Galen G. Weston is turning to a seasoned international retail executive with a deep knowledge of Asian and other far-flung markets to help sharpen Loblaw Cos. Ltd.'s offerings for new Canadians and bolster the bottom line.
Mr. Weston, executive chairman at Loblaw, is betting that Vicente Trius, who becomes president of the grocer later this year, will play a key role in attracting those consumers by identifying and responding to their distinct cultural needs.
The incoming president "has an understanding of Asian retail, South Asian retail and what constitutes a great way to grab those customers," Mr. Weston said on Thursday in unveiling his company's choice for its next leader to replace British retailing veteran Allan Leighton.
The impending arrival of Mr. Trius marks the next crucial stage of Loblaw's race to revive its fortunes. Its previous management failed in its revamping of the country's largest grocer, leaving Loblaw scrambling to take on giant discounter Wal-Mart Canada Corp.
Today, as it starts to see tentative signs of a rebound, the iconic Canadian retailer is rushing to embrace the ethnic consumer as an engine of growth. The stakes are higher than ever: Foreign merchants are preparing to expand into Canada and by 2013 one of the savviest - U.S. discounter Target Corp. - will open its first stores here.
In a bid to deal with the mounting pressures, Loblaw appointed as its next president Mr. Trius, currently an executive director at Carrefour SA, the world's second-largest retailer after Wal-Mart with operations in Europe, Asia and Latin America.
"His international experience will help Loblaw as you see more players come into Canada," said Brian Yarbrough, retail analyst at Edward Jones in St. Louis. "They [Loblaw executives]need to continue to look for ways to differentiate themselves from the standard Sobeys, Metros and Wal-Marts of the world. Just competing on price doesn't win in the long run."
Mr. Leighton has already zeroed in on the ethnic consumer as a key growth vehicle for Loblaw. In 2009, the grocer snapped up T&T, the country's biggest Asian food retailer; Loblaw's No Frills discount supermarkets also draw diverse customers.
"Immigration to Canada is driving long-term growth over the next 20 years and will have a defining impact on retail grocery," Mr. Leighton said in identifying the ethnic market as a "huge" opportunity. "Our objective is to be the No. 1 ethnic player in Canada."
Data suggest Loblaw's quest for diversity can pay off. About 70 per cent of spending growth in the next decade will come from visible minority groups, according to research from CIBC World Markets. "The growth of visible minority consumers is changing merchandising strategies in mainstream stores, spawning new modern indigenous stores, and altering the shopping dynamics of urban centres," retail analyst Perry Caicco at CIBC said in a report this week.
Mr. Trius, 53, who will leave Carrefour in the coming weeks, is director of its European markets and previously held senior executive positions at Wal-Mart's international operations, including heading its Asian, Latin American and Brazilian units. He was also an executive at a U.S.-based drugstore chain.
"He is apparently a solid retail executive, with reasonable experience in food and a good understanding of fresh [food]" Mr. Caicco wrote in a note on Thursday.
Loblaw needs the sales lift. In its fourth quarter, same-store sales fell 1.6 per cent from a year earlier. Those sales at outlets open a year or more are a crucial measurement of a retailer's health. While Loblaw's operating profit improved, its net profit from a year earlier dropped 8.5 per cent to $151-million or 54¢ a share, down from $165-million or 60¢ a share amid one-time charges and $27-million of costs to update systems.
Mr. Weston said Mr. Trius's strengths fit perfectly with those needed to boost Loblaw, including his understanding of various cultural communities. He "understands store operations like the back of his hand," Mr. Weston added.
Mr. Leighton, who spearheaded the turnaround efforts at Loblaw, said the incoming president will continue on the same strategic route. But Mr. Leighton, a longtime adviser to Mr. Weston's family, which controls Loblaw, also warned of rough waters ahead: "We expect 2011 to be one of our toughest years yet."