Loblaw Cos. Ltd. is betting bigger on mobile phones as it races to set up telecom shops in its outlets and find ways to pump up its grocery sales.
Aiming to be a leader in mobile phone retailing, Loblaw will announce on Tuesday that it is rolling out 100 telecom kiosks this year at its stores and another 100 in 2012, staffed by trained employees.
The initiative expands on Loblaw’s self-serve mobile phone offerings, moving them into 10 times more space – 80 square feet – to carry more than 50 handsets, mostly smart phones and tablets, compared with 27 mobile models currently in the stores.
“Our goal is to become the biggest third-party retailer by 2013 selling these mobile services,” said Maria Forlini, senior vice-president of PC services at Loblaw.
The country’s largest grocer is sprinting to shore up its relatively flat food sales, including ramping up its Joe Fresh Style fashion business, its financial services operations and businesses catering to the growing ethnic communities. Still, in its bid to bolster its telecom retailing, it faces an already crowded field: Other players such as Shoppers Drug Mart Corp. and even Canadian Tire Corp. are stepping up their mobile phone and tablet offerings.
“I think that there is some skepticism, given how well-developed the Canadian mobile offering is,” Irene Nattel, retail analyst at RBC Dominion Securities, commented on a conference call earlier this year when Loblaw said it was planning a further push.
But Loblaw’s plan to stock a broad range of products touted by knowledgeable staff has a lot of potential to take off among Loblaw shoppers, said Kaan Yigit, president of consultancy Solutions Research Group.
The mobile market is still expanding at a nice clip as consumers seek smart phone upgrades, Internet sticks with data plans and tablets that connect wirelessly, Mr. Yigit said.
“Everybody sells milk or cereal, stores have to have them on the shelves for parity,” he said. “In 2011, mobile phones are becoming that kind of a commodity as well… It’s one more service they can offer to their customers at a relatively low cost – the risk they take is minimal really.”
The move is appealing to telecom carriers, providing them with additional distribution at grocery stores that draw more traffic than their own outlets, he said.
Because Loblaw’s mobile offering currently is limited to pre-paid plans, it caters to a smaller market: only one in four mobile phone users have pre-paid plans, Mr. Yigit said. Those mobile users spend much less than so-called post-paid users, that is, monthly bill payers, he said.
Ms. Forlini said Loblaw is hiring 400 new employees, mostly full-timers, to staff the mobile shops this year, and another 400 next year.