August 27, 2024
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Will a Non-Refrigerated Grocer Appeal to Canada’s Bargain Hunters?
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.”
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Recent Discussions
Discussion Questions
Will Loblaw’s No Name concept offer enough appeal to Canadian grocery shoppers?
What will No Name’s success depend on?
What steps taken to reduce costs at No Name could prove beneficial for other grocery formats?
Poll
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I think this will appeal, especially in the current environment of high prices. The point isn’t just that products are cheaper, it’s that the whole shopping experience provides a value for money offer – in other words, it is hard to chalk up a very high bill. However, the trick is to balance low cost with some satisfaction in terms of quality. As for the one dimensional nature of the offer, this does weaken convenience but given consumers are shopping around more to find the best value I don’t necessarily see this as a major disadvantage provided the savings are strong. What wont work is a proposition where sacrifices have to be made but where savings are meagre.
Are Canadians chea…thrifty ? I know a great joke – involving three soldiers, three beers and three flies – that suggests they are, but let’s just agree on the truism that people everywhere enjoy saving money; so yes, I think it will find success. But of course that will attract competition, which always finds its way…even to Canada.
The No Name value proposition is obviously thought out. “Hey, what costs a lot? Let’s take that out.” Were shopper preferences (and peeves) taken into consideration? We’ll soon find out!
Any argument that Loblaws’ “No Name” concept will fail because it doesn’t offer one-stop shopping is fallacious. According to the Retail Council of Canada, the average Canadian visits 2.3 stores regularly. Loblaws provides compelling reasons to visit with deep discounts and an easier-to-shop range. Customers will adjust their behavior and include the convenience of this new concept into their routines; less is likely to be more in the case of “No Name.”
I suppose that being in Canada, in winter they can just put the products outside . Seriously, I think it’s too much trouble
Loblaw’s No Name concept will appeal to Canadians who are trying to stretch every dollar by making groceries more accessible. No Name targets pragmatic (vs. premium) shoppers for whom staples suffice.
The success of No Name stores will depend on simple, streamlined operations, minimal marketing and the enduring brand power of a trusted value-tier private label.
As the Law of Divided Loyalty states: “All shoppers are split shoppers.”
Its most important corollary is that shoppers routinely assemble their pantry solutions by combining visits to several grocery retailers. Each offers certain advantages, brands, assortments, etc. Yes, in Canada too.
With that in mind, I don’t see any reason that Loblaw’s No Name stores should fail because they require a separate store visit. Shoppers will naturally rebalance their habits, IF the offering is compelling based on quality, value and price.
The severely limited assortment could be its Achilles heel however. Items must be very thoughtfully curated to attract that share of trips. Just cheap won’t be enough.
James, that is a thoughtful comment about the Achilles heel. How often will shoppers go to No Name only to get frustrated that they can’t fill their cart and must make a separate trip before they say, “This is too much bother”?
That’s what I think too, but we seem to be in the minority.just strikes me as annoying, but I don’t live there
First and foremost, boycotts of supermarkets for higher prices reflect shallow minds, in which consumers think supermarkets are at fault for higher prices.
In reality, a multitude of factors contribute to higher prices, including supply chain disruptions, increased production costs, and global economic shifts. Additionally, inflation and changes in consumer demand can further drive prices up. Blaming supermarkets alone overlooks the complex economic dynamics at play.
However, a Non-Refrigerated Grocer Appeal is a lame idea. In my research over the years, I have found that over 30% of purchases are either frozen or refrigerated.
This statistic highlights the essential role refrigerated goods play in daily consumer purchases. Furthermore, refrigerated and frozen items often include essential perishable products such as dairy, meat, and fresh produce, which are crucial for maintaining a balanced diet. Ignoring this significant portion of the market could lead to a shortage of vital food items and negatively impact consumer health.
Consumers are unlikely to shop in one store for non-refrigerated items and then shop elsewhere for refrigerated and frozen items. Inconvenience, time, and gasoline will offset the savings. Db
“Consumers are unlikely to shop in one store for non-refrigerated items and then shop elsewhere for refrigerated and frozen items. Inconvenience, time, and gasoline will offset the savings.” David, you have reached a big agreement with me! Simply, no way!
