Who’s Minding the Store?

This story was originally published in 2007.

Hi,” says the young man on the television screen in the vestibule of the new Loblaws Superstore in Milton. “I’m Galen Weston.” The words “Galen Weston” appear beside him. “At President’s Choice we’ve been creating environmentally friendly products for over 20 years. But this is huge!” On comes a shot of Loblaw’s reusable shopping bag, with “99 cents” beside it. “Each one of these,” he says, “will keep a hundred of these [shot] out of the garbage. We’re going to reduce the number of plastic bags going into Canada’s landfills by a billion. Imagine: one billion fewer of these every year.” The young man stands in a shower of plastic bags. Voice-over: “President’s Choice. Worth switching supermarkets for.”

Set next to the natural delights of the Niagara Escarpment, about 30 kilometres west of Toronto, Milton is Canada’s fastest-growing community—theoretically super­store heaven. The store sits in a huge plaza next to the GO station on the outskirts of town. This is its official opening. A “soft” opening took place two weeks ago.

The TV in the vestibule is set atop a sort of environmental shrine, piled high with green plastic bins and reusable bags. Beside the screen is a prominent slogan: “Something can be done.” The word “can” has a line through it. The word “must” is superimposed. The shrine, with its central 30-second message, raises certain questions. The first: Who the hell is Galen Weston? The ad seems to assume that everyone will know that this amiable, slightly geeky-looking 34-year-old is the son of Galen Weston Sr. and heir to the Weston family fortune. The second: Will shoppers switch supermarkets to support an anti–plastic bag campaign? In this store, cutting down on plastic bags is not a matter of choice. “Canada’s 1st Bagless Store,” declares a banner at the front of the big box building. “Plastic bags not offered at checkouts.”

Who came up with the idea of turning President’s Choice into No Choice? According to the script of the opening ceremony, which takes place amid the Halloween paraphernalia outside the vestibule, it was a Grade 4 student named Megan Reid. Dalton Philips, Loblaw’s Irish chief operating officer, declares that the bagless store is the brainchild of, well, a child’s brain. Megan had apparently sent a letter to the company’s new president, Mark Foote. “Listen to this letter,” says Philips. “It is unbelievable.”

Little Megan, cute as a button, is summoned to the microphone and proceeds to read an earnest screed about the benefits of reusable bags. She also suggests the use of paper, because paper takes only 30 days to decay, while plastic takes a thousand years. “Thank you for your time and consideration,” she concludes, “Megan Reid.”

Megan is warmly applauded by the small crowd, which consists mostly of store staff. Then Foote, who looks like a powerlifter, steps up to the microphone. He reminds the assembled that Loblaw is the biggest retailer in the country. This store is an example of “new thinking” and some “adjustments” to what used to be called the company’s Real Canadian Superstores. The most exciting thing, he says with a straight face, is that “one letter from a Grade 4 student defined some changes to a big company’s strategy.”

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Is the relatively inexperienced Galen Jr. the man to lead Loblaws back to the promised land of profitability?

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After Megan and Milton’s jovial mayor, Gord Krantz, cut the ribbon, the crowd is invited inside for coffee and cake and, as they pass through the vestibule, given free bags along with maps of the store. “Each one of these,” repeats the voice from the video, on a perpetual loop, “will keep a hundred of these out of the garbage.”

The young man on the TV screen does not appear at the opening. Philips and Foote—two of nine top executives who have been with Loblaw Companies Limited less than two years, in some cases just a matter of months—are here in his stead. They, more than anybody, know that the company is in a mess. Although still the king of Canadian retailers, Loblaw has suffered a series of misadventures. In 2006, it experienced its first loss in almost 20 years. The relevant Biz School case study questions are: How did it get here? And is the relatively inexperienced Galen Jr. the man to lead it back to the promised land of profitability?

