Supermarket wars ripple into B.C.’s grocery sector
Empire plans to convert quarter of Safeway, Sobeys stores to FreshCo
Ripples from a supermarket war among Canada’s large chains are reaching B.C.
Empire Co. Ltd. said Wednesday it plans to convert up to a quarter of its 255 Safeway and Sobeys stores in Western Canada to FreshCo, its discount store brand.
There are about 30 Safeway stores in Metro Vancouver. Empire could not say which ones will change to FreshCo.
“There have been no announcements on which stores will be converted at this time. The expansion of discount will take a little time to initially roll out,” said spokesperson Jacquelin Corrado. “We need to have conversations with affected employees and will need to work with the relevant labour unions. We will also need permitting plans to renovate stores.”
The Stellarton, Nova Scotiabased chain bought Safeway’s Canadian operations for $5.8 billion in 2013, but has struggled to integrate the purchase into its operations. The aftermath included the departure of its chief executive officer and a $2.9-billion write-down of the Safeway acquisition by mid-2016.
There was one positive aspect, says retail analyst David Ian Gray, who is principal of Vancouverbased firm Dig360. “Safeway was very stale but in Vancouver it did happen to have some very good locations, so (Empire) has picked up some good real estate and these can be rebranded.”
Gray said the Canadian market is dominated by three large chains. For some time, they have been hotly competitive, especially in southern Ontario.
The competition is now moving West where there is still some room for chains to outmanoeuvre each other by adjusting focus and establishing niches. For example, says Gray, they can provide more or less of the following offerings: “Fresh food — which would mean less space for package or canned items — dine-in or take away, ethnic or healthy products, being discount or premium.”
B.C. is unique in some ways because the country’s third largest grocer doesn’t operate here. The other two, Empire and Loblaws, have stores with various brands in B.C., but Montreal-based Metro, which has more than 600 stores under different brands, operates only in Ontario and Quebec.
“Save- On-Foods is a big player in Western Canada. It’s the last of the
We need to have conversations with affected employees and will need to work with the relevant labour unions.
independent, local players. Jimmy Pattison (chairman of Vancouverbased Jim Pattison Group, which owns Save-On) has said he doesn’t want to sell Save-On so it makes it much harder for Metro to come in.”
Gray says American giants such as Costco Wholesale and Amazon are making inroads in the B.C. grocery market. However, chains such as Save-On will continue to better understand local tastes and why certain products sold in, for example, Prince George wouldn’t have the same appeal in Parksville.