Conventional leads e-comm sales growth as discount shoppers ‘vote with their feet:’ Loblaw chief

While online grocery sales have tumbled in the U.S., Canada’s major grocers continue to see double-digit increases in e-commerce, while simultaneously growing same-store sales. 

The latest is Loblaw Cos. Ltd., which saw e-commerce sales jump by 16.1% during the first quarter ending March 23, versus the same period a year earlier. 

“Beauty is up a bit more and food is up a bit less [than the 16.1%], but food is still in the double digits,” said CEO Per Bank during an earnings conference call on May 1. “If I look at the contribution of food online, it represents 15% to 20% of our total growth in food – it’s a good contribution.” 

Some of the online uptick is being driven by third-party partnerships, with CFO Richard Dufresne citing DoorDash, which delivers from more than 1,100 Loblaw stores, and Instacart as each growing their business with Loblaw by double digits. 

However, he underscored “the big, big growth” has come from its own e-commerce delivery platform, PC Express.  “That is where we are getting triple-digit growth.” 

Food sales, overall, increased 4.4% compared to the same period a year ago, to $9.4 billion. Same-store sales in grocery retail were up by 3.4%. 

When it comes in-store, growth is being driven by the company’s discount banners, which include No Frills and Maxi, as well as more promotions of its private label brand, No Name, and customized PC Optimum loyalty offers at its conventional banners, including Loblaws and Fortinos. 

“What we have seen over the past half year is customers continue to look for value,” said Bank. “They are voting with their feet and going even more into our discount stores.”

He added that private label and national brands are now growing at about “the same pace, because we have started some initiatives with the brands getting a bit more focus.” He didn’t elaborate on those initiatives. 

Earlier this year, Bank revealed that Loblaw will build 40 new discount stores across Canada in 2024.

However, the discount-chain focus doesn’t track to offline strategy. 

While the company made investments last year to improve the PC Express experience at its discount and market chains – including of a real-time dashboard where store teams can see how food pickers are performing – Bank said e-commerce is being driven by its conventional banners. 

“We’re not as focused as much on e-commerce in discount,” he said, explaining those stores tend to be smaller in size than conventional and superstore locations, which are better able to accommodate pick and pack orders. “It is more of a play in the superstores – and you see that around the world.” 

He added while the discount chains are seeing better performance with e-commerce, “it’s still a relatively small market.” 

The country’s two other big grocery giants have made big e-commerce gains in their first quarters of 2024, as well. 

Metro saw its online food sales skyrocket by 105%, while Empire Co. Ltd., which owns Sobeys, Safeway,  Farm Boy and FreshCo, increased sales of its online grocery home-delivery service Voilà by 16%. 

During the earnings call, Bank also said he’s “more optimistic now than before” that Loblaw will be able to come to an agreement on a grocery code of conduct. The sentiment was shared last week by a company spokesperson to The Canadian Press.

The code would aim to establish rules for fair negotiations between chains and suppliers.