Even if you try hard, it’s difficult to avoid being a customer of the Loblaw Cos.
The 102-year-old Canadian retail giant spans more than 50 popular brands such as Loblaws, President’s Choice (PC), Shoppers Drug Mart/Pharmaprix, Life, No Name, Real Canadian Superstore, T&T, Joe Fresh and more.
According to the firm’s website, 90 per cent of Canadians are living within 10 kilometres of one of its locations — a vast network of more than 2,500 stores and complementary e-commerce sites.
But Loblaw, which is controlled by the Weston family — the country’s fifth wealthiest with an estimated net worth of $8.6 billion — is in fact so much more.
Under the PC Financial brand, it’s offering services such as a money (chequing) account and credit cards. Three million customers use its Mastercard. It serves as an insurance broker for home and auto insurance. It has a travel agen- cy.
And its PC Mobile subsidiary will sell you cellphones and SIM cards.
Loblaw’s most recent initiative is PC Health, a personalized digital health app that it developed in collaboration with League, a digital startup (in which it owns a stake). The app provides users easy access to a network of nurses, dietitians, doctors and other health-care providers as well as products. It also rewards customers for making “healthy choices.”
And on top of all of that, one of Loblaw’s most valuable assets is its popular loyalty program, PC Optimum. The program, which has 18 million members, is accepted at 4,500 locations coast to coast, as well as in its network of online stores.
With PC Optimum, Loblaw can connect the dots and draw precise profiles of its customers.
In a business where what you bought yesterday is the best predictor of what you’re going to buy tomorrow, having access to recent, real data of 18 million customers is a data gold mine, and Loblaw is firing on all cylinders to monetize it.
As part of this effort, the company launched Loblaw Media, a full-service digital marketing agency in 2019. The move, which mimics that of U.S. retail giants Amazon, Walmart and Kroger, allows Loblaw to generate revenue by selling advertising space on its platforms, as well as high-resolution data about consumers.
The Wall Street Journal documented recently a dramatic growth in advertising revenue for retailers, who are finally taking some ad market share from Google and Facebook. Amazon, for example pulled in $14 billion (U.S.) in revenue in 2019 in the “other” category, which primarily comprised advertising revenue, compared to only $1.7 billion (U.S.) in the same category in 2015. The numbers for Walmart and Kroger are lower, but growing fast.
For retailers, who operate on thin margins, the advertising and consumer-insights business offers attractive margins with light capital expenditures. Adding to that the fact that the pandemic dramatically increased online traffic and access to consumer data and you have a lucrative advertising market.
Vass Bednar, executive director of the master of public policy in digital society program at McMaster University, analyzed Loblaw in a series of posts on her blog. Some of her insights were recently featured in a Canadaland episode.
“The advertising power that Loblaw has is fascinating” she said in a video interview. “And the fact that they are, for example, teaching their staff to code is another, really interesting dimension. They are building their own talent pipeline to pivot or evolve more in a digital way.”
However, Bednar raises many concerns. One of them is the potential use of dynamic pricing, which lets the company to update prices rapidly in response to changes in demand. Mostly, though, what she is worried about is the accumulation of power that Loblaw is gaining through the collection and management of consumers data.
While Loblaw has already made huge investments in data and technology, it doesn’t seem to be slowing anytime soon. The company is on a hiring spree for data experts in artificial intelligence, machine learning and pretty much anything data-related. It currently has job openings for dozens of positions in these fields.
In addition, following a successful completion of a 10-month pilot in Toronto, it announced a partnership with Gatik, an autonomous vehicles’ technology startup. With a fleet of light to medium-duty trucks, Gatik and Loblaw aim to optimizes middle-mile supply-chain logistics (short haul trips between Loblaw’s distribution centres and its retail locations).
Big players in the marketing industry are impressed with the company’s bold expansion. In an email statement, Brian Cuddy, vice-president of digital activation at Cossette Media (which has a business relationship with Loblaw) said, “We love that (Loblaw) has invested in its data ecosystem with a relevant offering for Canadian brands.”
But Cuddy also raises concerns with respect to data privacy. “Loblaws will need to ensure it has a significant focus on its privacy solutions to appropriately navigate the changing landscape and build trust with its customers in a transparent way while offering its data to advertisers.
This I think will be especially important if it plans to have significant success with its ‘off-site’ media offering,” he added.
