Sobeys Digital Transformation Strategy

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Part
01

Sobeys Digital Transformation Strategy

Key Takeaways

  • According to Similarweb, Sobeys uses 36 technologies in 14 categories among which we can mention publicity (DoubleClick), Widget (reCAPTCHA), Conversion & Analysis (Google Analytics), and Social (Facebook Connect).
  • Three major competitors of Sobeys in the grocery industry are Metro, Loblaws, and No Frills.
  • Sobeys' corporate challenges relate to problems with Supply Chain after purchasing Safeway and the impact of the pandemic on their e-commerce demand.

Introduction

For the first part of the project, we provided Sobeys' company analysis that includes annual revenue, products and services offered, and a brief overview of Sobeys' corporate values and mission. Besides, we included two recent announcements about digital strategic initiatives. The team also added two quotes from the company’s executive team concerning technological improvements. As requested, we included data associated with the company's existing marketing tech stack (the software they use for e-commerce, marketing automation, and content management system (CMS), among others). However, after extensive research, we found that Sobeys' funding history was not available in the public domain. More information is in our "Research Strategy" section.

For the second part of the project, we identified three major competitors for Sobeys in the grocery industry (Metro, Loblaws, and No Frills). We considered them to be key competitors on the website visitors basis.

For the third part of the project, we provided two corporate challenges faced by Sobeys. The first one relates to problems with Supply Chain. The second refers to how the company increased its e-commerce technology to meet consumers' needs during the pandemic.

Findings

1- Company Analysis

Overview

  • Sobeys started when John William (J.W.) Sobey opened his first store in 1912 in Nova Scotia, Canada. However, the company was officially born in 1924. Since then, Sobeys Inc. has catered to Canadians' food shopping requirements with roughly 1,500 stores in all ten provinces, as well as over 380 retail fuel facilities.
  • Today, Sobeys has around 123 000 employees.
  • In 2021, its annual revenues have been estimated at $24.21 billion.
  • Sobeys' funding history is not available in the public domain.

Products & Services

  • With the slogan "we've got what you need," Sobeys offers a wide range of products. The company offers kinds of pasta (e.g. pizza), Greek yogurt, different types of snacks, and pharmacy products. Besides, it has baby items (diapers & wipes, infant formula, compliments, and baby food, among others).
  • The giant retailer also has bakery products (celebration cakes, bread of any kind), a wide variety of meats, fruits, vegetables, vegan food, fresh seafood, and Canadian and exported cheeses.
  • Sobeys offers Voilà, an innovative online shopping home delivery service that guarantees freshness at a reasonable price, delivered directly to consumers' homes. Customers can also download Sobeys' App to receive personalized offers.

Sobeys' Corporate Values and Mission

Recent Announcements

  • On March 2022, Danavation Technologies Corp. announced its contract with the giant grocery wholesaler Sobeys. On its part, Sobeys will benefit from this partnership because Danavation's custom-built software will simplify Sobeys' digital experience across many hardware endpoints.
  • Sobeys Inc.'s parent company, Empire Company Ltd., has joined up with Scotiabank and Cineplex to co-own Scene+, a new customer loyalty program in Canada. Scene+ already has over 10 million members who may earn points at Scotiabank, Cineplex Theatres, and other entertainment establishments. With this partnership, Empire/Sobeys will migrate consumers participating in the Air Miles rewards program by becoming a Scene+ partner.

Executives' Quotes


Existing Marketing Tech Stack

  • According to Slintel, Sobeys uses more than one software and tool in different categories to achieve engagement and interaction between the company and its customers. For example, Sobeys uses Salesforce Commerce Cloud for e-commerce on its platform. Instead, for Voilà, they use Ocado, as stated by Michael Medline, President & CEO of Empire, in this article.
  • The company uses one of the fastest Content Management Systems(CMS), Agility CMS, which is hosted on Microsoft Azure.
  • According to Apps Run the World, Sobeys uses Cisco System for Marketing automation. In addition, Slintel lists Salesforce CRM as one of the sales tools used by the company.
  • Other software and tools are SAP Product Lifecycle Management (it helps Sobeys deliver the products), IBM Lotus Notes (email software), MangoApps, and Cisco WebEx (a cloud-based communication & collaboration app), among many others.
  • According to Similarweb, Sobeys uses 36 technologies in 14 categories among which we can mention publicity (DoubleClick), Widget (reCAPTCHA), Conversion & Analysis (Google Analytics), and Social (Facebook Connect).
  • Built With provides an extensive list of technologies detected for Sobeys' website here.

