August 22, 2013
Loblaw opens first Montreal Provigo Le Marché outlet
New brand provides hints of the grocer’s strategy shift in Quebec
Several days ago Loblaw Companies Limited quietly took down the “Loblaw’s” sign at its 86,000 square-foot Kirkland Quebec store, in Montreal’s west island, replacing it with a Provigo Le Marché banner. This week, the company formally introduced the revamped outlet to shoppers, local officials and media.
The shift to the new Provigo Le Marché brand, which will also occur in six other Quebec stores, including its newly-built Sherbrooke outlet, which opened in July, signals an important strategy change in Canada’s largest francophone market. “The Provigo brand has been around for more than 40 years and Quebecers have grown to love it,” said Pierre Dandoy, Loblaws’ senior vice-president in charge of operations. “We’d be crazy not to take advantage of that.”
The changes are expected to be fully implemented by yearend. At that time seven stores will carry new Provigo Le Marché brand, which according to Dandoy, will offer expanded services, extra, better-trained personnel and as merchandize stripped from cash register areas to speed traffic. For example staff in the new Kirkland outlet will increase from 200 to 300 employees. The produce section, which was already a major priority at the flagship store, has been expanded by a further 20 percent, to counter increased competition in the dry goods offerings at Wal-Mart, some pharmacies and other outlets.
A tough market
Loblaw Companies Limited currently operates 400 outlets in Quebec, under 11 different banners. These include 78 Provigos 31 Loblaw’s and 111 Maxi stores. However the company has had considerable challenges optimizing those assets. Loblaw acquired the Provigo outlets in 1998 for $1.6 billion, but was forced to write off $800 million of the acquisition cost in 2006.
Quebecers also never really took to the venerable Loblaw’s banner, which the company put on 32 stores there, nor to the President’s Choice brands, which have such huge value in the rest of Canada.
According to one expert businesses need to be particularly careful when tackling Quebec. “It’s a tough market particularly in food,” says Alda Pavao, a portfolio manager at Addenda Capital. “Quebecers are choosy about what they eat and place more emphasis on the dining experience than consumers in the rest of Canada.”
However Pavao adds that many of the changes being implemented in the Provigo Le Marché Quebec store mirror those taking place in Loblaw’s Maple Leaf Gardens outlet in Toronto and its City Market locale in Vancouver. “The increased focus on fresh offerings such as cheeses, meats, ready-to-serve and produce provides a promising avenue,” says Pavao. “Grocers are facing considerable competition from other channels and new players such as Target and are under considerable pressure to react.”
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