December 2007
Who’s Minding the Store
Loblaw’s decline is a story of clashing egos, professional jealousy and strategic screw-ups, the biggest mistake being the company’s decision to try to out-Wal-Mart Wal-Mart. Can Galen Weston save this sinking ship? By Peter Foster
Image credit: Norm Betts/Klixpix
“Hi,” says the young man on the television screen in the vestibule of the new Loblaws Superstore in Milton. “I’m Galen Weston.” The words “Galen Weston” appear beside him. “At President’s Choice we’ve been creating environmentally friendly products for over 20 years. But this is huge!” On comes a shot of Loblaw’s reusable shopping bag, with “99 cents” beside it. “Each one of these,” he says, “will keep a hundred of these [shot of fluttering plastic bags] out of the garbage. We’re going to reduce the number of plastic bags going into Canada’s landfills by a billion. Imagine: one billion fewer of these every year.” The young man stands in a shower of plastic bags. Voice-over: “President’s Choice. Worth switching supermarkets for.”
Set next to the natural delights of the Niagara Escarpment, about 30 kilometres west of Toronto, Milton is Canada’s fastest-growing community—theoretically superstore heaven. The store sits in a huge plaza next to the GO station on the outskirts of town. This is its official opening. A “soft” opening took place two weeks ago.
The TV in the vestibule is set atop a sort of environmental shrine, piled high with green plastic bins and reusable bags. Beside the screen is a prominent slogan: “Something can be done.” The word “can” has a line through it. The word “must” is superimposed. The shrine, with its central 30-second message, raises certain questions. The first: Who the hell is Galen Weston? The ad seems to assume that everyone will know that this amiable, slightly geeky-looking 34-year-old is the son of Galen Weston Sr. and heir to the Weston family fortune. The second: Will shoppers switch supermarkets to support an anti–plastic bag campaign? In this store, cutting down on plastic bags is not a matter of choice. “Canada’s 1st Bagless Store,” declares a banner at the front of the big box building. “Plastic bags not offered at checkouts.”
Who came up with the idea of turning President’s Choice into No Choice? According to the script of the opening ceremony, which takes place amid the Halloween paraphernalia outside the vestibule, it was a Grade 4 student named Megan Reid. Dalton Philips, Loblaw’s Irish chief operating officer, declares that the bagless store is the brainchild of, well, a child’s brain. Megan had apparently sent a letter to the company’s new president, Mark Foote. “Listen to this letter,” says Philips. “It is unbelievable.”
Little Megan, cute as a button, is summoned to the microphone and proceeds to read an earnest screed about the benefits of reusable bags. She also suggests the use of paper, because paper takes only 30 days to decay, while plastic takes a thousand years. “Thank you for your time and consideration,” she concludes, “Megan Reid.”
Megan is warmly applauded by the small crowd, which consists mostly of store staff. Then Foote, who looks like a powerlifter, steps up to the microphone. He reminds the assembled that Loblaw is the biggest retailer in the country. This store is an example of “new thinking” and some “adjustments” to what used to be called the company’s Real Canadian Superstores. The most exciting thing, he says with a straight face, is that “one letter from a Grade 4 student defined some changes to a big company’s strategy.”
After Megan and Milton’s jovial mayor, Gord Krantz, cut the ribbon, the crowd is invited inside for coffee and cake and, as they pass through the vestibule, given free bags along with maps of the store. “Each one of these,” repeats the voice from the video, on a perpetual loop, “will keep a hundred of these out of the garbage.”
The young man on the TV screen does not appear at the opening. Philips and Foote—two of nine top executives who have been with Loblaw Companies Limited less than two years, in some cases just a matter of months—are here in his stead. They, more than anybody, know that the company is in a mess. Although still the king of Canadian retailers, Loblaw has suffered a series of misadventures. In 2006, it experienced its first loss in almost 20 years. The relevant Biz School case study questions are: How did it get here? And is the relatively inexperienced Galen Jr. the man to lead it back to the promised land of profitability?









