Canadian grocery giant Loblaw (TSE:L) made a huge splash once with its No Frills grocery store lineup, a discount chain that offers bargain pricing. Now, Loblaw is going even further with the concept, a move that sent prices up fractionally in Friday morning’s trading session as a result. Loblaw managed to streamline even its No Frills concept by creating a grocery store chain so stripped down it technically has no name. Rather, it is called No Name, and the first three of these outlets will open in September in three Ontario locations: Brockville, St. Catharines, and Windsor.
Loblaw is reportedly taking its simplified packaging of store-brand items to the next level, focusing on bright-yellow packaging and stripped-down marketing efforts. It brings together simplified store designs, simplified product offerings, and reduced store costs to bring customer prices down even further than the No Frills brand could accomplish.
This is widely regarded as a good move; discount grocery store operations have been giving Canadian grocery chains a boost all over, so pursuing even deeper discount options should prove helpful.
Growing in Healthcare, Too
But Loblaw is not just engaged in a race to the bottom to see who can sell canned soup the cheapest. It is also working to expand its presence in healthcare, so much so that it is proving to be a concern to some observers. In fact, some believe that Loblaw’s expansion into healthcare is actually undermining the public health system, according to a report from The Globe and Mail.
Of particular concern are the consultation rooms and “care coordinator” found at the back of Shoppers Drug Mart locations. Offering healthcare basics like cholesterol screenings and travel vaccinations is a comparatively minor thrust into the most basic of healthcare options. But some of Loblaw’s own pharmacists are already blowing whistles, noting that they have been pressured to focus less on patient care and more on bottom-line results.
Is Loblaw a Good Stock to Buy?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on TSE:L stock based on four Buys and two Holds assigned in the past three months, as indicated by the graphic below. After a 51.81% rally in its share price over the past year, the average TSE:L price target of C$180.84 per share implies 4.59% upside potential.
