STORE WITH A MILLION SALESMEN

Loblaw’s became Canada’s biggest food merchandiser without a word of sales talk. Their secret: surround the shopping housewife with groceries—and psychology

C. FRED BODSWORTH November 1 1948

STORE WITH A MILLION SALESMEN

Loblaw’s became Canada’s biggest food merchandiser without a word of sales talk. Their secret: surround the shopping housewife with groceries—and psychology

C. FRED BODSWORTH November 1 1948

STORE WITH A MILLION SALESMEN

Loblaw’s became Canada’s biggest food merchandiser without a word of sales talk. Their secret: surround the shopping housewife with groceries—and psychology

C. FRED BODSWORTH

NOT LONG ago the Loblaw Groceterias Company opened the shiniest, biggest, most modern, self-service supermarket of its 119-store chain at New Toronto, Ontario. Recently a New Toronto housewife, her shopping basket brimming with merchandise, stopped the manager on the floor of the store.

“There’s something 1 don’t understand,” she told him. “All of your prices are lower than where 1 shopped before. Yet I’ve been spending a couple of dollars more each week for food than I used to spend. It doesn’t make sense, does it?”

Actually, it did make sense to the store manager. “You must be buying more food than you used to,” he said and let it go at that.

Why was the New Toronto housewife, buying food at lower prices, actually spending more on food than she had before? There is certainly no high-pressure salesmanship involved, for the selfservice arrangement of Loblaw groceterias permits her to walk in, select what she wants and walk out again without a salesclerk saying a word to her. The answer is applied psychology the principal secret of Loblaw’s growth in 30 years from a t wostore partnership into a 119-store empire whose stock has a market value of around $24 millions and which sells more food per store than any ot her large food merchandising chain in the world.

Loblaw’s stores are all in Ontario, scattered throughout 39 cities and towns from Sudbury at the north to Windsor at. the west and Ottawa and Cornwall in the east. (There are Loblaw stores in Buffalo, N.Y., but. they no longer belong to the parent company.) Toronto, where the empire was born and where the head offices and warehouses are located, has 55 of them; Windsor and Hamilton have seven each; Ottawa has six, London three.

When Loblaw’s last counted them, they had 3,611 full-time employees and another 1,530 parttime workers—most of the latter week-end extras. At any one moment Loblaw warehouses and stores contain around $6 millions worth of groceries—a four weeks’ supply.

Food by the Trainload

IOBLAW’S last year sold a quarter of a million J tons of groceries, fruit, vegetables and meat, a mountain of merchandise which, if if could have been piled in one spot, would top a 10-story skyscraper. This year’s sales are running somewhat higher. Loblaw’s in a year sell enough sausages to reach from Halifax to Edmonton; enough breakfast cereals — about six million packagesto fill a freight train more than two miles long. For their breakfasts alone, Loblaw customers guzzle about 6 million cans of orange and grapefruit juices a year, between five and six million dozens of 3ggs and, even in these days of 80-cent.s-a-pound bacon, they’re still frying up Loblaw-bought bacon at the rate of one and a half million pounds a year.

Sales last year came to a whopping $73 millions. This boils down to about $630,000 per store. No other chain of stores that publishes its sales figures came even close to that average. The runner-up in Canada was A & P, with $430,000 per store, and Ibis was even better than A & P’s combined

average for its 6,000 Canadian and U. S. stores $333,000. Dominion and Safeway ran neck and neck with A & P in total Canadian sales (just over $50 millions each) but their per-store average was lower.

Every time sales go up and they usually increase every year— Loblaw’s percentage of profit is pared downward. Thus, in 1933, Loblaw’s were taking a net profit of $7.96 on every $100 of sales. By the 1946-47 year this percentage of profit had been sliced to $2.27. Last year, although the $1 1 million profit was a record high, the profit percentage $2.06 per $100 sales—was a record low.

How do they do it? —

j They have put psychology to work and turned

a million D>blaw shoppers into ardent sale«»»»«»».

'Let's go hack to New Toronto and follow the housewife (we’ll call her Mrs. X) on her Loblaw shopping tour.

