| A new player touting itself as "fresher, cheaper" | | | | just about rock-bottom prices any more. Sobeys |
| joined the field of discount grocers in Canada as | | | | is targeting the growing ranks of ethnic shoppers |
| Sobeys Inc. has transformed eight locations into | | | | who demand both high quality and good value. |
| FreshCo stores. Sobeys Inc., Canada's | | | | "From there you transition into an area that's filled |
| second-biggest supermarket chain, is opening a | | | | with pallets of high-value merchandise, which is a |
| new chain of stores aimed at capturing a bigger | | | | hallmark feature of any discount outlet, but we've |
| chunk of Ontario's discount market and tempting | | | | merchandised it in a way that it's very, very |
| multi-ethnic shoppers: The company opened eight | | | | abundant," McEwan said. |
| stores, in Brampton and Mississauga, ON, under | | | | There won't be a full-scale change from Price |
| the FreshCo. banner recently. | | | | Chopper to FreshCo, he said, but he met with |
| | | | franchisees Tuesday and they were enthusiastic |
| Toronto, ON (Friday, May 14, 2010) -- Sobeys, a | | | | about the concept. |
| division of Empire Co., is aiming to broaden the | | | | "Market by market, if we determine through our |
| appeal of the discount store by offering a wider | | | | market research … that a FreshCo is a |
| range of fresh fruit and vegetables using a bright | | | | requirement, I can't imagine a single franchisee not |
| modern design. It's also planning to tailor products | | | | wanting to proceed with it," McEwan said. |
| closely to the local community to attract more | | | | "We're not prepared to say where's next for |
| ethnic shoppers. The former Price Chopper stores | | | | competitive reasons, but in some cases it won't |
| are in the vanguard of "dozens" that will be | | | | make sense to convert from a Price Chopper |
| switched over in the next year and a half. | | | | because … [it] actually provides a better option |
| "The Ontario market is the most competitive in | | | | in that marketplace. It's not a franchisee's decision |
| Canada, with the highest concentration of | | | | or our decision -- we do it together." |
| discount," president and chief executive Bill | | | | The discount segment of the marketplace is |
| McEwan said, adding that over the past 25 years, | | | | more developed in Ontario than almost anyplace |
| "there has not been a retooling of what discount | | | | else in North America. |
| should mean in this diverse and rapidly changing | | | | "A full 35 to 40 per cent of the food shopping is |
| environment." | | | | done in the discount market, so to compete and |
| | | | | participate in the retail grocery industry in Ontario, |
| Photo: Grocer Sobeys rebranded a number of | | | | you have to have a strong discount format," |
| Ontario Price Chopper stores under its new | | | | McEwan said. |
| FreshCo line. | | | | The FreshCo stores aren't fancy or expensive |
| Sobeys plans to rapidly expand the brand in the | | | | because the effort is being put into low prices and |
| province, replacing most of its 87 existing Price | | | | high-quality products, he said. |
| Chopper stores. It also plans to look at new | | | | "It's not about the decor -- but it's attractive, it's |
| locations. There's also a recognition that each | | | | clean, it's contemporary, it's functional -- and the |
| store has a different clientele. The new stores | | | | flow is such that you can get through there with |
| offer multicultural and ethnic foods tailored to the | | | | less inconvenience the way it's laid out." |
| needs and choices of people in the neighbouring | | | | If successful, FreshCo will give Sobeys an |
| communities. | | | | important weapon in the increasingly crowded |
| "In Brampton, the South Asian population has | | | | battle for the culturally diverse grocery shopper. |
| grown 250 per cent in about 12 or 13 years, and | | | | That segment is being hotly contested as retailers |
| there are varieties of produce that are important | | | | attempt to take advantage of a massive change |
| and relevant and required to satisfy that | | | | in Canadian demographics. By 2031, one in three |
| marketplace," McEwan noted. | | | | Canadians will belong to a visible minority -- and |
| Sobeys Inc. has more than 1,300 stores from | | | | one in four will be foreign-born, according to |
| coast to coast that include Sobeys, IGA, | | | | Statistics Canada. |
| Foodland, Thrifty Foods and Lawtons Drug Stores. | | | | Already, a growing number of bargain-hunting |
| In Ontario, there are 79 Price Choppers and now | | | | customers are new Canadians who look for dried |
| eight FreshCo stores. | | | | shrimp or kecap manis along with their paper |
| About 60 per cent of the stores nationwide are | | | | towels. In the fight for those customers, Sobeys |
| run by franchisees, McEwan said. | | | | is taking on Loblaws, the market leader, which last |
| But -- for the time being -- McEwan said the | | | | year acquired T&T Supermarket Inc., a |
| company has no current plans to take the | | | | specialist in Asian foods, and continues to beef up |
| FreshCo. brand to the rest of Canada. | | | | its No Frills chain. |
| CIBC World Markets senior analyst Perry Caicco | | | | Metro Inc.'s Food Basics discount chain is also |
| welcomed the move for addressing a weak link in | | | | broadening its low-frills offerings, while discount |
| the Sobeys chain in Ontario. | | | | giant Wal-Mart Canada Corp. is adding new "super |
| "This is a remarkable new effort that seems to | | | | centres" with full grocery sections that attempt |
| combine the pricing of a discount store with a | | | | to lure local ethnic shoppers. |
| strong 'fresh' presence designed to appeal both to | | | | Loblaw Companies, which last week reported a |
| a broader demographic and a localized ethnic | | | | 26 per cent jump in first-quarter profit, said it had |
| shopper," he said in a research note. | | | | noted the trend. |
| The new-look stores are also coming amid signs | | | | "People are a lot more promiscuous," president |
| the recession may have led to a more permanent | | | | and deputy chairman Allan Leighton said. "There's |
| change in spending habits in Canada, with | | | | twice the level of promiscuity than a year ago |
| consumers becoming more cost conscious and | | | | and that's still growing a bit." |
| willing to shop around for bargains. | | | | Loblaws owns the No Frills discount brand and also |
| Customers entering a FreshCo store will first | | | | ethnic food chain, T&T, which was one of |
| encounter fruit and vegetables in a great hall | | | | the strongest performing sectors of its business |
| immediately inside that flows into a deli area, a | | | | in the first quarter. |
| bakery market, and a local cheese and meat | | | | McEwan said FreshCo. would aim to cater to the |
| market. | | | | local community, providing specialized products to |
| | | | | mark religious and other cultural celebrations. |
| Photo: The discount supermarket segment isn't | | | | |