CEO of Loblaws Per Bank doesn't believe the company deserves the reputation it has now but he aims to pass more value on to the customer.Christopher Katsarov/The Globe and Mail
There are many things Per Bank is willing to do in his new role at the head of Loblaw Cos. Ltd. L-T: move to a new country, conduct impromptu customer surveys in supermarket parking lots, even skin an eel. (More on that later.) But unlike what his predecessor and controlling shareholder, Galen Weston, used to do, there is one task he will not take on: TV pitchman.
“Never,” Mr. Bank said during his first sit-down interview since taking over as Loblaw chief executive officer on Nov. 1, 2023. After joking that his Danish accent makes him unfit to star in Canadian commercials, he added, “I think there is a time for everything, and there was a good time for that. But it’s not the time any more.”
For more than two years, Canadians have been feeling the pressure of rising prices, almost nowhere more than at the grocery store – where food inflation has finally begun to slow, but only after prices climbed to a punishing new normal.
While a Bank of Canada report last year found that there was “little evidence” of retailers expanding their markups and therefore “amplifying” inflation, grocers have acknowledged that they’ve passed on many cost increases that they received from suppliers.
“I don’t think we deserve the reputation that we have right now,” Mr. Bank said. He knows that part of his job is to rebuild trust in Canada’s largest grocer, which owns banners including Loblaws, Real Canadian Superstore and No Frills.
During a fraught time, Loblaw has had some missteps. In 2023, the company took to social media to explain the causes of inflation to people who were complaining – a defensive tone that did not sit well with some. Last month, it walked back a plan to cancel 50-per-cent discounts for food nearing its expiry date, after facing a backlash.
“I’m not pleased with where we are,” Mr. Bank said of the company’s image. “Some of the things where we’re giving to customers, giving them more value, I think that will help. And doing more of the right thing.”
As an example, he cites a new promotional program launched this week, significantly slashing prices on four items for the month of February. Kraft Dinner is one, coming down from its regular price around $1.50, to 55 cents a box. Partly, this was achieved through better negotiations with big suppliers such as Kraft, Mr. Bank said, but also, Loblaw will be selling that product at a loss. Loblaw is planning to release these kinds of deep discounts on a handful of products each month.
But another move by Loblaw triggered blowback this week. After Mr. Bank’s interview with The Globe and Mail, news emerged that the company had struck a deal with insurer Manulife Financial Corp. It would restrict people to filling prescriptions for roughly 260 specialty medications through Shoppers Drug Mart and other Loblaw-owned pharmacies, either in person or for home delivery.
On Wednesday, federal Industry Minister François-Philippe Champagne said the government is reviewing the arrangement. “They don’t get the message,” he told reporters. “We want more competition in this country.”
In an e-mailed statement, Shoppers Drug Mart president Jeff Leger wrote that “we believe strongly in patient choice.” According to the company, the affected drugs had previously been under a different network that primarily sent them to people by mail.
Building its presence in the health care space has been a priority for Loblaw, which has experimented with offering more health services in its drugstores, and opened 103 medical clinics in Alberta. Mr. Bank believes there is room for Loblaw to have an even bigger presence in Canada’s drugstore market: “I also want to build as many new pharmacies as possible,” he said.
Metro’s first-quarter sales near $5-billion, but profit slips
Mr. Bank is currently working through his strategic plan, which he will present to the Loblaw board in July. But how much room will he have to manoeuvre?
After Loblaw announced the CEO hiring last April, Mr. Weston told analysts on a conference call that while he and chief financial officer Richard Dufresne are open to the new ideas that Mr. Bank will bring forward, there are limits.
“Ultimately, the ownership block is going to need to be supportive of any change in the strategic direction,” Mr. Weston said, adding that such a change is not “the intent” right now. Mr. Bank said he also believes major change is not necessary.
“He lets me do my job,” Mr. Bank said of Mr. Weston. “But I also know that while I’m here for, whatever, eight to 10 years, the family, they’re here for good. So I know my role.”
On the call in April, Mr. Weston pointed to Mr. Bank’s experience managing a family-controlled company with a long history, and “an outsized cultural and financial place inside his country.”
Mr. Bank’s last job was CEO of Denmark-based retailer Salling Group, which was founded in 1906 and, like Loblaw, is the largest grocer in its market. Mr. Bank grew its market share in Denmark to 37 per cent from 29 per cent over the course of his tenure. Also during his time there, the Sallings bought back 100 per cent control of the company, placing its shares in the family’s foundation.
“There was only one shareholder, that was the foundation. So it makes it much more easy on reporting, and the way we could take decisions,” said Jens Bjerg Sorensen, chairman of the board of Salling Foundations. Mr. Bank was experimental and decisive, he said. “We could move with speed together.”
One example of that speed: In 2022, Mr. Bank came up with a new discount-store concept called Basalt. Salling Group already operates hundreds of discount stores called Netto, but Basalt aimed to cut costs even further, partly by spending much less on electricity: They sold non-refrigerated packaged goods, limited fruit and vegetables, and some health and beauty products. But even with deep discounts, customers preferred one-stop shopping. Basalt shut down after just seven months.
The chain was an attempt to bring some relief to customers at a time of high inflation, something Mr. Bank had seen coming. In early 2022, he began warning Denmark’s national bank, where he sat on the board, that inflation was going to be worse than many were expecting.
Still, Mr. Bank’s experience during this inflationary period has been a bit different from Mr. Weston’s.
“We did manage not to take the blame,” Mr. Bank said.
In Canada, Mr. Bank believes Loblaw can negotiate harder with large multinational suppliers. He also said that Loblaw will be more vocal about its promotions and other ways for shoppers to save money. But he adds that retailers cannot absorb all of the cost increases they receive.
“Of course we need to pass it on,” he said. “Because we need to be there for customers, but we also need to be there for shareholders. And by the way, I don’t think that contradicts. I think we can do both.”
A few of Canada’s beleaguered grocery customers have already met Mr. Bank, though they may not have realized it. After arriving in Canada in August, the 56-year-old executive began approaching people in supermarket parking lots to do a little recon. “Hi, I’m Per,” he told them. “I’m new to Canada. Could you please advise me where to do my grocery shopping?”
Of dozens of such encounters, only one person recognized him as the incoming Loblaw CEO, he said. That is his preference. While he plans to be “accessible,” he will not be cultivating a high profile: “I’m not here to be famous, and be well known in Canada.”
Mr. Bank is enjoying living here, he said, though his family is far away: his two sons, aged 21 and 24, are in university in Denmark, and his wife, Heidi Bank, is a member of the Danish parliament.
Part of getting to know his new country and company involved a cross-Canada tour in September and October, visiting Loblaw-owned stores. During his travels, T&T Supermarket CEO Tina Lee challenged him to work on a fish counter. “Okay,” he replied. “Let me show you how to skin an eel.”
His choice of task was deliberate: In his younger days, while growing up near a Danish fjord, he recalled that he would catch eels. Skinning them can be tricky, he said: The eels often wrap around your arm while you try to wield the knife.
Compared with the challenge of running Canada’s largest retailer, and rebuilding customer trust, this was not the most slippery job he was taking on. But he only donned the apron, he said, because he’d already had plenty of experience.
“I’m a little bit competitive, so I wouldn’t have entered into something that I was not capable of doing.”