Mrs. X starts out with a shopping list. The top item is “meat for dinner.” This isn’t surprising; sales research has revealed that when a housewife goes shopping the item upj>ermost in her mind, seven out of 10 times, is meat. Next on her list is “a vegetable,” then “something for dessert” and bread, sugar and butter. The last three items are everyday necessities, and Loblaw’s chiefs admit quite frankly that there’s no big money in these staples. For competitive reasons the profit on necessities like sugar. Continuai on page 64

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Store With a Million Salesmen

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! butter and bread is kept pared to a minimum. ^ ,

f As soon as she enters the store Mrs. i j X picks up a wheeled pushcart or j j “glider” that will carry two shopping ! ! baskets, one above and one below. Since Mrs. X has only six items on her list, j she places only one basket on her j glider. If Junior is accompanying her i there is a little seat on the glider into j j which he can be strapped for safe1 keeping. (It also keeps his fingers away from the candy shelves.)

The gliders and baskets are provided,) of course, for theshopper’sconvenience j hut a pair of hands won’t hold much merchandise and the housewife who canj effortlessly wheel two big baskets along in front of her is likely to purchase; extras she wouldn’t buy if her arms were full. ~ ~—____!

It isn’t justan accident that Mrs. X has to walk to the right-hand side of the store to get her glider and basket. By seeing to it that everyone starts at the same spot Loblaw’s assure that every shopper is going to walk past, certain luxury items which she might buy if she sees them. Furthermore, by directing shoppers first, to the right, thus forcing them to circle the store contradockwise, Loblaw’s planners are keeping in tune with human nature. Eight out of 10 shoppers would do this same thing even without direction.

Now where is the meat counter? It’s back at the rear of the store. Mrs X starts along the right wall, aiming at the meat department. On her right immediately there loom up several shelves of olives, pickles and sauces. She pauses. Her husband likes olives. Why not? She selects a jar of olives and drops it in her basket.

Next she spots a display of peanut butter. Eohlaw’s make t heir own peanut butter from peanuts imported from Virginia. The peanut butter is on a shelf at eye level to make certain that everyone sees it. Mrs. X read in a Loblaw’s ad a few days before that peanut butter is a highly nutritious food. She drops a jar of it in beside t he olives.

On her left at t he end of an “island” tier of shelves which stands in the centre of the floor is a huge display of canned peaches. She thinks that the fruit must he of exceptional quality and value, ot herwise t he merchant wouldn’t have risked putting in so large a supply. Her dessert! She puts a can in her basket, notices that the price stamped on the can is 171 •_> cents, so buys a second can to save herself a cent.

Lye-Level Buying

Nowhere in the store is there any merchandise displayed at more than a foot above eye level. Loblaw’s storeplanning experts point out that there are two reasons for this. First, they sav, we spend a lot more of our time looking down than we do looking up and as a result displays higher than eye level j are in danger of being missed. And. secondly, the low centre-floor shelving permits the staff to keep an eye on ! the whole floor and thus discourage attempts at pilfering, a problem that mounts into a serious expense in the self-service store which contains hidden corners where a shopper can slip small parcels into an overcoat pocket unseen. Loblaw’s pilferage loss is one of the smallest on t he continent.

Mrs. X has reached the meat counter now. She walks past the section where clerks wait on customers to the selfserve section where, in an open

refrigerated glass case, there is a wide variety of roasts, steaks and chops, each wrapped in Cellophane and bearing a ticket which states the name of the cut, the price per pound and the price for that particular package. She selects a roast and adds it to the growing pile of merchandise in her basket.

Now, a vegetable. In the New Toronto store the fruit and vegetable department is at the rear. In most Loblaw stores this department is at the front because fruits and vegetables make a colorful, appetizing display to draw people into the shop. This front position has one drawback, however. Fruit and vegetables are bulky items and if a shopper gets her basket filled with a couple of big bundles at the outset, she’s going to feel less inclined to pick up those olives and anchovies afterward. New Toronto is an experiment to determine whether a back-end spot for fruit and vegetables will increase the sale of items like peanut butter and pickles farther up t he line.

Mrs. X picks up a tomato and pinches it to test its ripeness. A clerk

materializes suddenly at her side. (Ora out of five women are “squeezers,’ clerks watch closely for them and rush to give them immediate service before they can spoil too many soft fruits and vegetables.) Typical of “squeezers,” Mrs. X returns the tomato she has pinched and then buys six different ones.

She had bought the tomatoes on impulse because they looked appetizing. Loblaw’s promote this impulse buying of fruit and vegetables by trying to get produce into the stores within 24 hours of the time it was pulled from the ground or picked from the tree. Fruit and vegetables with lush green tops still attached and the sheen of freshness still on them sell twice as fast as those stored for a couple of days.

Mrs. X sees a display of fresh peas in the pod already packaged and priced in Cellophane hags. She picks up a bag and moves on seeking the butter. Loblaw’s that day had a big supply of fresh peas and the Cellophane packaging was a device to boost sales. Produce! packaged, weighed and priced in

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advance will he picked up frequently by shoppers in preference to other items which have to be weighed up by a sales clerk.

