Sobeys announces more Safeway-to-FreshCo conversions

Sobeys Inc. and its parent company Empire Company Ltd. has revealed plans to switch four more Safeway supermarkets in Saskatchewan to its FreshCo discount grocery format, marking 22 planned conversions to date.

The Canadian grocery giant said earlier this week it plans to shut down its Regent Park, Confederation Suburban Centre, 33rd Street Saskatoon and Market Mall Saskatoon Safeway locations by March 2020, with the stores slated to reopen under the FreshCo name in the summer of 2020. Though meeting that timeline depends heavily on the timing of construction schedules and permits.

In December 2017, Empire Company Ltd. said it aims to convert about 25% of underperforming Safeway and Sobeys full-service stores in Western Canada —which amounts 65 locations in total— to FreshCo outlets over the next five years.

Since the inception of the company’s expansion plan, seven FreshCo stores have opened in British Columbia and Manitoba. While another five stores are due to open in British Columbia later in 2019 and early 2020, and six Safeways in the province are expected to reopen as FreshCo locations next spring.

“We are one-third of the way selecting and opening our FreshCo stores in Western Canada,” said Mike Venton, general manager for FreshCoin a statement.

FreshCo plans on making more investments by leveraging on their existing real estate network in a bid to provide their customers with impeccable service—a move that has seen them gain grounds in the retail market. Though frequent shoppers still take advantage of No Frills coupons from leading retailers.

“We continue to make smart investments and leverage our current real estate network to deliver exactly what our customers want. We are winning market share we simply couldn't compete for in the past. The customer feedback so far has been strong, and we're moving full steam ahead with our rollout,” said Venton.

Recently, Empire opened its first two Chalo! FreshCo stores in the west in Surrey, British Columbia. Alongside their traditional offer of high-quality fresh products at discounted prices, the Chalo! FreshCo stores offer a wide range of South Asian products, such as rice, lentils, spices, fresh produce, snacks, halal meat and seafood. This concept was launched in 2015 in Ontario.

The retail giant plans on opening four more FreshCo stores in British Columbia this year and seven in 2020. According to Venton, the company plans on improving its customer base by dominating the discount space.

“Our marketing leading up to each store opening has been very strong and focused on connecting with the local community in a meaningful way,” said Venton.

“We will continue to push hard and win in this hyper-competitive discount space. So far, we've effectively differentiated ourselves as the discount grocery retailer of choice with exceptional quality, product assortment, fresh produce and price.”

Last year, Empire Co. Ltd. Purchased Farm Boy as part of an $800-million deal. This was part of the ongoing expansion plan as the popular grocery chain is taking over a location previously occupied by Sobeys on Metcalfe Street.

“Busy commuters and shoppers working in the downtown Ottawa area will be thrilled with our healthy, fresh, wholesome foods and friendly service,” said Farm Boy co-chief executive officer Jeff York in a release.

“We launched our first fresh urban concept store in Ottawa’s Westboro neighbourhood in 2017, then added another at CF Rideau Centre. We can’t wait to expand our proven fresh urban concept further in Ottawa’s downtown core.”

However, Empire revealed that store closure costs will be factored into earnings in the first quarter of fiscal 2020. The combined closure expenses related to store conversions are estimated at $6 million and these costs—along with those from the recent FreshCo and Farm Boy conversions—total $21 million, the company said.

Sobeys owns, affiliates or franchises more than 1,500 food and drug stores in all 10 provinces under different banners including Sobeys, Foodland, Safeway, FreshCo, IGA, Lawtons Drugs, Thrifty Foods, and Farm Boy.


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