No Name Store in LaSalle to Close: Loblaw's Discount Grocery Experiment Falters
The No Name discount grocery store in LaSalle, Ontario, is set to close its doors next month, just a year after Loblaw launched the pilot project. This closure marks another setback for Loblaw's attempt to offer ultra-discount grocery options, as reported by CBC's Chris Ensing.
Pilot Project Contraction
Initially, Loblaw introduced three No Name stores in Ontario, located in St. Catharines, Brockville, and LaSalle. These stores were designed to test a "laser-focused" approach aimed at reducing prices and exploring new retail concepts. However, with the closures of the St. Catharines store in July and now the impending closure of the LaSalle location on October 25th, only the Brockville store will remain open for the time being.
The No Name stores operated with fewer items, less frequent deliveries, fewer refrigerated sections, and shorter operating hours. These measures were intended to lower operating costs and provide customers with items up to 20 percent cheaper than those at competing grocery stores.
Location and Customer Base Issues
According to Loblaw, the LaSalle store initially attracted a strong customer base. However, the company states it "hasn't built the customer base needed to remain sustainable long-term." Loblaw has not released any specific information regarding the lessons learned from this pilot project's failures.
Expert Analysis and Future Outlook
Mike von Massow, a professor of food, agricultural and resource economics at the University of Guelph, believes that Loblaw will likely shift towards further developing its discount brands in response to competition from companies like Costco and Walmart. He suggests that the closure of the LaSalle store doesn't necessarily indicate the failure of the discount concept overall, but rather its unsuitability for that specific market and brand.
"I think this is a sign that it's not gonna work in this market with this brand." - Mike von Massow, Professor at University of Guelph
Customers like Rob Caruana have noted the potential of the discount concept, comparing the store to a dollar store with produce. However, he also pointed out location challenges, suggesting a more central location in Windsor's downtown core might have proven more successful. Von Massow anticipates further experimentation from major retailers to compete for value-seeking customers in an environment of rising food prices.
"We'll continue to see experimentation on the part of the big retailers and expansion of the discount model to compete with those big box stores," he said.
Impact of Rising Food Costs
The launch of the No Name stores coincided with a growing consumer awareness of rising food costs, which have increased by 30 percent over the past five years. Discount brands like No Name have become attractive to consumers seeking savings, as they are often more profitable for retailers than mid-level brands. According to Von Massow, lower-income individuals are particularly affected by rising prices and are changing their shopping habits to afford necessities.
