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

Kelowna cannabis company licensed to perform tests on the plant

GTEC Holding’s Zen Labs got its Health Canada licence in July

Downtown drug crime a cause for concern for Kelowna cops

City’s top cop says police presence being bumped up downtown as a result of increase in crime

International bestselling author coming to Kelowna

Jonas Saul has outranked Stephen King and Dean Koontz

City of West Kelowna releases survey for cannabis store restrictions

October 17 non-medical cannabis sales will be permitted

VIDEO: Visual recap of Vancouver Island MusicFest

Walk Off The Earth, Passenger, Arlo Guthrie among highlights

Tailgate Party celebrates Naramata’s early roots

South Okanagan wineries located on the Naramata Bench host their annual party

Emerica tears up Penticton Youth Park

Pro skateboarders make summer afternoon even hotter

‘Virtual drugstore’ dealer sentenced in the South Okanagan

A Penticton woman was using the casino as a hub to sell drugs and launder money

Trudeau’s youth council divided over Trans Mountain pipeline purchase

A letter signed by 16 past and present members was made public today, asking the federal government to reverse course

UPDATE: Wildfire near Lake Country grows to seven hectares

The BC Wildfire Service is responding to a blaze at Dee Lake

Hulk Hogan reinstated into wrestling Hall of Fame

Hogan had used racial slurs caught on video when talking about his daughter sleeping with a black man

UPDATE: BC crews respond to two new wildfires

Blazes near Allison and Osoyoos Lakes

Motorcycle driver dies in a head-on collision near Oliver

RCMP said the three vehicle collision, near Road 18, happened around 2:45 p.m. on July 14

Most Read