Most people I know, myself included, already shop at more than one grocery store to get what they need. If No Name offers the same quality staple goods as other grocers, but for less money, consumers will shop there.
This concept is concerning, if not for the sheer lack of innovative thinking but for the health of Canadian consumers.
Loblaws is one of the largest retailers in Canada. They have an implicit responsibility to the consumers in the communities that they serve. If prices are deemed to high, the responsible thing to do is to find a way to pull costs out of the supply chain, tighten up pricing strategies or trim overhead.
Instead, Loblaws has employed none of these strategies and has simply removed key categories from the store that are essential to everyday health. The risk is, consumers may learn to rely on frozen and prepackaged foods instead of fresh dairy and lean meats. These are not long-term healthy habits and this No Name format may be perpetuating this behavior.
Further, for consumers who are able to recognize the shortfall in this format’s offerings, they will still need to use up fuel to go to yet another store to fill in the gaps.
There are some lessons to take from Loblaws in reusing shelving and fixtures to keep costs down and minimizing marketing costs. But, to establish a format that intentionally limits essential foods is not an answer to managing price. The one thing I do agree with Bank on is to take the learnings and apply them elsewhere.
There were “on-the-street” interviews about inflation and grocery prices. One interviewee said, “They got much better in the last few months.” I suspect she just got used to the prices.
I was around in the late 70s and early 80s when inflation was agressive. In three of those years, it hit double digits. Inflation hurts for a moment in time, but people get used to it.
I believe that shoppers are starting to notice that price rises have tapered off.
As my grandmother used to joke: “He hits his head against the wall because it feels good when he stops.”
Concerned that this format may have a very appealing margin for the provider, (eliminating a great deal of perishable waste and energy overhead) reducing access to more complete and healthy options in certain communities. Appreciate the experimentation, but also aware of the “food desert” conversation. A photo of cans and boxes is more indicative of the no name environment .
This should be successful as it addresses an underserved demand for highly discounted products in the food market. I applaud their creative approach to reducing store expenses and passing some of those savings along to their customers.
It’s great to see Loblaw responding to consumer demands for lower prices with the No Name store concept. By focusing on essentials and reducing costs, they could tap into a significant market of budget-conscious shoppers. However, I wonder how the absence of refrigerated items may affect the store’s success, given that many shoppers value the convenience of one-stop shopping. It’ll be interesting to see how this store concept resonates with consumers.
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I think this will appeal, especially in the current environment of high prices. The point isn’t just that products are cheaper, it’s that the whole shopping experience provides a value for money offer – in other words, it is hard to chalk up a very high bill. However, the trick is to balance low cost with some satisfaction in terms of quality. As for the one dimensional nature of the offer, this does weaken convenience but given consumers are shopping around more to find the best value I don’t necessarily see this as a major disadvantage provided the savings are strong. What wont work is a proposition where sacrifices have to be made but where savings are meagre.
Are Canadians chea…thrifty ? I know a great joke – involving three soldiers, three beers and three flies – that suggests they are, but let’s just agree on the truism that people everywhere enjoy saving money; so yes, I think it will find success. But of course that will attract competition, which always finds its way…even to Canada.
The No Name value proposition is obviously thought out. “Hey, what costs a lot? Let’s take that out.” Were shopper preferences (and peeves) taken into consideration? We’ll soon find out!
Any argument that Loblaws’ “No Name” concept will fail because it doesn’t offer one-stop shopping is fallacious. According to the Retail Council of Canada, the average Canadian visits 2.3 stores regularly. Loblaws provides compelling reasons to visit with deep discounts and an easier-to-shop range. Customers will adjust their behavior and include the convenience of this new concept into their routines; less is likely to be more in the case of “No Name.”
I suppose that being in Canada, in winter they can just put the products outside . Seriously, I think it’s too much trouble
Loblaw’s No Name concept will appeal to Canadians who are trying to stretch every dollar by making groceries more accessible. No Name targets pragmatic (vs. premium) shoppers for whom staples suffice.
The success of No Name stores will depend on simple, streamlined operations, minimal marketing and the enduring brand power of a trusted value-tier private label.
As the Law of Divided Loyalty states: “All shoppers are split shoppers.”
Its most important corollary is that shoppers routinely assemble their pantry solutions by combining visits to several grocery retailers. Each offers certain advantages, brands, assortments, etc. Yes, in Canada too.
