Loblaws closing 22 stores, launching home delivery ahead of ‘difficult year’

Loblaws closing 22 stores, launching home delivery ahead of ‘difficult year’

“We are excited about our future. But…we expect 2018 will be a difficult year,” said Galen G. Weston, Loblaw CEO.

Loblaw Companies Ltd. is closing 22 stores and launching home delivery in two major Canadian cities, ahead of what it believes will be a challenging new year.

The grocery and pharmacy giant has finalized a plan that will result in the closure of 22 unprofitable stores across a range of its banners and formats, said spokeswoman Catherine Thomas in an email, who declined to provide specific store locations. The store closures are expected to be mostly complete by the end of the first quarter next year.

“We are excited about our future. But given all of the headwinds, we expect 2018 will be a very difficult year,” said Galen G. Weston, Loblaw CEO, during a call with analysts following the company’s earnings report.

Canadian grocers face increasing pressure from several fronts, including discount and online retailers, and pending minimum wage increases in some provinces.

Loblaw has already made several moves in recent months that some analysts attribute, at least in part, to cost pressures. The company recently announced a new handling fee on its largest suppliers and announced last month that it was laying off 500 employees from its office operations. The company did not immediately answer whether that figure encompassed the job losses from the upcoming store closures.

The retailer is also doubling down on its e-commerce offerings, including launching home delivery with California-based Instacart in Toronto starting Dec. 6 and Vancouver starting January 2018.

Shoppers will order from local Loblaws, Real Canadian Superstore or T&T locations via the Instacart website or app and the company will deliver the food.

“This is a premium service targeted at customers who are looking for the ultimate in convenience,” Weston said.

Deliveries will cost $3.99 for orders of $35 or more — that jumps to $5.99 for one-hour drop off — and $7.99 for orders under $35, said Nilam Ganenthiran, Instacart’s chief business officer.

Customers will also pay a 7.5-per-cent service fee, said Thomas, adding prices will be higher online than in stores and shoppers will see different sales on Instacart than in physical locations. Shoppers won’t be able to order alcohol online, or earn or redeem PC Plus points through Instacart.

Loblaw, which said in 2016 it had no plans to launch home delivery due to lack of customer demand, plans to expand the program rapidly next year.

In the U.S., Instacart aims to serve 80 per cent of households, said Ganenthiran. It will aim to do the same in Canada, which would require a presence in about 20 to 25 cities, he said. That could include partnerships with other grocers in the future.

Canadians currently have few options for grocery deliveries, with companies like Grocery Gateway and select large chains offering the service in limited locations. Walmart, for example, announced in March it would start delivering groceries to customers living in certain parts of Toronto and the surrounding area.

Most grocers, including Loblaw and Walmart, have opted to focus heavily on in-store pick-up for online orders instead. Loblaw launched its click-and-collect offering in 2014 and now offers it at nearly 200 locations. Weston said the company remains very committed to the program and is opening a new location nearly daily.

However, Amazon’s recent acquisition of Whole Foods Market increased speculation that Canada’s grocers would have to step up on home delivery offerings.

Weston said that recent initiatives, including combining PC Plus and Shopper Optimum points into a harmonized loyalty program beginning in February, expanding click and collect and launching home delivery, are key ingredients in the company’s strategy “to compete and win in a rapidly changing and increasingly digital world.”

Loblaw reported that it more than doubled its third-quarter profit compared with a year ago as its results were boosted by the sale of its gas bar business.

The retailer said its profit attributable to common shareholders totalled $883 million or $2.24 per diluted share for the 16 weeks ended Oct. 7. That compared with a profit of $419 million or $1.03 per diluted share for the same period last year.

Revenue totalled $14.19 billion, up from $14.14 billion in the third quarter of 2016.

The results included a $432-million gain on the sale of the company’s gas station business to Brookfield Business Partners.

Aleksandra Sagan, The Canadian Press

Like us on Facebook and follow us on Twitter.