At first blush, the Milton store doesn’t seem that different from other Loblaws Superstores. On one side are the general merchandise offerings, with an emphasis on housewares, a baby section and a clothing section, along with a pharmacy and beauty products. At the back is an electronics nook. Along the front, across from the lengthened checkout conveyors, stands a jumble of typical superstore add-ons: an optical store, a portrait section, a walk-in clinic, a dry cleaner. Upstairs there is a women’s health club, a room for cooking lessons, and a bland “community area” with tables and chairs.

Related: Inside Hilary and Galen Weston’s exclusive enclave of palatial vacation homes

But this monument to capitalism exists in a world of quasi-religious environmental obsession, which, as the shrine in the vestibule suggests, seems to have kidnapped the imagination of the people who designed it. The “new thinking” goes well beyond the prohibition of plastic bags. In the parking lot there are spots reserved for hybrid cars. Fried foods have been banished from the takeout section. Candies are tucked away at the back of the store, by the entrance to the stockroom. No trashy magazines are displayed at the checkout counters.

According to the store map, there has already been one minor “adjustment.” The book section has been moved from the back to the front. Most prominently displayed is a title called On Leadership, by a man named Allan Leighton. Leighton happens to be Loblaw Companies’ deputy chairman.

A brash Englishman with a shaved head and a penchant for brightly coloured shirts, Leighton is the former Mars candy executive credited with turning around British supermarket chain Asda, then selling it to Wal-Mart. He subsequently took on multiple consultative roles—which he described as “going plural”—including an influential position at Rupert Murdoch’s British media giant BSkyB and the chairmanship of the Royal Mail. Leighton, Galen Jr. and Mark Foote form a managerial triumvirate that has the task of fixing Loblaw’s problems. Leighton’s role is widely believed to be that of young Galen’s éminence grise.

The new team is already hard at work. As part of a radical strategic overhaul, Loblaw has stopped building superstores. The Milton store is here because it was too far along to abandon. And while it is portrayed as the gateway to the company’s future, it is also a reminder of the long saga of ego, genius, professional jealousy, and strategic and organizational screw-ups that lie behind the company’s rise and stall. Above it all looms the fact that Loblaw is still very much a family business. Galen Jr., a callow scion, has been elevated to the most demanding of jobs by his father, Galen Sr., who played a significant role in the debacle by confusing inheritance with managerial talent.

For many Canadians, the name Dave Nichol still conjures the glory days of Loblaws, when President’s Choice bestrode the grocery world like a colossus, and Dave could be seen on TV in front of a barbecue, slathering on sauces he had been inspired to create by some exotic journey. From the centre of his domain at the test kitchen on the ninth floor of the Weston Centre at St. Clair and Yonge, Nichol and his team had developed a plethora of new products, including the sensationally successful Decadent Chocolate Chip Cookie and PC Cola, as well as lines sporting such names as “Too Good to be True!” and 29 different “Memories of...” sauces. Nichol was trying to save Canadians from Kraft Dinner, not global warming.

He was a larger-than-life character, with an ego to match. (When I called him about this story, he said, “Can you guarantee me the cover with Galen Jr. on one side and me on the other?”) Unfortunately, his success fed his ego to bursting, and eventually he decided that Loblaw was an insufficiently large canvas for his ambitions. Seduced by Cott Corporation, one of Loblaw’s suppliers, he had visions of becoming his own man—and a very rich one at that. But at Cott, where he could no longer control the supermarket shelves, he crashed and burned in a spectacular fashion. He went on to peddle Dave’s beer, a beverage he didn’t drink, then slid into consultancy.

Nichol, too, had been a member of a triumvirate, and while he was not the business genius behind Loblaw’s success—he was never the company’s president—he can take credit for introducing that person to the triumvirate’s other member, Galen Weston Sr. Nichol had been Galen Sr.’s roommate at the University of Western Ontario. After graduation, he had worked for McKinsey, the giant international consulting firm, where he met Dick Currie, a chemical engineer with a Harvard MBA who hailed from New Brunswick. When Galen asked Nichol to recommend someone who could turn around Loblaw, he suggested Currie.

