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02/21/2020

Flourishing click and collect drives e-comm growth at Loblaw

Canada’s largest grocery reported $1 billion in online sales in fiscal 2019 across food, pharmacy, caregiver services and beauty
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As competition in the online grocery space continues to heat up in Canada, Loblaw believes click and collect is still the strongest tool in its arsenal.

The Brampton, Ont.-based grocery company reported $1 billion in e-commerce sales last year--nearly double what it recorded the year before, according to president Sarah Davis. Though the $1 billion figure is drawn from all areas of Loblaw's business--food, pharmacy, caregiver services and beauty--click and collect is clearly an area of strength for the company.

A greater proportion of e-commerce sales on the food side of Loblaw's business comes from click and collect, said Davis during a call with analysts Thursday morning to share the company’s 2019 fourth-quarter results and fiscal 2019.

"We believe that the click-and-collect model will be a strong one going forward and Canadians have adopted it readily," said Davis. "And in our business we have a higher growth in the click-and-collect business than we do in delivery."

Loblaw drew in new customers to click and collect in 2019, said Davis, while existing users increased their use of the service. "So clearly  are satisfied with the service, and continue to use it," Davis said.

Loblaw made a shift last year in the way it used data and technology and spent a chunk of 2019 making improvements to its click-and-collect service. Loblaw has improved turnaround times for pickups, for instance, and implemented new technology that tracks when a customer arrives at the store and the time it takes to load their car.

"Customers are highlighting that they do like the convenience of a quick turnaround," said Davis. "So the one-hour and two-hour time slots for pick up would be the most popular.... We are still seeing that, and seeing growth in those areas."

That's not to say the company plans to steer away from its grocery delivery service, said Davis. Loblaw believes in giving its customers choice "and that's how we expect to stay competitive going forward," she said.

Another area of the grocery company benefitting from data is Loblaw Media--an in-house digital ad service that uses customer data, collected via its PC Optimum program, to deliver more targeted advertising from some of the country’s largest CPG brands.

"Loblaw Media is a great example of a business that is benefiting from our data assets, to drive customer purchases and insights for our vendors," said Davis, calling it a win-win-win situation because it not only benefits Loblaw but CPGs and customers as well.

READ: Loblaw debuts targeted advertising program

Customers receive more relevant offers and CPGs can direct their advertising in a more precise way, she said. "When you think about the addressable market, the CPG companies in Canada spend about $2.4 billion on digital advertising," said Davis. "So it's that market that we would be looking to address."