Loblaw Companies--Canada's largest grocery chain and once one of North America's most innovative retailers--has decided that the best defense against Wal-Mart is to return to basics and narrow its
efforts in nonfood products. It will also concentrate on a line of inexpensive clothing sold under the Joe Fresh brand.
Galen G. Weston, 34--who succeeded his father, W. Galen Weston,
as Loblaw' executive chairman five months ago--is leading the charge. With Wal-Mart's expansion into the Canadian grocery market, Loblaw's previous management tried to respond to by becoming more like
Wal-Mart. But when the televisions, flashlights, air-conditioners, arm chairs, camping gear and small appliances began rolling into Loblaw stores in the central Ontario market, few ended up in
customers' shopping carts.
John Chamberlain, a retail analyst with the debt rating service DBRS in Toronto, says that not only was Loblaw unable to match the prices of Wal-Mart, many
of its nonfood offerings put the stores directly in competition with other aggressive retailers. "There's no oxygen trying to be cheaper [than Wal-Mart]," Chamberlain says.
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