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If Currie was the strategic mastermind, and Nichol was the marketing genius, what exactly did Galen Sr. do?

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A low-key but brilliant manager and strategist, Currie was comfortable with letting others do their thing, as long as it fit the plan. He was happy for Nichol to be portrayed, as Anne Kingston put it in her book The Edible Man, as the “food obsessed Leonardo” to Weston’s “Lorenzo de Medici.” He could even laugh when people asked his then fiancée, Beth, what her prospective husband did, and then blurted out, “Wow, you’re marrying Dave Nichol!” when she told them he was president of Loblaw. (Nichol was Currie’s best man.)

When he came to Loblaw, Currie found, in his words, “dispirited management and decrepit assets.” The threesome toiled away for four years, with Galen Sr. as CEO, but the company was still losing money. In 1976, Galen’s father, Garfield, announced there would be a change in management. Currie would take over and run Loblaw “as if he owned it,” while Galen Sr. would concentrate on George Weston Limited, which was rooted in the bakery business.

Currie steered the company through a three-stage renewal, which involved rationalizing the stores, developing private label products, and then building a full spectrum of store formats, from discount warehouses to upmarket emporia. He closed down or sold 1,000 stores in the United States and 300 in Canada. He put a renewed emphasis on fresh produce. He developed No Name brands and then Nichol’s President’s Choice. He set up No Frills stores, along with Superstores in the West. And with the help of a marketing genius, Don Watt, he introduced new signage and attractive food-oriented decoration.

It took more than 20 years to put the company right. Then, in the mid- to late 1990s, Currie began to plow the company’s cash flow into expansion. When he left Loblaw at the end of 2000, it was recognized as “the finest food retailer” and one of the top 10 merchandisers in North America. He had turned a $40-million company into a $14-billion company. Over the course of his tenure, the value of the Loblaw stock increased by a stunning 25 per cent compounded annually. Four thousand dollars invested in Loblaw in 1976 was now worth a million.

In the meantime, in 1996 Galen Sr. had asked Currie—some suggest that “begged” would be a more appropriate word—to become president of George Weston, too. Galen Sr. had been running Weston (through which the Westons held their 63 per cent stake, then 70, in Loblaw) for 20 years, but the business had been flagging. Currie noted that the non-Loblaw parts of Weston “were in urgent need of direction.” During his six years at the helm, Weston’s shares rose from $16 to $124, exposing the gap in managerial skills between Currie and his boss. He wasn’t trying to upstage Galen Sr., but it was inevitable and, some say, deeply resented.

In 2001 Currie was named Canada’s CEO of the Year. At the award ceremony at the Art Gallery of Ontario, he noted that, as with freedom, the price of corporate leadership was eternal vigilance. “Retail is detail. Execution is strategy. It is a store by store, day by day business.” He said Loblaw had thrived because its competitors slept. He didn’t know why. But it was surely a warning for the people who would manage the company in the future.

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Loblaws was beset by unsold merchandise in its aisles, gaps on its shelves and increasingly grumpy staff and customers

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Six months later he was gone, never again to set foot on the company’s premises. At the time, his unexpected exit aroused little comment. Most people bought the line that he simply wanted to move on. But according to a long-time Loblaw supplier—and a close observer of the Loblaw Kremlinology—Currie was sent packing because he had failed to give Galen Sr. sufficient praise in his CEO of the Year acceptance speech.

What he had said was this: “I am indebted to Galen Weston for giving me the opportunity to show what I could do—for giving me the chance of a commercial lifetime. That I have delivered—to him, to his family, to the shareholders, to the employees and to the customers of this great enterprise—is as nothing compared to the chance he took and the opportunity he gave to this boy from the south end of Saint John, New Brunswick. To him, I am deeply and profoundly grateful.”

