Loblaw piloting ultra-discount No Name grocery stores in Ontario

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Loblaw is piloting a new ultra-discount grocery store in Ontario that promises to deliver even lower prices by stripping away even more frills.

The first three No Name stores will open in September in Windsor, St. Catharines and Brockville, capitalizing on discount brand Loblaw known for its simplified bright yellow packaging and marketing.

“The No Name store is a completely different shopping experience,” Loblaw president and CEO Per Bank said in an interview.

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“Running a traditional grocery store can be expensive, but by reducing building and operating costs, as well as the complexity of the store, we believe we can generate meaningful savings.”

This is the latest discount concept launched by the retailer, after unveiling a smaller version of the No Frills discount banner earlier this year.

Discount grocers have been driving sales growth for all of Canada’s major grocers as shoppers hunt for deals to cover their grocery bills.

Loblaw has been investing in its chain of discount stores by opening new stores and remodeling others. Companies and the industry as a whole are under pressure from consumers and politicians to stabilize or lower food prices after inflation drove grocery costs more than 20 percent higher in three years.

No Name stores will be less complicated to open, the company said — in part because they will have less variety with about 1,300 individual products, compared to up to 7,000 products at smaller-format No Frills locations.

“We try to make it as simple as possible,” Banks said.

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“If this works, we will accelerate, and if not, we will pivot and, importantly, take the learning and application elsewhere.”

The store will have shorter hours of operation from 10 am to 7 pm, limited marketing and no brochures. Shoppers will find some frozen items, packaged bakery items, produce and pantry staples, but no refrigerated foods like milk or fresh meat.

The company says it relies on reused equipment such as racks and cash lines to keep costs down. It won’t have its own checkout, at least not to begin with, Banks said. A lean product selection also means less waste, he added.

Building these stores will take about 10 to 20 percent off the cost of a new regular-size No Frills store, Banks said, giving the company more room to cut costs for customers.

In-store prices will be up to 20 percent cheaper than comparable products at nearby discount stores, including the No Frills store itself, with more than three-quarters of products cheaper than 10 percent, Banks said.

Two-thirds of the products will be below $5, he said, and only 60 per cent will be No Name or President’s Choice brands.

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The idea started before Banks merged with Loblaw late last year. When energy prices rose in Europe a few years ago, they decided to try a smaller and simplified store in the Salling Group with a hard discount banner called Basalt in Denmark, which was launched at the end of 2022.

This concept is not out there, shutting down after seven months, but the Bank believes that the idea has legs in Canada.

One of the biggest struggles for Basalt in Denmark is that shoppers are reluctant to visit more than one store, says Bank, which is based on the No Name store concept.

Canada also has a larger customer base for stores, he said, and No Name has become a recognizable brand.

In six months, the Bank hopes to have a good idea of ​​whether this concept works.

He sees discounting as a “growth engine” in the coming years for Loblaw, from No Frills and Maxi stores, smaller No Frills locations, and the potential for new No Name stores.

The bank said it has brought a discount-focused strategy to the company, but also a “test and learn” approach seen in its corporate discounting efforts.

“We’re not afraid to try new ideas,” he said.

This report by The Canadian Press was first published on August 22, 2024.

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