Mrs. X still needs butter, sugar and bread. Before she finds the butter she is attracted by a machine in a rear corner that is making and icing doughnuts. This is a new Loblaw experiment; only four stores have the machines. Once the moving parts of the machine have drawn a shopper’s attention, the stacks of fresh, steaming doughnuts glistening with new icing do the rest. Mrs. X has just ignored the doughnuts and cookies on the bakery shelf, hut this is something she can’t resist. She buys a dozen.

Mrs. X heads for the front of the store now. She stops at the refrigerated case containing eggs, milk, cheese and butter, helps herself to a pound of butter and places it in the basket. Her basket is practically filled now, it won’t hold much more, but a clerk has observed this and he walks up quickly with another empty basket and places it on the lower shelf of her glider.

Impulse Sales

She approaches the checking-out desks where a battery of nimblefingered girls is ringing up purchases on cash registers. The sugar is here near the exit, also flour and breakfast cereals. These are bulky items which take a lot of space in a basket. Mrs. X thought she would have to content herself with a two-pound bag of sugar but since she now has an empty basketshecan manage a five-pound hag. The bread is also here near the exit, if a soft loaf of bread had landed in the bottom of Mrs. X’s basket it might have been flattened beyond recognition by heavier merchandise placed on top of it .

Mrs. X lines up in front of a checking-out desk. She glances down and through a glass-topped refrigerator, sees a tempting array of ice cream bricks and sundaes. She could save the

peaches for tomorrow and have icd| cream for dessert tonight. But no, she has two or three other calls to make and ice cream would become soft. Lohlaw’s, however, have anticipated this problem. On the top of the ice-cream freezer is a stack of thickly insulated bags, just the size of an ice-cream brick, “guaranteed to keep ice cream in good condition for one hour.” All right, she’ll take a brick of ice cream then.

She reaches the check-out girl and lifts her purchases from the baskets onto the counter. Junior is reluctant to abandon his ride and starts to howl. Right in front of Mrs. X’s nose there is a cabinet of cigarettes and chocolate bars. She takes out a chocolate bar to pacify Junior, then buys a package of her favorite cigarettes. There is a cabinet of cigarettes and chocolate bars beside every cash register, where they’re sure to be seen by everyone leaving the store.

Mrs. X steps out onto the street. But Loblaw’s psychology hasn’t ended yet. Her car is parked just a few steps away on a parking lot provided free for Loblaw customers. Mrs. X had no hesitation about buying a large order, because she knew all the time that she wasn’t going to carry it very far.

In her purse Mrs. X still carries her shopping list of six items. In her arms she is carrying 13 items. And she wasn’t urged to buy a single thing by a salesperson.

This is the modern grocery, the 20thcentury de luxe model that is as great an advancement over the old crackerharrel-behind-the-counter store as is the airliner over yesteryear’s rattling stagecoach. The self-service groceteria is not a Loblaw monopoly, scores of other chains and independent grocers have adopted the idea today. It wasn’t even a Loblaw invention; two or three U. S. chains were experimenting with it in 1919 when J. Milton Cork and the late T. P. Loblaw, founders of the firm, opened Canada’s first self-service groceteria in Toronto. But under Loblaw and Cork and the merchandising wizards they gathered around them,

the self-service store became a precision instrument of selling.

In 1919, when (lie founders were planning their first self-service groceteria, they took a trip through the United States to study stores of that typt>. Two or three times a year Loblaw officials still go off on fours scouting for merchandising ideas. Rut from tlie U. S. there is a constant stream of grocery executives dropping in at Loblaw’s bead office for a squint at the Loblaw method of doing business.

The Why of Groceterias

Mrs. X of New Toronto and most of the other Mr. and Mrs. X’s assume that the self-service groceteria is no more than a way to reduce staff and cut down overhead. The method does eut costs; the average overhead in a counter-service store is more than 20'/, of sales, frequently as high as 30'/. The overhead in a self-service store is 12 to 16'/, .

But this reduction in overhead is the small end of the self-service benefits. The fundamental supremacy of the self-service store lies in its selling appeal. Turn a woman loose among several thousand dollars worth of foodstuffs, let her walk around at her leisure, picking up, examining and reading the labels on anything that catches her eye, and she’ll buy a lot more merchandise than she will if she has to stand in front of a counter and ask for it item by item.

