Miller’s Monday Morning Message

Andrew MillerMiller’s Monday Morning Message
presented by ACM Consulting Inc.

Andrew Miller on operational excellence, strategy, life balance and everything in between

Toronto – November 4, 2013
Just when you thought the retail and grocery store landscape in Canada couldn’t get any more complicated, Amazon has announced it will start offering groceries online. Loblaws has recently agreed to purchase Shoppers Drug Mart. Sobeys has acquired Safeway Foods. Walmart is constantly growing it’s assortment of grocery items. Target is another player to be reckoned with. And now Amazon. Not to mention Metro and other grocery store chains. Who knew Canadians were so popular?
Here are some questions to consider as Amazon enters the marketplace:
  • How can Amazon compete with other grocery chains without offering fresh and perishable items?
  • Will customers order online knowing that they still need to go to the grocery store for fresh items?
  • Can Amazon replicate the in-store experience of walking up and down the aisles, often selecting items not on a grocery list?
  • Will customers stay away from ordering online because they like their routine of grocery shopping? 
“Amazon is arguably the greatest supply chain company in the world ,” says Andrew Miller, president of ACM Consulting. “So we know they can offer fast and reliable delivery. The question is whether enough Canadian shoppers value the online experience enough to forego their weekly trip to the supermarket.”
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© Andrew Miller. All rights reserved. 2013.

Shoppers and Loblaw’s, a match made in heaven?

As you have already likely heard, Loblaw’s has agreed to buy Shoppers Drug Mart for more than $12b. This is actually a seemingly smart acquisition for so many reasons. The loyalty programs that both companies have. The ability to attract different customers to the various stores and leverage their strengths. The securing of Loblaw’s as a force to compete against Target and Walmart. Yes, this deal makes a lot of sense on paper.

Hopefully Loblaw’s will be able to make the integration work. They have said it will take 6-7 months and that customers will see no difference and that all employees will keep their jobs. I hope that is the case. This is a very complex acquisition and it might just be easier for Loblaw’s to keep Shoppers running as a separate division, as it has proposed.

This changes the Canadian retail landscape once again as we see additional consolidation in the grocery industry. As you may remember, only a few short weeks ago, Sobey’s parent company Empire agreed to buy Safeway. So the big get bigger. This is great if you are a supporter of Canadian businesses.

Another interesting angle…think how many service providers, consultants, lawyers, etc., will be lining up to try and get a piece of the acquisition pie. No doubt there will be money available for “integration” of the two companies.

I wish them all the best as I hope this turns out to be as good a move for both organizations as it appears to be on paper.