Helpful Findings - Digital Transformation Initiatives

In inverted chronological order, the retail giant purchased the following programs:
  • In 2017, SAP SuccessFactors Employee Central for Core HR and its corresponding IT decision-makers and key stakeholders.
  • In 2015, the company bought Assyst ITSM Solution for IT Service Management.
  • In 2007, it bought UKG Workforce Central (ex Kronos Workforce Central) for Workforce Management.
  • Sobeys' preferred distribution type is SaaS, and Axios was able to explicitly define and meet high availability, recovery time, and point objectives. Sobeys needed an effective solution so that IT could add value to the business. According to Apps Run the World, Sobeys IT considers Assyst the greatest product on the market since it meets their current and future needs.
  • To remain competitive, Sobeys is ready to invest more and broaden its partnership with Axios Systems, UKG, and SAP, or identify new suppliers as part of their overall Digital and IT transformation.

Major Competitors

1- Name: Metro
  • Website: please, click here.
  • Description: The company operates in manufacturing, distributing, and retailing areas. It has 950 food stores and 650 drugstores.
  • Why is it a competitor? Sobeys' website had 1.3 million visits from May to July 2022 while Metro had 2.8 million visits for the same period. Metro had an increase of 8.58%.
2- Name: Loblaws
  • Website: please, click here.
  • Description: Loblaws company belongs to the grocery industry and was founded in 1919. Ten years later, it had 70 stores, now it has more than 2,000 locations in Canada.
  • Why is it a competitor? Sobeys' website had 1.3 million visits from May to July 2022 while Loblaws had 1.2 million visits for the same period. Metro had an increase of 16.21%.
3-Name: No Frills
  • Website: please, click here.
  • Description: No Frills was born in 1978 when Loblaws decided to convert 200 of its stores to "No Frills® outlets." Now, the stores changed to become franchise locations (250 in Canada).
  • Why is it a competitor? Sobeys' website had 1.3 million visits from May to July 2022 while Loblaws had 1.8 million visits for the same period. Metro had an increase of 6.72%.

Corporate Challenges

1- Supply Chain Problems

  • In 2016, Sobeys' acquisition of Safeway shops in Western Canada proved to be a $2.9 billion albatross, leading to the dismissal of Empire CEO Mark Poulin.
  • The competition in the grocery retail business made Sobeys' acquisition of Safeway a high risk. It was a high-reward offer, a proposition intended to address the company's lack of a budget retail business in Western Canada.
  • When Sobeys attempted to use SAP in the chain to assist with product procurement, the Safeway Supply Chain encountered serious challenges. Issues with the difficulty and complexity of this new SAP installation caused huge headaches for Sobeys as it attempted to integrate Safeway locations across its larger Supply Chain.
  • The outcome was higher prices and reduced sales, particularly in Alberta, where buyers are more price-sensitive because of the oil price collapse.
  • To Sobeys, it was a challenge because a supply chain is paramount for success in business, mainly in competitive areas like supermarket retail.
  • The situation brought about impacts on the company's credit. According to Bloomberg, due to its debt after purchasing Safeway for $2.58 billion, Sobeys' credit was put at risk. Andrew Calder, from the Royal Bank of Canada in Toronto, said Sobeys had the lowest investment-grade rating (BBB-from S&P).

2- COVID-19 Impact

  • The spread of COVID-19 was a challenge for Sobeys and many other grocery and food retailers. Even though sales increased because more consumers spent their time eating from home, the challenge consisted of being able to satisfy the increasing demand.
  • The pandemic impacted Sobeys because people of all ages, especially those over 50, shifted from buying into physical stores to digital ones. This made Sobeys and its parent Empire rethink their software and tools related to e-commerce, supply chain, marketing, etc.
  • Sobeys quickly tackled the situation by launching Voilà, its online grocery home delivery service powered by Ocado with which Sobeys had partnered in 2017. Ocado's leading technology allowed Sobeys/Empire to reach sales of $26.59 billion in 2020 surpassing the previous year by 5.8%. In this way, the process got automatized since customers made orders through Sobeys' App and received their purchases at home.

Research Strategy

For the first project, we leveraged the most reputable sources available in the public domain, including the company's website, as well as credible sources like Atlantic Business Magazine, Apps Run the World, PitchBook, and Newswire, among others. We were able to provide all the requested data except for Sobeys' funding history. We found that in 2006, Sobeys released its last annual report because it was acquired by Empire Company Limited in June 2007. "As a wholly-owned subsidiary, financial data is consolidated within Empire's financial reports," for which it is complex to uncover Sobeys' funding history. However, we also found that it had two financial funding rounds though the information is under a paywall.

For the second project, we provided three key competitors to Sobeys for which the team consulted reputable sources like
Crunchbase and Zoominfo among others. We determined the companies to be major competitors based on their website visits from May to July 2022. We also offered a comparison between Sobeys and each competitor.

For the third project, we provided two corporate challenges faced by Sobeys. We consulted reputable sources available in the public domain like Newswire, Supermarket News, and Argentus among others. For each challenge identified, the team stated a description of the challenge, the reason for being considered a challenge, and explained how it was impacting the company. While we prioritized the most recent sources, we expanded our scope to include one article published in 2016, which contained key qualitative data needed to satisfy the research criteria.

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