The Canadian grocery war is becoming increasingly intense. The three big players of the industry: Loblaws, Sobeys, and Metro are all dropping in revenue significantly. Loblaws saw a decrease in almost 30% of earnings in its 3rd quarter this year, while Metro saw a 9% decrease in sales this year. Although these three giant corporations hold a competitive monopoly in the grocery industry, they are losing out due to the threat of new entrants. Low margin companies such as Walmart and Target are aggressively competing with the traditional grocers. They are able to offer what Loblaws, Metro and Sobe
ys can offer at a cheaper price. Not surprisingly, Amazon is continuing to innovate its business to adapt with the times. They are now offering produce on their website, further threatening the oligopoly that the three grocer giants once held. As these low margin companies continue expanding into the grocery market, the traditional grocers are also expanding into other markets. Loblaws is seeing much success in its Joe Fresh Fashion department. However, if these companies wish to survive, they must continue innovating their brand by creating points of differentiation between themselves and the lower priced companies.
Watch this video for a full analysis of the current situation.
Resources:
http://www.bnn.ca/News/2013/11/13/The-challenges-facing-Canadas-grocers.aspx
http://www.reuters.com/article/2013/11/13/metro-results-idUSL4N0IY3T020131113
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