Perhaps Galen Sr. felt he should have been thanked for more than merely giving Currie the job, particularly when they both knew it was his father, Garfield, who had actually made the appointment. But this much is certain: his departure would rob Loblaw of its founding genius and an invaluable source of retail wisdom, just when the company needed it most. It also raised a fundamental question about the Loblaw triumvirate: If Currie was the strategic mastermind, and Nichol was the marketing genius, what exactly did Galen Sr. do?

Willard Galen Weston has always had the bearing of royalty. Tall, distinguished and impeccably dressed, he has for decades been a fixture, along with his wife, Hilary, at A-list social events on both sides of the Atlantic. He is a close friend of the Queen and Prince Charles, with whom he plays polo, and among his homes is one on the grounds of Windsor Castle. Those who have done business with him say he speaks in paragraphs, as if from a teleprompter, and does not like to be interrupted.

As to his management style, we might turn for enlightenment to that book sitting on the top shelf at the Milton Superstore, Allan Leighton’s On Leadership. Since Leighton has been a key adviser to Galen Sr. (in particular on Weston’s $1-billion purchase of Selfridges in London), he seems eminently qualified to comment on the man’s executive skills.

After the requisite remarks about how “smart and hardworking” Galen Sr. is, Leighton notes his “rather unorthodox way of making sure every detail is just as he likes it.” He rifles through the garbage at the back of stores. “The amount of waste tells the story,” Galen Sr. is quoted as saying. “I once caught a store manager packing trash cans with food so that he could take it home and sell it to his friends. It is the most obvious place to hide stuff. Senior executives often feel too important to go to the back of the store.”

Quite apart from the differences in their managerial abilities, Galen Sr. and Currie also disagreed on Loblaw’s future course. Currie believed it was a mature business and had about as much of the Canadian food market as it could hope for. Additional gains would become costly. So the company had three options: it could diversify the grocery business geographically, by moving into the northeastern U.S., where markets were most similar to those of Canada; it could leverage its reputation in food by diversifying further into general merchandise, that is, moving into the territory occupied by Canadian Tire and Wal-Mart; or it could sell.

To most competitors, Wal-Mart, the company that had revolutionized retailing via its economies of scale and its relationships with its suppliers, looked very scary. Within five years of entering the U.S. grocery business, it had become the largest food retailer in the country. But Currie had always thought it would be a mistake to emulate the behemoth from Bentonville. He was convinced that Loblaw’s best course was to sell. Galen Sr. considered, but nixed the idea. The post-Currie Loblaw—with Galen Sr. apparently playing a more strategic role—would attempt to out-Wal-Mart Wal-Mart.

With Currie gone, the man who had to move the company into general merchandise was a low-key Loblaw veteran named John Lederer, who, ironically, had been Currie’s pick to succeed him. Lederer had worked closely with Currie and built the company’s East Coast operations. Upon his appointment, he referred journalists to Currie for comment. “My job was to take Loblaw from no place to number one,” said Currie. “His job is to keep it there.” Galen Sr., speaking in one of those teleprompter-style statements, said: “His mandate will be to build upon our current business strategies and to provide superior returns to our shareholders.” Execution was rendered infinitely more difficult because the company simultaneously undertook a massive internal reorganization, centralizing its head office and other regional functions in Brampton.

Nobody seemed to give much thought to the possibility that without Currie Loblaw might run amok. Perry Caicco of CIBC World Markets, Canada’s leading retail analyst and a former Loblaw executive himself, typified the continued faith. “We do not believe,” he wrote in 2004, “that these massive strategic efforts should in any way reduce Loblaw’s value. If anything, the company is becoming more resilient, more world-class and, eventually, more saleable than ever before.”

