🛍️ laying down the loblaw
The Westons might be Canada's Bezos
Are the Westons Canada’s Bezos OR did Amazon scoop Loblaw’s lead on Canadian consumers?
*If so, why were they asleep at the e-commerce wheel?
I think that the way(s) Loblaw can leverage customer data could be of interest to regulators.
The firm also displays many of the hallmarks that have come to characterize large technology companies like Amazon and Google.
What IS Loblaw, other than “grocery stores and Shoppers?” I’ve taken the below from a recent press release, which helps to set the baseline for the scale of the firm.
About Loblaw Companies Limited (TSX: L)
Loblaw Companies Limited is Canada's food and pharmacy leader and the nation's largest retailer. Loblaw provides Canadians with grocery, pharmacy, health and beauty, apparel, general merchandise, financial services, and wireless mobile products and services. With more than 2,400 corporate, franchised and Associate-owned locations, Loblaw, its franchisees, and Associate-owners employ approximately 200,000 full- and part-time employees, making it one of Canada's largest private sector employers.
Loblaw's purpose – Live Life Well® – puts first the needs and well-being of Canadians who make one billion transactions annually in the companies' stores. Loblaw is positioned to meet and exceed those needs in many ways: convenient locations; more than 1,050 grocery stores that span the value spectrum from discount to specialty; full-service pharmacies at nearly 1,400 Shoppers Drug Mart® and Pharmaprix® locations and close to 500 Loblaw locations; PC Financial® financial services; affordable Joe Fresh® fashion and family apparel; and three of Canada's top consumer brands in Life Brand®, no name® and President's Choice®.
In a lot of ways, the Loblaws family of companies could be considered just as ambitious, predatory and worrisome as Amazon. Also - let’s not forget the great bread price-fixing scheme of 2017, which Loblaw admitted it participated in for 14 years (!).
Most recently, the Westons have been making headlines for their opposition to an increase in the minimum wage despite posting record profits in the pandemic (according to Forbes data, Weston’s personal fortune increased by ~$1.6 billion).
📢 Here’s why policy people should add Loblaw to the same conversations we have about Amazon and Google regarding antitrust, consumer protection, “Green New Deal,” etc.
1 - low wages, high earnings
This combination has become a hallmark of sorts among the largest tech companies - especially Amazon. If companies could patent it, some would.
When the wages of the workers that form the foundation of a company (cashiers and warehouse workers) are suppressed while a firm posts record profits, this tends to be a key indicator of wealth consolidation and a bad bargain for workers. While Galen Weston has suggested he supports a living wage, he doesn’t pay one - and people are noticing.
The company also has uneven unionization. In the past, Loblaw has argued that Shoppers stores should not be automatically certified because the stores are franchises and not corporately owned, and not operated by Loblaw.
2 - use of data
In a Canadian context, Loblaw comes close to being a digital titan from a data wealth perspective. They’ve had a fairly sophisticated digital loyalty program (PC Optimum) since 2013, which they are now (presumably) preparing to integrate with health and banking information.
⛵ *The thing is, the PC Privacy ship has long sailed. There are other issues we should concerned about - like, why are we normalizing downloading responsibility for an individual’s health to the individual, or wasting[?] tax dollars on a broken archaic single payer health system that simply needs to be revitalized?
Knee-jerk concerns about individual privacy obscure the creeping privatization (and worse - gamification) of public health.
When it comes to consumer data harvested through a rewards program - Loblaw seems to be making a late-game pivot of sorts. They were an early leader in data collection and seem to be figuring out how to stay relevant and dominant; I can’t tell whether they are expanding their empire or just experimenting in the finance/banking and health spaces because... they can.
3 - health tech
Their latest foray into our lives is PC Health, powered by League - which is ostensibly an insurance company. This will potentially enable the PC family to link up health data paired with grocery and pharmacy spending, and even further enriching a user’s profile with their banking history. PC might even know whether you booked a flu shot.
4 - digital banking
Did I mention that Canada’s top grocer is getting even more into the banking game? Their new banking solution, the PC Money Account, rewards you for your everyday spending - incentivizing those transactions with “points.” This enriching data set could allow the company to build a much more fulsome profile of you as a consumer. For instance, this information can help them figure out what ads to serve you, what discounts to offer you, what your price sensitivity is, and even what products to stock at your nearest No Frills (etc).
5 - autonomous vehicles
This evolution - the recent partnership with Gatick - seems inevitable. It’s also disconcerting from a future of work perspective, as we watch automation erode employment.
Exhibit 6 - competition bureau
Let’s be real, Loblaw has also run afoul of the Competition Bureau (*many times). They’ve also recently caught the eye of the CRA (Canada Revenue Agency). 👀
🤷♀️ What’s the strategy here?
🇨🇦 Is it good for Canadians?
👔 Is Loblaw a Canadian “Amazon”?
Both firms have massive scale, and have the power to squelch competition both upstream and downstream. You can connect that back to my earlier point on workers’ wages: Loblaw can squeeze both suppliers and workers.
Then it comes back to scale, and taking up so much of the market for “essentials.”
🗣️ Predatory tactics are not new for grocers or big box retailers, but when these legacy corporate entities add the sheen of a tech frontier mentality, regulators need to see it for what it is: the exploitation of working class Canadians.
We *could* think of Loblaw as a Canadian technology company because of their incredible predictive power.
I got some pushback online for suggesting that on Twitter - when is a toaster just a toaster? Great question.
The data-fication of companies puts them in a “tech” category. For me, any company that leverages data to manipulate consumer behaviour can count as tech.
So when my toaster rewards me for eating toast, gets me discounts on buying toast, and know how much I spent on toast (and everything else), and can tell other companies my toasting habits, then it’s a tech company, or a “data” company, or whatever classification people need to stop and say: what’s going on over here?
But it doesn’t really matter if they are or aren’t [“a tech company”]. What matters is that we’re able to spot these tactics, think about them, and regulate the company accordingly.
*Recently, Douglas of Betakit challenged me to think about the “darkest future” for technology. I think that’s a good mindset to try and anticipate harms on the horizon.
So here’s a bet: in the near future, PC Optimum could incentivize data sharing with the new data portability opportunities in C-11 (An Act to enact the Consumer Privacy Protection Act and Personal Information and Data Protection Tribunal Act and to make consequential and related amendments to other Acts) that could unlock open banking. I’m sure we’ll see “bonus” points for porting over your banking data (as we saw rewards points for booking your flu shot online).
I also have nightmares about dynamic digital pricing.
Further, the company’s track record re: data isn’t all that great. In 2019, the Privacy Commissioner of Canada determined that Loblaw Companies Ltd. initially collected more personal information that it needed with respect to the $25 gift cards it made available to customers affected by the bread price-fixing scheme in which Loblaw participated.
Why should you care about Loblaw’s digital evolutions if you are “into” the startup scene?
Perhaps it comes down to whether you believe that a company can both “do good” for the consumer AND harm them.
Ultimately, I believe that our scholarship suffers (severely) when we simply replicate global conversations about regulating big tech. It’s lazy.
We can and should continue to learn from the tech examples we have in our backyard alongside global models. Given their engagement across grocery, pharmacy, and financial markets as well as their market dominance and ability to set prices, Loblaw is wholly deserving of our scrutiny and interrogation. It’s not hard to imagine where the company is trying to go with this growing portfolio, and I’d rather anticipate it than admire it later and wonder if it can be undone.