Led by “data-obsessed” president Sarah Larkin, who self-describes as “mathy,” and backed by one of Canada’s wealthiest families, Loblaw is making huge investments and powerful partnerships to rapidly become a data-driven giant. It is doing it in a fashion that draws many similarities to the FAANG (Facebook, Amazon, Apple, Netflix and Google) giants.
There is no doubt that the clever data scientists who analyze consumer behaviour can create some real value of it. From helping consumers find better deals for products they like, to nudging them to live a healthier lifestyle.
Loblaw’s sweeping move to become the leading Canadian data-driven powerhouse is impressive. But once it is done positioning itself as such, it’s going to be hard for others to compete in that space.
Should we be worried that the largest grocer in Canada, which operates close to 1,300 pharmacy stores, clothing stores, a bank, an insurance company and more, has access to so much data that it can predict with great accuracy what each one of us would like to purchase tomorrow?
A quick look at the FAANG gang suggests that we probably should.
Every innovator knows what “Yes but” means. It’s two words that tell you that while the person you’re pitching understands the problem, they’re not ready to invest in your solution.
You get a lot of “Yes but” when your business is clean technology. Despite the obvious need for it, there have long been enormous barriers to getting new clean tech developed, financed and adopted. Many of them are legitimate and daunting — too different, too impractical, too expensive.
But we may start hearing less of that little phrase in 2021.
Climate change has reached a tipping point. In the U.S., natural disaster costs doubled last year after an unprecedented confluence of storms and wildfires.
One million species are at risk of extinction, according to a recent United Nations report.
For Canada and its innovators, the need for action is increasingly urgent. We see the technical barriers beginning to fall because we all realize the cost of inaction is too great. And so Ot- tawa has created legally binding climate targets. Investment funds are piling into clean energy. And while U.S. President Joe Biden’s recent cancellation of the Keystone XL pipeline will cause economic pain for Alberta and Canada, it’s also ironclad proof of the new dynamic.
The COVID-19 pandemic is another source of pain that’s driving an imperative to build our economic recovery through Canadian clean tech. If we’re going to stimulate our way out of a massive economic crisis, we might as well spend it building a better world, not rebuilding the old one. For our governments — including the federal Liberals, who are expected to make massive investments in green infrastructure this year — that means smart fiscal policy and procurement. It means playing an active role in helping Canadian companies export to other countries. It means tweaking regulations and domestic policies to ease the way for industrial users or consumers.
The innovation ecosystem needs to do its part to help create the conditions for these outcomes, too — at Toronto’s MaRS Discovery District, we’re working on a national initiative to accelerate the process by building sustainable markets for clean technology.
If we keep at it, tech adoption will finally start falling into place. Deals will be struck, money will trade hands and world-changing ideas will become investments that grow the economy, provide jobs and a cleaner, better world.
I just saw one of those ideas get closer to reality — up close. One of the Canadian clean-tech companies MaRS works with is NRStor, a Canadian clean-tech company led by former Home Depot Canada president Annette Verschuren, who also chairs the MaRS board. Her company has just signed an MOU with the Six Nations of the Grand River and the Canada Infrastructure Bank to build an energy-storage facility that will be the largest of its kind in Canada. In fact, it’ll be one of the largest such facilities anywhere.
Energy storage is the answer to an awful lot of “Yes buts.” It is the key to being able to turn intermittent sources of renewable energy into consistent, ondemand energy sources for large communities and cities. NRStor’s Oneida Energy Storage project is a 250 MW/1,000 MWH facility that will inject a shot of adrenalin straight into Ontario’s creaky energy grid. This one facility would provide enough to power a city of at least 250,000 homes, by banking energy from renewable sources like wind and solar then releasing it during periods of peak demand.
This will let the province rely less on gas plants for backup, cutting emissions and saving up to $760 million over the course of its lifetime, at no cost to consumers. It will make Ontario’s power system measurably cleaner, more efficient and more affordable.
For the Six Nations, it’s an inclusive energy project that will generate profits and benefits directly into an Indigenous community. For the Canada Infrastructure Bank, it’s a key plank in a plan to invest $2.5billion in clean energy projects across Canada over the next three years.
And for this country’s broader clean-tech industry, it’s a giant win — a sign of big things starting to happen. The barriers are falling. The cost of inaction is too high. The moment is right for adoption. That’s an awful lot of winning, and the signs look good that more is coming.
So hang in there, Canadian clean-tech innovators. After so many years of honing and pitching your ideas, this could be the one when we finally start seeing them become reality. In 2021, we could start hearing less “Yes but” — and more just plain “Yes.”