And, for a time, the company that Dick built continued to churn out profits. But 2005 first-quarter profit dropped by 20 per cent, and Galen Sr. warned the annual meeting there might be “storm clouds ahead.” In December of that year, just before the Christmas season, he admitted, “We’re challenged by the cost of change, which has been dramatic.” Lederer acknowledged the company had created “the perfect storm” by changing so much so quickly.

Loblaw’s stores were now beset by gaps on their shelves, unsold merchandise in their aisles, and increasingly grumpy customers and staff. Two thousand employees had been moved to Brampton in the fall of 2005. Half the general merchandise buyers, who had been based in Calgary, had quit. The dysfunctional system began to resemble a Soviet five-year plan. Store managers weren’t sure what the next truck shipment would bring. In January of 2006, Lederer admitted the cock-up and its cascading effect. Meanwhile the private labels, Loblaw’s jewels, were, as one observer put it, “sliding into anonymity.”

The company’s stock had fallen more than 20 per cent in 2005. Neither Lederer nor Galen Sr. took bonuses for the year. But things were still going downhill. Now much less of a believer, Caicco noted the company was neglecting its food offerings. “This has been caused by a lack of focus, a paucity of innovation and a diversion of resources and attention to the logistics crisis in the company.” One observer described the company’s general merchandise offering as “an unfocused over-inventoried flea market.”

In September 2006, Lederer was dumped, with a $22-million settlement. Galen Sr. resigned as chairman, although this appeared more like a passing on of the mantle than an acknowledgment that he had screwed up, because he was replaced by his virtually unknown son, Galen Jr., who was appointed executive chairman. When Allan Leighton was appointed deputy chairman, Caicco suggested he might become a “behind-the-scenes” CEO. But having a behind-the-scenes CEO would surely make it tougher for the CEO who was actually onstage, even if he was reportedly fond of acting. And it wasn’t as if Galen Sr. was about to retire to Mongolia. Famed money manager Stephen Jarislowsky said of the new management: “They’re unknown quantities for me.... I’m not a great believer in family succession in major firms, but if you have somebody good, fine.”

Galen Weston Jr., or Galen G. Weston, to give him his proper name, had worked at Loblaw for a number of years, most recently in corporate development, but this new assignment was a quantum leap. Much was made of the fact that he and his sister Alannah, the creative director of Selfridges, had retailing “in their genes.” As children they were wheeled around in shopping carts while their father checked out the stores. When he was still a kid, he had heard Dave Nichol pitching President’s Choice in person.

G2, as he’s colloquially known, inherited his father’s tall, angular frame, and is pure WASP high society. He attended Upper Canada College and has an MBA from Columbia University. He supports the theatre and co-founded the hip Spoke Club. He plays tennis at the Lawn and golfs at Rosedale. Like his father, he has an armed bodyguard.

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It was decided that Galen Jr. would become the new, fresh face of Loblaw—the 21st-century answer to Dave Nichol

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Parallels were inevitably drawn between Galen Jr.’s newly announced “triumvirate” and that of his father, but apart from consisting of three people in an unstable relationship, the two groups have little in common. Leighton relishes his role as éminence grise, but seems to have more power than responsibility, which is always dangerous. Foote is seen as a good merchandiser with a creditable track record at Canadian Tire, but he is not from the food business, and that is the area where Loblaw has fallen down most abysmally.

The new chairman’s first step, wisely, was to go on the road. He reportedly “received an earful” from employees and customers alike. Back at HQ, he brought in consultants, lots of consultants. Eventually, they would take over so many meeting rooms in the Brampton office that the vendors who came to flog their products had to make their presentations in the staff cafeteria. The company launched an intensive 100-day internal analysis, which involved identifying key employee groups and asking them for their views. It also instituted an executive purge of stunning proportions.

