Welcome to the the Ivey HBA Retail Marketing Management blog. Retail marketing is an exciting, dynamic, important, and very visible aspect of the overall field of marketing. Throughout the year, students will be posting comments regarding contemporary retailing issues. Although this is intended to be used by Bus 4411 students, industry marketing professionals are also invited to join in if they like.

Friday, February 13, 2009

A Fresh Idea

In the first retail marketing class of the year, we discussed how Loblaws was named Canada’s top retailer in 2004 followed by the Wal-Mart Canada Corporation. However, as Wal-Mart increased its selection by moving into the realm of groceries, Loblaws had to fight back to provide an RVP of greater value to their consumers. This would help differientiate themselves from other grocery retailers. One may argue that these two retailers target different target segments. However in times of a recession, consumers tighten their budgets and become more price-conscious. Therefore, Loblaws customers may be pushed to switch to Wal-Mart for their grocery needs if they are already purchasing other goods there because it is more convenient and cheaper.

However, Loblaws has been able to hit back at Wal-Mart’s grocery intrusion by regaining some of their customer base with Joe Fresh. Joe Fresh is a low-cost, chic fashion line distributed in Loblaws stores. By giving Loblaws shoppers a more diverse selection of goods to choose from and changing the grocery shopping experience to include a clothing aspect, the company has brought greater value to its RVP. Furthermore, Loblaws has added price to its RVP by adding a low-price line of goods. Customers originally in the stores would purchase clothing in addition to their grocery items. Conversely, Loblaws would also draw customers who would shop there for the Joe Fresh line, but while in the store would purchase a couple grocery items out of convenience. These two instances together drive sales and attract new and more loyal customers because of the greater value in price, selection and experience.

To take advantage of the new business opportunity, Loblaws had to evaluate their corporate capabilities. How well did the top-retailer understand its current market and what they wore? There were many challenges, but as any good company do, Loblaws adapted and learned from their mistakes. For example, learning from experience, Loblaws has now cut their men’s Joe Fresh line in half. The company now understands that more woman than men shop for groceries for the family and that men do not gain the same pleasure from shopping for clothes, as do women.

As greater recessionary pressures hit the clothing industry, it is Joe Fresh who has actually benefited while others have failed. Consumers are looking for low-cost yet still chic, and trusted options. Consequently, fewer consumers are hitting malls because they cannot rationalize huge shopping sprees when the future of their jobs are on the line. However, a simple purchase while grocery shopping provides consumers with the thrill of updating their wardrobes at a guilty-free price. In addition, the mere fact that a consumer does not have to go out of their way to visit a clothing store makes the entire process more guilt-free. The convenience factor is key.

Taking advantage of this small luxury concept, Joe Fresh will unleash its own low-price cosmetics line. Research has found that during a recession, cosmetic companies experience a surge in lipstick sales and other small luxury cosmetics. These items provide a luxury experience to the consumer at a low-cost.

In closing, as Loblaws moves forward to take advantage of the recessionary times, they must fully understand their target market. By providing consumers with a more diverse selection of products, the retailer becomes a one-stop shop for multiple needs.

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