In 2000 Loblaws had its banner year: TORONTO (FNS) -- Loblaw Cos. Ltd. here turned in what the company termed a "spectacular" performance in the 52-week fiscal year ended Jan. 1, 2000, with profit for the year increasing 43.9% to $259 million. [Supermarket News, March, 2000]

JUMP TO 2007: Investors sell Loblaw stock: Falls to lowest in 8 years as profit plunges 42% and grocery chain warns of more struggles ahead. (Nov 16, 2007 04:30 AM thestar.com].

HEADLINES IN YESTERDAY'S FINANCIAL POST: Loblaw To Retain Non-Foods - Plans to compete more strongly v. Shoppers Drug
Loblaw Cos. Ltd. is taking on Shoppers Drug Mart Corp. and the country's department stores as it tries to revitalize its underperforming general merchandise superstores, the grocery retailer's executives said yesterday.

"We are a drugstore business, and that is the biggest piece of what we do in non-food," executive chairman Galen G. Weston said during a presentation to update analysts on a massive five-year operational overhaul of the country's biggest grocery retailer.

"We are an apparel business.… We believe we can be a powerful home business," Mr. Weston added, and said the phrase "general merchandise" would likely be phased out in coming months in reference to the company's non-food business.

"We actually don't consider ourselves a direct competitor to Wal-Mart Supercentre," he said, explaining that Loblaw's non-food selection has fewer categories and is targeted to the interests of a food shopper. ibid.

Notwithstanding my surprise at the 'stake it all on identifiable soft spots in the market' strategy (which is destined to change any company beyond recognition in 5 years or less) the investor comments are more concerned about how Loblaws will turnaround its housewares and electronics segments. Why? Because if Ikea can sell flatpack housewares, so can Loblaws. And if Wal-Mart can sell electronics, so can Loblaws. We want our money and we'll kill the goose to get it.

It is more and more clear to me that I am not really a customer of Loblaws of 17 years standing and I know nothing of what business they are in. How could I, when my concept of Loblaws is so different from its owner?

I am not knocking Shoppers Drug Mart for its focus on cosmetics. It is entirely plausible and rational to connect women who are the largest demographic redeemer of prescriptions through birth control and feminine hygiene needs to the beauty enhancers that (directly/indirectly) precipitate these needs. I can easily comprehend Wal-Mart extending its purchasing power into major electronics as a supplier aggregator of low-cost products. What I can't comprehend is Loblaws selling down the river its power-base as the source for best fresh and frozen food ideas to lose money on all the other expansion ideas it has had in order to appease shareholders betting on a possible increase in dividend if it can only just figure out how to be a different kind of company like those others over there.

It's a mess. Huge capital investment in an empire they thought they could build, at the expense of one they are about to destroy. And customer-centric has nothing to do with it. I think Loblaws has completely forgotten who its customer base is and why they come to Loblaws. Too many notes (to misquote a line from Amadeus).

Not sure how to read who is accountable for this one. Wal-Mart scared a lot of companies into trying to beat them at their own game, and imitation is the greatest form of flattery. Best Loblaws can hope for by copying W-M and SDM is to take a first rate business to second rate.

Why am I steamed? Because I used to hold Loblaws as a role model for customer-centric marketing. That's why. I hate to see good marketing principles fly out of the window.