The new management unveiled its plan to fix its problems at a two-hour presentation for analysts in February. A little on the generic side, its watchwords were “simplify, innovate and grow.” Oh, and “fix the basics.” The company would cut prices, boost service and invest in product innovation, plus grow the clothing business, Joe Fresh, so as to treble its sales by 2009 to $1 billion. Joe Fresh had been launched in 2006 by Joe Mimran, the co-founder of Club Monaco, who had been brought into the company at the beginning of Lederer’s reign to design a line of housewares.

“We have not been focused on our core strength of being the best food retailer in Canada,” declared G2. “Our organization is too complex and is ineffective and slow to respond to the customer and to the competitive environment.”

The analysts were told that the company would spend the following year fixing existing stores. The superstore building program, except for Milton, was put on hold. Mark Foote told the analysts that the company had lots of room to grow in pharmacy, kitchen gadgets and clothing. There were firm financial targets: five per cent sales growth, 10 per cent profit growth, and $250 million of free cash flow annually. Galen Jr. admitted morale was low. At some stage it was decided that he would attempt to raise it—and simultaneously present the new, fresh face of Loblaw—by becoming the 21st-century answer to Dave Nichol.

G2 is said to have bounced the idea off his wife, Alexandra Schmidt, a member of the Bata shoe family, “over a dinner of PC Blue Menu shepherd’s pie.” The meal detail sounds a little concocted, but her reported reply seems genuine enough: “That’s cheesy,” she said. Nevertheless, he decided to give it a try. Initially, he made three ads, which were created by Toronto agency Bensimon Byrne. The first was the one on plastic bags.

At a Loblaw-organized environmental conference in 1989, Dave Nichol had suggested retailers had to go where their consumers wanted, and if they wanted green, retailers had to follow. But Galen Jr. appeared to want to lead rather than follow. In April of this year, an article appeared under his name in The Globe and Mail. “By now,” it read, “even the most hardened skeptic admits it: Global warming and other environmental and health challenges are going to require fundamental changes in the way we live and work as a society. It’s no longer a matter of choice or opinion, but of survival.” The words could have come from Al Gore. The piece closed by suggesting that Galen Jr. was part of a “new generation of CEOs” who understand “the challenges and opportunities of the greening of our economy.... Just as the previous generation of retailers redefined shopping and the in-store experience for millions of Canadians, this new generation must move the sector in a new direction. It’s an issue of survival.”

So he wasn’t just stepping into Dave Nichol’s big shoes; he was also saying that those shoes needed to take the company in a radically new direction. It was certainly hard to imagine Nichol getting worked up about plastic bags, but they had now become a focus for environmental activism. In March, Anya Hindmarch, the London designer, got together with a non-profit organization called We Are What We Do to create a hot shopping bag with the words “I’m Not a Plastic Bag” emblazoned upon it. When Keira Knightly and Reese Witherspoon were seen carrying them, demand took off. In New York, Whole Foods put 20,000 on sale at $15, and there were reportedly fist fights to get at them. A few made their way to the Westons’ Holt Renfrew. They were selling on eBay for up to $500.

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The PC lean burger ads made people wonder: was G2 trying to address the obesity crisis or solve an inventory problem?

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Typically, governments climbed on the bagwagon. In May 2007, Ontario announced a “new partnership…to find creative solutions to environmental concerns about oil-based plastic bags.” Environment Minister Laurel Broten declared the plan was to reduce the consumption of single-use oil-based plastic bags by 50 per cent within five years. This would be achieved by expanding the use of reusable shopping bags, increasing the amount of recycled content in plastic bags, and introducing “incentives” to guide consumers in the appropriate environmental direction. There would be a promotion and educational program. Grants would be scattered around.

The Canadian Council of Grocery Distributors, the Canadian Federation of Independent Grocers, the Recycling Council of Ontario, the Retail Council of Canada and the Canadian Plastics Industry Association—all agreed to the “voluntary” anti-bag program. A&P had started selling reusable bags in 2006, although a year later it reported that there had been virtually no impact on the number of plastic bags used in its stores. Loblaw’s No Frills franchises already had a very simple and effective plan to encourage economical use of plastic bags: they charged five cents for them.

