Loblaw is piloting a smaller, deep-discount grocery format that excludes refrigerated departments as one step to deliver lower food prices.
The concept, to be called “No Name” after Loblaw’s private-label discount brand, will be piloted in three markets in Ontario, beginning in September.
The development comes after a group of consumers organized a boycott of Loblaw-owned stores in May over frustrations with higher prices and industry concentration. Amid pressure from consumers as well as from politicians, Loblaw has also been opening discount stores and converting others to its discount formats: No Frills and Maxi. Four months ago, a smaller No Frills format was introduced.
The No Name stores are reducing operating costs in a variety of ways, including:
- Shorter operating hours (10 a.m. to 7 p.m.)
- Leaner assortments (1,300 items compared with up to 7,000 products at the smaller-format No Frills locations) to make the locations less complicated to run
- Limited marketing and no flyers
- No refrigeration (no dairy or fresh meat products)
- Reused fixtures — shelves, cash lanes — to reduce buildout costs
- Fewer weekly deliveries, reducing logistic costs
Prices will be up to 20% less expensive than comparable items at nearby discount stores, including its own No Frills stores, with more than three-quarters of products more than 10% cheaper, Loblaw president and CEO Per Bank told The Canadian Press. Just under 60% will be No Name or President’s Choice brands.
Offerings will include a small range of frozen food items, complemented by pantry staples, household essentials, and shelf-stable bakery and produce items. Melanie Singh, president of Loblaw’s Hard Discount Division, said in a statement, “These are many of our top-selling pantry staples and household goods throughout the province, so we know they’re what customers buy most and what will bring them the biggest savings.”
The concept’s 1,300 items compare to ADLI and Lidl U.S. locations, which each carry fewer than 2,000 stock-keeping units (SKUs), according to an analysis by Coresight Research.
Bank, who joined Loblaw as CEO in April 2023, tried a similar concept in late 2022 in his former role as CEO of Salling Group A/S, the largest retailer in Denmark. That concept was shuttered within months because Danes were reluctant to shop at more than one grocer. No Name, Bank believes, has a better chance of success because the stores will reach a wider customer base and the “No Name” brand has strong recognition.
Bank said a “test and learn” approach will be employed. He told The Canadian Press, “If this works, we will accelerate, and if not, we will pivot and, importantly, take the learnings and apply them somewhere else.”
Michael Mulvey, associate professor of marketing at the University of Ottawa, believes Canadian consumers may be seeking more choices and one-stop shopping. He told Global News, “By this model, it looks like you can get a few staples that are dry goods, not refrigerated, but it means you’re going to have to go somewhere else.”