One of Loblaw’s chief sales psychologists is George E. Huffman, merchandising manager and a member of the firm’s board of directors. Step into his office and you see a desk not cluttered with papers and reports, but covered with packaged foodstuffs— perhaps several different brands of pork and beans whose labeling he has been comparing, tea, candies, ketchup and a handful of coffee beans where the inkwell should be. There are other grocery samples scattered on window sills and bookcases around the room and the office is pungent with the appetizing aroma of freshly ground coffee.

Huffman’s specialty is selecting

packages and label designs which have sales appeal.

I íe picks up a small can from his desk and holds it out. At six feet there are only two words on the label that are visible —t he brand name and the word

“sauce.”

“But that on a store shelf and shoppers will glance at if and think it’s just another sauce for spicing up meats,” he says. “But read the small print on the label and you discover it’s not that kind of a sauce at all, it’s a sauce for spaghett i. And good spaghetti sauces are rare. We told the manufacturer we wouldn’t stock it, hut if ht“ changes his label and gets the words ‘spaghetti sauce’ in big print we’ll take it on.

“Yesterday a salesman tried to interest us in a new chocolate-sugar mix. His package stressed the fact that it was to he used for making cake icing and in smaller print he added that it could also be used for mixing fudge candy. People won’t buy prepared icings hut they grab up anything in the homemade candy line. We told him if he stressed the fudge and moved the icing back into the small print he’d have something that would sell. He’s getting new labels and we’ll soon he stocking it.”

Battle of the Packages

Package draftsmen are in constant competition to develop designs and shapes that make their product appear bigger than a competitor’s product. And colors are effectively used to attract attention.

“This is the package we’ve been using 10 years for one of our own brands of coffee,” Huffman says as he holds up a brown hag with gold design. “Now we’re trying to improve its selling power. We’re going to use a brighter gold and we’re going to change the design so that all the lines run up and down which will make the package look taller and bigger.”

Black and white labels are poor salesmen. Black, yellow and red are the most eye-catching. Bright colors suggest freshness and promote sales

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Iwhile washed-out colors suggest oldness. Old-fashioned lettering on canned food may look attractive but experience shows that housewives pass it by because it suggests that the food, too, is old-fashioned. Housewives appreciate recipes printed on food wrappers but paclkagers avoid any suggestion that there is work involved in the food’s preparation. They seldom show a woman cooking.

As important as creating demand is anticipating demand.

Loblaw’s were ready with more coffee when rationing changed the preference of many Canadians from tea to coffee under the illusion that they could get more cups out of their ration that way. When butter was scarce, Loblaw’s were set to push cream cheese and other spreads as a substitute. And then there’s the case of the white and brown eggs.

In Ontario more and more people are asking for white eggs in preference to brown ones. Loblaw’s bosses admit frankly that t hey don’t know why this is so, for the experts say an egg is an egg regardless of the color of its shell. Hut if people want white eggs Loblaw’s

are going to have white eggs and they have made their suppliers aware of the trend in public taste.

The Difficult Days

Loblaw managers still recall with a shudder the woes and deceits that, grew out of the shortages and rationing. When butter was rationed Loblaw’s kept a girl at a desk to take ration coupons and stamp the words “ration coupon received” on the end of the butter package. Some shoppers discovered that the ink of the stamp remained wet long enough for them to return to the butter case and t ransfer it to a second package of butter Impressing them together. Thus they acquired two pounds of butter on a single coupon and kept the store managers working overtime trying to account for the discrepancies between butter sold and ration coupons received.

A few other butter-seekers learned to remove the lard from a shortening box, hide it somewhere in the store and slip a pound of butter into the box instead. For a long time the store clerks couldn’t figure out why they were

finding unpackaged squares of lard hiding behind big items like corn flakes and flour.

Hut there is more than stores and selling efficiency to t he Loblaw empire. There is a buying network whose contacts are scattered from the tea gardens of India’s Travaneore to the fisheries of Alaska.

There is the distribution division, operating a fleet of 10(> trucks which every night rolls like a dozen freight trains across the highways of Ontario to keep the shelves of Loblaw stores from Windsor to Sudbury always freshly laden.

There are the vast processing, packaging and manufacturing sections of t he Loblaw lakefront headquarters in Toronto— a candy factory, peanut butter factory, sausage plant, coffeeroasting plant, tea-blending laborat ory, cheese-curing rooms, cake bakery, banana-ripening chambers, egg-grading floor and a dozen other such units, all under one roof. And, lastly, there are the men themselves who keep the hundreds of cogs in the Loblaw machine meshing smoothly toget her.

(This is the first of two articles.)