Dave Nichol did a video for the 2005 Marketing Hall of Legends in which he said, “Marketing is the art of meaningful, sustainable differentiation.” It was difficult to see how G2’s plastic bag ad met that imperative, other than to suggest Loblaw was holier than thou.

Having struck his first blow for the environment, Galen Jr.’s second ad dealt with healthy eating. “Hi,” he says again. “I’m Galen Weston.” He is standing in front of two barbecues, one red, one blue. “The President’s Choice Thick & Juicy sirloin burger is Canada’s bestselling burger,” he says [shot]. “But I don’t want it to be. I want this to be Canada’s bestselling burger. The President’s Choice Thick & Juicy lean burger [shot]. All the flavour, but 50 per cent less fat [shot]. We don’t want to sell fewer burgers. We just think we’d all be better off if we started eating more of these.” Voice-over: “President’s Choice. Worth switching supermarkets for.”

In this ad Galen Jr. chose to contradict one of the commandments of retailing. When it came to hamburgers, apparently, the customer was wrong. Meanwhile, the ad stirred up cynicism within the company, which had warehouses full of lean burgers (they reportedly tasted “like cardboard”) but couldn’t keep sirloin burgers on the shelves. Was Galen Jr. addressing the obesity crisis or trying to solve an inventory problem? (Eventually, the company had to mark them down to get rid of them.)

Only with the third ad did he get anywhere close to the spirit of Dave Nichol. “Hi, I’m Galen Weston. Naan is Indian flatbread that’s baked in tiny tandoor ovens [shot]. It’s one of the world’s great eating experiences. Unfortunately, it’s just about impossible for Canadians to enjoy at home. But my friends Sam and Ojus had an idea [shot]. They built the world’s biggest tandoor oven. And now Sam and Ojus bake authentic naan exclusively for President’s Choice [shot]. Thanks guys.” Voice-over: “President’s Choice. Worth switching supermarkets for.”

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Galen Jr. has a raft of executive talent around him, but leadership, as Leighton’s book suggests between the lines, is largely a mystery, a talent that may be inspired but not imparted

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But G2’s interest in peddling a product shoppers might actually want was apparently fleeting, because in a fourth ad that appeared in October, this time for concentrated laundry detergent, he was back in his proselytizing form. “Hi,” it began. “I’m Galen Weston, with another small way to help the planet.” G2 was emerging as Dave Nichol for a hair-shirt society, peddling not what schmecked, but what was Good For You. And The Planet. But would people switch supermarkets to have their choices narrowed, to be told they couldn’t have plastic bags, to be lectured about fat content, to receive a President’s Directive?

Once the ads were launched, Galen Jr. was wheeled away from the media. (He refused to be interviewed for this story.) But around the middle of August, his Svengali, Allan Leighton, made himself available to promote his book. Inevitably, he was asked about Galen Jr. “It was me who said, ‘This is the guy who should run the company,’ ” he told a reporter. “He’s got all the cunning of his father and the charm of his mother, and that is a potent combination.” To another journalist, he said, “[Galen Jr] was by far the best guy to do it [that].” He also said, “G2 is going to be exceptional. He is a young guy, a Canadian guy and... he is determined to restore this business to its premier status.”

Note “going to be.” Leighton added that Galen Weston Sr. was still very much involved, and that it was in fact himself, Leighton, who bore the responsibility for turning around Loblaw. But was a part-time leader meant to inspire confidence, particularly in the young man who was the titular leader?

As Leighton had noted in his book, “Finding the next generation for family-run firms is a challenge.… Very few dynasties manage to maintain momentum and success generation after generation. The telling statistics from the Family Firm Institute are that only 12 per cent of family businesses make it to the third generation and just three per cent make it to the fourth.” That is, to G2’s generation.

