of $70 million this year to bolster its information technology and supply chain and $40 million to continue developing its marketing or "customer proposition."

Spending on the infrastructure overhaul - which should reduce costs and redundancies once completed - is expected to peak in 2012 after more than five years of investment.

The Toronto company doesn't expect profits from operations to be able to cover the expenses it will book in 2012 and as a result expects net earnings per share to be down year-over-year, with more pressure in the first half of the year.

Trius also told analysts how important it is for food to be fresh and he said that goes back to the supply chain and how the food gets to the stores.

"Fresh is about the quality, it's about the experience, it's about what really brings the loyalty. It's about how you source, how fast you deliver at the right speed to ensure freshness. We call it field-to-fork. Sometimes I call it field-to-stomach."

Trius said Loblaws has put new transport and warehouse management systems in place, cut the number of distribution centres to 23 from 27, trimmed expenses and improved customer service. He said the company has labour agreements that give it flexibility and a competitive edge.

The grocery chain, which operates across Canada under numerous banners including Loblaws, Real Canadian Superstore, Zeros, Provigo, No Frills and Atlantic Superstore, launched the revamp in 2007 in an attempt to resolve supply difficulties that had resulted in stock not reaching stores efficiently.

Loblaws wants to lead in offering products to new Canadians, Trius said, adding that $1 out of every $3 going forward will be spent by new Canadians.

"This is a country that's a mosaic and this is a huge opportunity when I look at the market. What an opportunity with new Canadians and what an opportunity with all Canadians."

He also said Loblaws wants to build on its success of the Joe Fresh clothing brand in other categories such as children's goods, home essentials and beauty products.

Loblaws will grow by adding more square feet yearly but also by looking opportunities for smaller stores as more Canadians opt for condominiums, he said. Loblaws also wants to grow e-commerce through its Joe Fresh brand by 2013 and have a "best-in-class loyalty card."

"I want to know our customers better. I want to be able to communicate to them better."