Sobeys is set to convert 10 Safeway stores in British Columbia to support the launch of the FreshCo banner in western Canada. This will build on the launch of the concept in the spring with two stores in Manitoba.

Progress on labour negotiations enabling store conversions

Sobeys announced last year that it would launch the FreshCo banner in the region with the conversion of two stores in Winnipeg, Manitoba. These will be closely followed by three stores in British Columbia, while another seven will open in the province later this year. Sobeys can move ahead with its plans for the discount chain having made progress with its labour negotiations which provide it with greater flexibility to manage operational costs.

Source: Sobeys

Testing broad range of locations

The BC locations extend from Chilliwack in the east to Richmond in the west, enabling the retailer to test the format in a range of demographic and ethnically-diverse locations. This will help the retailer to further refine and develop the offer, ahead of an expected larger conversion programme next year. In addition to five stores previously closed, a further five will be closed to allow construction.

New look FreshCo concept

Each conversion will cost around $4m, which will also include some element of downsizing to fit the smaller-format stores which are planned. Most of the conversions will be former Safeway stores, and will be operated on a franchised basis. The stores will feature evolved branding, logo, strapline and offer to reflect a stronger discount tone. Last year, the retailer launched four pilots in London, Ontario to test some of these enhancements, while a new concept store opened in January in downtown Toronto. The aim is to deliver a more open experience and deliver a clearer message on value and freshness.

Intensifying price competition

The lack of a discount banner in western Canada has impacted Sobeys’ ability to compete on price in the region. While the acquisition of Safeway in late 2013 significantly enhanced its supermarket business, it has lacked the format flexibility to compete with Walmart and Loblaw’s No Frills discount format. With plans to open just over 60 stores, the retailer is planning on building a significant discount business in the region which is likely to intensify price competition.

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We review Metro’s first quarter performance and progress with the integration of the Jean Coutu Group.

Sales growth boosted by Jean Coutu acquisition

Metro’s first quarter sales increased 27.8% to $4.0bn, reflecting the acquisition of the Jean Coutu Group. Excluding the acquisition, sales were up 3.5%. Food same-store sales increased 3.2%, drive by stronger traffic and basket growth, while pharmacy same-store sales were up 1.5%. Adjusted net earnings increased 35.9% to $172.2m.

Source: IGD Research

Integrating Jean Coutu

The retailer continues to make solid progress integrating the Jean Coutu business. Synergies of $10.7m were achieved in the quarter, bringing the annual run-rate to $28m. The retailer remains confident of hitting its three-year $75m synergies target. The retailer has started transferring relevant private brands across its grocery and pharmacy businesses, while procurement synergies will be finalised in the first year. The retailer is currently planning the conversion of retail systems and the transfer of operations from the McMahon DC to the Jean Coutu DC next year.

Ontario ecommerce launch expected in the spring

Metro remains on-track to launch its ecommerce service into the Ontario market in the spring. It continues to test and refine the offer in Quebec, which is seeing solid growth. The service is helping it to attract new customers, which Metro believes will help support the profitability challenges associated with the channel. The retailer expects to have a profitable ecommerce business over the long term.

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Canada’s leading dollar store chain, Dollarama, has launched a new online store, offering products in case quantities.

1,000 products available for home delivery

The national launch of the store follows on from a five-week pilot in Quebec. The store offers around 1,000 products across consumable and general merchandise departments for purchase in full cases. Product categories include cleaning, clothing, electronics, food, hardware, health and beauty, home, kitchen, office, party, pets and toys. The retailer offers just under 150 products within the food category, including beverages, confectionery and snacks.

Source: Dollarama

Segmenting ranges by shopper type

In line with Dollarama’s value positioning, online pricing matches store pricing. Products are offered across the retailer’s price points, ranging from $1 to $4 per item. In addition to shopping by department, the site has been designed to enable shopping by shopper type. These include catering, restaurants and hotels, hospitals and care facilities and workplaces.

Appealing to business operators

This will help drive the appeal of the site among these specific groups, enabling Dollarama to compete with more established wholesale services. While the service can be shopped by individual users, it is likely to appeal to business operators, especially small business that will be attracted by the added level of convenience that home delivery offers. This launch will help Dollarama to drive further growth, expand its product offer and enable it to test new products before launching in-store.

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