Toward the end of September, Galen Jr. presided over a town hall meeting in the four-storey central atrium of the company’s Brampton headquarters (which he had publicly described as the “Death Star”). From the back of the room, Allan Leighton watched his protégé strut his stuff, although the message was less than inspiring. Galen told the crowd that things would get worse before they would get better. This was hardly news, particularly for people on the inside. At the end of July, Galen Jr. had told a conference call of analysts that “the period of maximum risk with the restructuring is now beginning,” and had acknowledged earnings would be “challenged for the remainder of 2007.” Internally, a memo had been circulating that spoke of a need to “mitigate any upcoming disaster” in the period between Thanksgiving and Christmas. Disgruntled departing employees had reportedly left various “time bombs” in the shape, for example, of unordered goods.

Galen Jr. and his team have said from the beginning that the turnaround would take three to five years. But will the market give them that long? And are they even headed in the right direction?

Not that the Westons are teetering into Eatons territory. They have lots of other corporate interests—such as Holt Renfrew and Selfridges—even if Loblaw is still the jewel. And Loblaw itself still has valuable real estate assets—it owns the majority of land on which its stores sit—and its private labels, although they have been neglected, still count for a higher proportion of the company’s sales than those at any other major supermarket group. Galen Jr. has a raft of executive talent around him, but leadership, as Leighton’s book suggests between the lines, is largely a mystery, a talent that may be inspired but not imparted. Leighton is undoubtedly a key figure, but in the end, as Perry Caicco noted after the new team was appointed, “this business now belongs to Galen G.” Which begs the question: Does Galen Jr. have the right stuff?

Loblaw management is eager to point out that the Milton store doesn’t represent the last word. It is more, as executive vice-president of Superstores Andrew Iacobucci told me as we walked around it, a “test kitchen.” But the recipe didn’t impress Perry Caicco. He liked the Joe Fresh apparel line, but was critical of the fresh food section and positively harsh about the environmental theme, which “may limit the breadth of the store’s appeal.” He also noted that despite the health theme, the natural and organic food sections were small and difficult to find. “If the food offering works, this store will be successful,” he concluded. “If it doesn’t, the store will fail. And the food offering, in our opinion, simply doesn’t work.”

The last time I visited the store, at the end of September, business was brisk, although nothing like the mob scene that day at the huge new Wal-Mart Supercentre at Eglinton and Pharmacy, which is almost twice the size. The shrine was still in the vestibule, but the sound on the television had been switched off. Galen Jr. silently mouthed “This is huge!” A young store employee was handing out vouchers worth $10 on expenditures of a hundred. The vestibule contained a hefty display of the new super-concentrated laundry detergent that Galen Jr. was due to start advertising the next day. In the book section, Allan Leighton had been replaced by Brian Mulroney.

I bought a sandwich and ordered a non-fat latte from the coffee bar. The woman said they only had two per cent milk. At first, I said I’d make do, but then the ridiculousness of the situation struck me. “Hang on,” I said. “You’ve got countless gallons of skim milk in the store.” Another employee, who was lining up to buy some lunch, explained: “Yes, but that’s another part of the store.”

I retreated to the seating area beside the vestibule to watch customers depart. Some carried little piles of groceries in their arms, obviously resisting the reusable bag program. An employee sat down nearby and started chatting to a colleague about how she kept forgetting to bring her reusable bags and had to buy new ones. “My house is going to be filled with these bags soon,” she said.

Just before I left, it occurred to me that I hadn’t seen any of Galen Jr.’s new naan on the floor. That’s because there was none. When I asked somebody in the bakery section, they said they had some thawing out. How many did I want?

What was it that Dick Currie had said? “Retail is detail. Execution is strategy.”

Meanwhile, in the vestibule, the plastic bag video played silently on.

This story appears in the December 2007 issue of Toronto Life magazine. To subscribe for just $39.99 a year, click here. To purchase single issues, click here.