Great article in todays EJ on Walmarts
FLOW - supply chain approach - see paragraphs at end...
http://www.canada.com/edmontonjournal/ne...?id=12b0c5cc-7b70-459d-be01-ae9d03909d3f
Loblaw looks to revitalize non-food sales
Grocery giant's overhaul targets general merchandise, cosmetics
Hollie Shaw, Financial Post; Canwest News Service
Published: 2:03 am
TORONTO - Loblaw Cos. Ltd. is taking on Shoppers Drug Mart Corp. and the country's department stores as it tries to revitalize its underperforming general merchandise superstores, the grocery retailer's executives said Tuesday.
"We are a drugstore business, and that is the biggest piece of what we do in non-food," executive chairman Galen Weston said during a presentation to update analysts on a massive five-year operational overhaul of the country's biggest grocery retailer.
Executives of Loblaw, who spent years girding for the Canadian arrival of Wal-Mart's grocery superstores by rolling out scores of its own large-format general merchandise outlets, repeatedly stressed Tuesday that the selection at its superstores is not supposed to mirror that of its Arkansas-based rival.
We are an apparel business . . . we believe we can be a powerful home business," Weston added, and said the phrase "general merchandise" would likely be phased out in coming months in reference to the company's non-food business.
"We actually don't consider ourselves a direct competitor to Wal-Mart Supercentre," he said, because Loblaw's non-food selection has fewer categories and is targeted to the interests of a food shopper.
Loblaw's Real Canadian Superstores are also smaller, ranging from 80,000 to 120,000 square feet compared with 220,000 for Wal-Mart supercentres, Weston said.
Beauty products will be a key "sweet spot" for Loblaw because a move by competitors into higher-end cosmetics has left "a nice gap" for Loblaw to occupy between lower-priced brands and prestige brands, said Frank Rocchetti, the retailer's executive vice-president of general merchandise.
Shoppers Drug Mart has spent the past five years siphoning market share from department stores and specialty boutiques as it allocated more space to high-end cosmetics and fragrances. Under the recent tenure of Shoppers chief executive Glenn Murphy, a former Loblaw executive, the chain introduced a wider selection of packaged and perishable groceries at its larger locations.
Tuesday's Loblaw presentation comes after the retailer posted a 26-per-cent drop in adjusted fourth-quarter profit earlier this month and one year after Weston announced the company would require a massive overhaul of its retail network, head office, supply chain and IT platform in order to improve sales and stay competitive over the next five years. Executives outlined Loblaw's moves to improve productivity, reduce shrink rate at its stores and upgrade its supply chain.
During the presentation, chief operating officer Dalton Phillips said new training stores had helped improve cashier scanning rates per minute by 10 per cent and Loblaw's $1-billion annual "shrink" rate (loss due to damaged goods or employee theft) had been reduced by 30 per cent in test stores after only store managers were allowed access to the garbage compactor area and after the retailer ran criminal background checks on prospective employees.
Peter McMahon, executive vice-president of supply chain and IT, said
Loblaw will adopt a supply-chain model used by Wal-Mart known as "Flow" which will help Loblaw get supplies to store shelves in a more timely fashion.
A product such as yogurt, which is edible for 40 days, stays in transit for far too long, he said, arriving on shelves with an average of 13 days left before its expiry date.
"Two-thirds of the life of the yogurt is gone before it reaches the consumer," he said.
To that end Loblaw is increasing its distribution capacity in Ontario and improving its transport fleet.
Loblaw will spend $20 million to $25 million on consulting fees in each quarter of 2008, the bulk of which will go towards IT and supply chain.
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...and who says it is Wal-Mart, or if it is, who says it is JUST Wal-Mart. One of our business units uses 2 3PL's, one for forward logistics and one for reverse and repair.
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