loblaw

Loblaw is piloting a new ultra-discount grocery store in Ontario that
promises to deliver even lower prices by stripping away even more frills.

The first three No Name stores will open in September in Windsor, St.
Catharines and Brockville, capitalizing on Loblaw’s existing discount
brand known for its simplified, bright-yellow packaging and marketing.

“The No Name store is a completely different shopping experience,” Loblaw
president and CEO Per Bank said in an interview.

“Running a traditional grocery store can be expensive, but by reducing our
building and operating costs, as well as the overall complexity of the
store, we do believe that we can deliver meaningful savings.”

It’s the latest discount concept launched by the grocer, after opening
smaller-format versions of its No Frills discount banner earlier this
year.

Discount grocery stores have been driving sales growth for all of Canada’s
major grocers as shoppers hunt for deals to keep a lid on their grocery
bills.

Loblaw has been investing in its discount store network by opening new
stores and converting others. The company and the industry as a whole have
been under pressure from consumers and politicians to stabilize or lower
food prices after a bout of inflation left grocery costs more than 20 per
cent higher over three years.

The No Name stores will be less complicated to run, the company says — in
part because they will have less variety with about 1,300 individual
products, compared with up to 7,000 products at the smaller-format No
Frills locations.

“We are trying to make it as simple as possible,” Bank said.

“If this works, we will accelerate, and if not, we will pivot and,
importantly, take the learnings and apply them somewhere else.”

The stores will have shorter operating hours from 10 a.m. to 7 p.m.,
limited marketing and no flyers. Shoppers will find a small range of
frozen items, packaged bakery items, produce and pantry staples, but no
refrigerated foods like dairy or fresh meat.

The company says it is relying on reused fixtures such as shelves and cash
lanes to reduce costs. It will have no self-checkouts, at least to begin
with, said Bank. The streamlined product selection also means less waste,
he added.

Building these stores will take about 10 to 20 per cent of the cost of a
new regular-sized No Frills store, said Bank, giving the company more room
to cut costs for customers.

Prices at the store will be up to 20 per cent cheaper than comparable
products at nearby discount stores, including its own No Frills stores,
with more than three-quarters of the products more than 10 per cent
cheaper, said Bank.

Two-thirds of the products will be below $5, he said, and just under 60
per cent will be No Name or President’s Choice brands.

The idea stems from before Bank joined Loblaw late last year. When energy
prices were on the rise in Europe a few years ago, he decided to test out
this kind of smaller, simplified store at Salling Group with a hard
discount banner called Basalt in Denmark, which launched in late 2022.

The concept didn’t pan out there, shutting down after seven months, but
Bank believes the idea has legs in Canada.

One of the biggest struggles for Basalt in Denmark was that shoppers were
reluctant to visit more than one store, said Bank, which the No Name store
concept relies on.

Canada also has a wider customer base for the stores, he said, and No Name
is already a widely recognizable brand.

Within six months, Bank expects to have a good idea of whether the concept
is working.

He sees discount being a “growth engine” in the coming years for Loblaw,
from No Frills and Maxi stores, smaller-concept No Frills locations, and
potentially these new No Name stores.

Bank says he feels he’s brought a focused strategy for discount to the
company, but also a “test and learn” approach that’s evident in the
company’s recent discount ventures.

“We’re not afraid of testing new ideas,” he said.