With that in mind, I don’t see any reason that Loblaw’s No Name stores should fail because they require a separate store visit. Shoppers will naturally rebalance their habits, IF the offering is compelling based on quality, value and price.
The severely limited assortment could be its Achilles heel however. Items must be very thoughtfully curated to attract that share of trips. Just cheap won’t be enough.
James, that is a thoughtful comment about the Achilles heel. How often will shoppers go to No Name only to get frustrated that they can’t fill their cart and must make a separate trip before they say, “This is too much bother”?
That’s what I think too, but we seem to be in the minority.just strikes me as annoying, but I don’t live there
First and foremost, boycotts of supermarkets for higher prices reflect shallow minds, in which consumers think supermarkets are at fault for higher prices.
In reality, a multitude of factors contribute to higher prices, including supply chain disruptions, increased production costs, and global economic shifts. Additionally, inflation and changes in consumer demand can further drive prices up. Blaming supermarkets alone overlooks the complex economic dynamics at play.
However, a Non-Refrigerated Grocer Appeal is a lame idea. In my research over the years, I have found that over 30% of purchases are either frozen or refrigerated.
This statistic highlights the essential role refrigerated goods play in daily consumer purchases. Furthermore, refrigerated and frozen items often include essential perishable products such as dairy, meat, and fresh produce, which are crucial for maintaining a balanced diet. Ignoring this significant portion of the market could lead to a shortage of vital food items and negatively impact consumer health.
Consumers are unlikely to shop in one store for non-refrigerated items and then shop elsewhere for refrigerated and frozen items. Inconvenience, time, and gasoline will offset the savings. Db
“Consumers are unlikely to shop in one store for non-refrigerated items and then shop elsewhere for refrigerated and frozen items. Inconvenience, time, and gasoline will offset the savings.” David, you have reached a big agreement with me! Simply, no way!
Most people I know, myself included, already shop at more than one grocery store to get what they need. If No Name offers the same quality staple goods as other grocers, but for less money, consumers will shop there.
This concept is concerning, if not for the sheer lack of innovative thinking but for the health of Canadian consumers.
Loblaws is one of the largest retailers in Canada. They have an implicit responsibility to the consumers in the communities that they serve. If prices are deemed to high, the responsible thing to do is to find a way to pull costs out of the supply chain, tighten up pricing strategies or trim overhead.
Instead, Loblaws has employed none of these strategies and has simply removed key categories from the store that are essential to everyday health. The risk is, consumers may learn to rely on frozen and prepackaged foods instead of fresh dairy and lean meats. These are not long-term healthy habits and this No Name format may be perpetuating this behavior.
Further, for consumers who are able to recognize the shortfall in this format’s offerings, they will still need to use up fuel to go to yet another store to fill in the gaps.
There are some lessons to take from Loblaws in reusing shelving and fixtures to keep costs down and minimizing marketing costs. But, to establish a format that intentionally limits essential foods is not an answer to managing price. The one thing I do agree with Bank on is to take the learnings and apply them elsewhere.
There were “on-the-street” interviews about inflation and grocery prices. One interviewee said, “They got much better in the last few months.” I suspect she just got used to the prices.
I was around in the late 70s and early 80s when inflation was agressive. In three of those years, it hit double digits. Inflation hurts for a moment in time, but people get used to it.
I believe that shoppers are starting to notice that price rises have tapered off.
As my grandmother used to joke: “He hits his head against the wall because it feels good when he stops.”
Concerned that this format may have a very appealing margin for the provider, (eliminating a great deal of perishable waste and energy overhead) reducing access to more complete and healthy options in certain communities. Appreciate the experimentation, but also aware of the “food desert” conversation. A photo of cans and boxes is more indicative of the no name environment .
This should be successful as it addresses an underserved demand for highly discounted products in the food market. I applaud their creative approach to reducing store expenses and passing some of those savings along to their customers.
It’s great to see Loblaw responding to consumer demands for lower prices with the No Name store concept. By focusing on essentials and reducing costs, they could tap into a significant market of budget-conscious shoppers. However, I wonder how the absence of refrigerated items may affect the store’s success, given that many shoppers value the convenience of one-stop shopping. It’ll be interesting to see how this store concept resonates with consumers.