Just Posted

A CH-149 Cormorant from 442 Transport and Rescue Squadron out of CFB Comox on a training exercise in Chilliwack on June 16, 2021. (William Snow photo)
VIDEO: Military search and rescue training in Chilliwack Wednesday

CH-149 Cormorant and CC-115 Buffalo from CFB Comox participated in downed aircraft rescue simulation

Stock photo by LEEROY Agency from Pixabay
Drop-in vaccination clinics slated in Abbotsford for construction workers

Among three sites in Lower Mainland holding no-appointment clinics in June and July

Linnea Labbee outside the Chilliwack Law Courts on April 1, 2021 on day 16 of her trial in BC Supreme Court. Labbee was convicted April 12 for the fatal hit-and-run of 78-year-old Fourghozaman Firoozian on Dec. 1, 2016. (Paul Henderson/ Chilliwack Progress)
Sentencing hearing scheduled for 72-year-old Chilliwack woman found guilty in fatal hit-and-run

Crown will seek jail time for Linnea Labbee who struck and killed 78-year-old woman in 2016

Chilliwack Spartans Swim Club coach Justin Daly.
Chilliwack Spartans swim coach Justin Daly wins Rubber Boot Award

Daly was recognized in a vote by fellow coaches in the BC Swim Coaches Association

Dr. Keith Carlson, director of Peace and Reconciliation Centre, will be the MC and moderator for the June 23 webinar Islamophobia: Seeking Solutions for Hate. (Submitted photo)
Seminar presented on Islamophobia: Seeking Solutions for Hate

UFV webinar on June 23 features speakers who will draw on lived experience

People line up to get their COVID-19 vaccine at a vaccination centre, Thursday, June 10, 2021 in Montreal. THE CANADIAN PRESS/Ryan Remiorz
Vaccines, low COVID case counts increase Father’s Day hope, but risk is still there

Expert says people will have to do their own risk calculus before popping in on Papa

Provincial health officer Dr. Bonnie Henry outlines B.C.’s COVID-19 restart plan, May 25, 2021, including larger gatherings and a possible easing of mandatory masks on July 1. (B.C. government photo)
B.C. records 120 new COVID-19 cases, second vaccines accelerating

Lower Pfizer deliveries for early July, Moderna shipments up

A Heffley Creek peacock caught not one - but two - lifts on a logging truck this month. (Photo submitted)
Heffley Creek-area peacock hops logging trucks in search of love

Peacock hitched two lifts in the past month

The Calgary skyline is seen on Friday, Sept. 15, 2017. THE CANADIAN PRESS/Jeff McIntosh
2 deaths from COVID-19 Delta variant in Alberta, 1 patient was fully immunized

Kerry Williamson with Alberta Health Services says the patients likely acquired the virus in the hospital

B.C. Public Safety Minister Mike Farnworth and Attorney General David Eby attend opening of the first government-run B.C. Cannabis Store, Kamloops, Oct. 19, 2018. (B.C. government)
B.C. government to allow home cannabis delivery starting July 15

Added convenience expected to persuade buyers to ‘go legal’

The first suspension bridge is the tallest in Canada, with a second suspension bridge just below it. The two are connected by a trail that’s just over 1 km. (Claire Palmer photo)
PHOTOS: The highest suspension bridges in Canada just opened in B.C.

The Skybridge in Golden allows visitors to take in views standing at 130 and 80 metres

BC Green Party leader and Cowichan Valley MLA Sonia Furstenau introduced a petition to the provincial legislature on Thursday calling for the end of old-growth logging in the province. (File photo)
BC Green leader Furstenau introduces old-growth logging petition

Party calls for the end of old-growth logging as protests in Fairy Creek continue

B.C. Premier John Horgan leaves his office for a news conference in the legislature rose garden, June 3, 2020. (B.C. government photo)
B.C. premier roasted for office budget, taxing COVID-19 benefits

Youth addiction law that triggered election hasn’t appeared

A vial containing the Moderna COVID-19 vaccine is shown at a vaccination site in Marcq en Baroeul, outside Lille, northern France, Saturday, March 20, 2021. THE CANADIAN PRESS/AP/Michel Spingler
mRNA vaccines ‘preferred’ for all Canadians, including as 2nd dose after AstraZeneca: NACI

New recommendations prioritizes Pfizer, Moderna in almost all cases

Most Read