Loblaw has announced that only one out of the three No Name ultra-discount grocery stores launched in Ontario last September will remain operational. Initially introduced as part of Loblaw’s strategy to reduce prices for customers and test new concepts, these stores in St. Catharines, Brockville, and LaSalle featured a limited product selection with less frequent deliveries. They also had fewer refrigerated sections and shorter operating hours to lower costs and offer items up to 20% cheaper than competitors.
The St. Catharines store closed in July, while the LaSalle location is set to shut down on October 25. The Brockville store will continue operating as Loblaw assesses its future plans. According to a Loblaw spokesperson, the decision to close the stores was influenced by factors such as the need to build a sustainable customer base over the long term.
Despite not disclosing specific reasons for the closures or insights gained from the pilot project, Loblaw is expected to further emphasize its discount brands in response to competition from companies like Costco and Walmart. Retail food demand expert Mike von Massow, a professor at the University of Guelph, believes that the closures do not indicate the failure of the concept but rather highlight challenges in specific markets with certain brands.
Customers at the LaSalle No Name store recently likened it to a dollar store offering produce and various food items. While some praised the concept, others criticized the location for being in a car-centric area. Suggestions have been made to relocate the store to Windsor’s downtown core for better success.
Von Massow anticipates that Loblaw will make adjustments based on the pilot project’s outcomes to attract customers seeking value amid increasing food prices. He emphasized the ongoing trend of big retailers experimenting with discount models to compete with larger competitors, acknowledging that while the recent experiment may not have been entirely successful, valuable lessons have been learned.
The launch of these stores coincided with a call to boycott grocers due to escalating costs, which have surged by 30% in the last five years. Discount brands like No Name have become popular choices for cost-conscious consumers, with von Massow highlighting their slightly higher profitability compared to mid-level brands. He noted that individuals with lower incomes are adapting their shopping habits to cope with rising expenses.