Digital strategy paying off for Loblaw

"Last spring we pledged to blanket Canada with digital conveniences and, looking back, we did just that," Loblaw president Sarah Davis told analysts and media during the company's fourth-quarter earnings call Thursday morning.

Canada's largest grocer spent the last year building out its digital services and will continue to invest in technology to drive customer adoption and improve customer satisfaction, said Davis, who provided examples of the strides made over the last year.

Available across 670 grocery stores, Shoppers Drug Mart locations and GO transit stations, the company's PC Express click-and-collect pickup service is only 10 minutes away from 75% of Canadians, and home delivery is available to 65% of Canadian households.

Online grocery orders can now be picked up in as little as one hour, "delivering greater convenience and flexibility to our shoppers," said Davis. And, in some regions more than half of online food orders are for same-day pickup "with less than four hours from order to fulfillment."

Though the company’s digital food business tends to overshadow online initiatives across apparel, pharmacy and beauty, Davis said Loblaw’s e-commerce sales surpassed $0.5 billion in 2018. Overall, the retailer said it earned a profit of $221 million and $11.22 billion in revenue for the quarter, which ended Dec. 29, 2018.

In addition to delivering on and investing in pickup and delivery solutions, the company is focused on accelerating growth in key areas such as digital retail payments and rewards.

The 2017 launch of the newly-minted PC Optimum rewards program, which now boasts more than 18 million members, was expanded last summer to include collection and redemption opportunities at Esso stations across the country. This, coupled with the expanded rollout of the company's PC Insider's subscription service has created a "loyalty loop," said Davis. Customers are rewarded and incentivized to return to Loblaw banners and services more frequently, she said.

While offering customers convenient ways to shop is a priority, implementing cost-saving strategies is, of course, of equal importance. With this in mind, self-checkouts will be at more than 1,000 grocery and drugstore locations by the end of the year, said Davis.

Loblaw has also introduced electronic shelf labels in five stores with plans to expand to 50 locations this year. The labels are controlled digitally and centrally, provide greater pricing accuracy, and save store workers from constantly changing labels to reflect the latest promotion or price correction, she said.

"Changing price labels is one of our colleagues least favourite tasks and a change to electronic shelf labels has allowed us to reassign hours and people from old analog time-consuming roles to new, highly productive roles such as picking for PC Express," she said.

The retailer plans to roll out an app that will connect shoppers to online deals on food items that are nearing expiration. "This not only pleases customers, delivers value and draws traffic, it moderates our shrink costs and food waste, two major focal points for 2019," said Davis.

Additionally, store workers can now access their schedules on their mobile devices, making it easier for them to request a shift change. "This not only allows us to have more efficient interactions with colleagues, it's representative of our efforts to improve the colleague experience with the expectation that in turn will improve our customers' experience," said Davis.