Empire has now confirmed 37 of approximately 65 locations in Western Canada. In December 2017, it announced plans to convert approximately 25 percent of its Safeway and Sobeys locations to FreshCo over a five-year period and it is on track with the Project Horizon commitment to open 10 to 15 FreshCo stores in fiscal 2021.
Overall, the company currently has a total of 116 FreshCo stores — 22 in Western Canada and 94 in Ontario.
“Empire’s discount network has grown 23 percent since we opened our first store in the West only two years ago,” said Mike Venton, General Manager, Discount, with FreshCo and Chalo FreshCo, which are discount banners under Sobeys and the Empire umbrella.
“We are committed to delivering market share growth through Project Horizon; Alberta is ripe with opportunity for Empire to compete with a strong discount offering. We are now more than half way through our FreshCo expansion in Western Canada.”
On average, the FreshCo stores are about 35,000 square feet with a limited assortment, added Venton.
“We like to speak about our fresh foods. We try to give you fresh foods at a comparable quality to what you would see at a full serve store at discount prices,” he said. “That’s one of the big things we stand behind. It’s also one of our guarantees. One of the guarantees is if you find any fresh item in a store that is not to your satisfaction we not only would replace the product but we would also replace your money. We market it as a fresh guarantee just to give you confidence hopefully that when you shop in our stores you should feel comfortable about the quality we’re selling.
“The other thing too around us being a discounter is we give a raincheck guarantee that if something in our flyer is not there, we made a mistake, or it sold faster than we thought, we give rain checks and we add 10 percent of the value just for an inconvenience factor and we have a price match guarantee. Anything in the flyer of a competitor if you bring that to us either on your phone or a paper, we’ll match that and we’ll beat it by a penny.”
Chalo FreshCo was inspired and created to cater to the South Asian market.
“The business knew that that particular demographic was the fastest growing in Canada. There was a lot of research done actually even before my time about developing an add on or a new brand for our discount business. There’s many overlaps, meaning if you walked into a new Chalo store or a Chalo store you would find about 5,000 unique items that would cater to the demographic but you would also have a standard FreshCo embedded in the middle of that store,” said Venton.
“So everything you would get at a FreshCo you would get at a Chalo.”
The 37 FreshCo locations in Western Canada will include 1.4 million gross square feet. Click here for a full list of the 37 FreshCo store locations confirmed to date. The company said store closure and conversion costs are estimated to be approximately $11.7 million before tax and will be charged to earnings in the third quarter of fiscal 2021.
Earlier this week, Empire announced seven new locations for the FreshCo discount banner. Four stores in Manitoba and two in Alberta will open this Spring. One Saskatchewan store will open in the Summer. One Alberta store will open in the Winter of 2021/2022. There will be six Alberta store conversions and one Northern Ontario conversion.
Since April 2019, the company has opened 16 FreshCo stores in B.C., two in Manitoba, and four in Saskatchewan. By the end of fiscal 2022, the company plans to have these 37 FreshCo stores open in Western Canada.
Across Western Canada, the FreshCo stores are primarily conversions of Safeway stores but some Sobeys are also being converted and some are brand new builds.
The six Alberta FreshCo store conversions announced this week are: Brentwood in Calgary; Millbourne Mall in Edmonton; Saddle Ridge in Calgary; Coliseum in Edmonton; Palisades Square in Edmonton; and Gateway Village Mall in St. Albert. Closures of the respective Safeway stores will start in the first quarter of fiscal 2022, and open as FreshCo stores starting at the end of the second quarter of fiscal 2022.
In Northern Ontario, the Safeway store in Thunder Bay will close in the first quarter of fiscal 2022 and re-open as a FreshCo store in the second quarter of fiscal 2022.
There are currently seven Chalo FreshCo stores with three in Western Canada and four in Ontario. A new store will be opening in Edmonton and one in Brampton, Ontario within the next few months.
“We think the runway for this banner is huge because we look at the growth of that customer base in Canada as the most aggressive growth of any customer base there is. We like to say we’ve almost perfected it — because I’d never say we perfected anything in Ontario — but a very powerful brand and we introduced it to the West and we’ve got our work cut out for us because we know who we compete against and we think we’ve got a really good opportunity for this,” added Venton.
In Western Canada as a company, Empire really had no presence of discount before. It was a full serve retailer and it wasn’t being represented in discount which is the fastest growing segment of retail. So it made perfect strategic sense, said Venton.
“We look at the market and we strategically look at where it makes sense for many reasons. What’s the demographic? The discount business is very well in multicultural markets, we look at lower averaging costs, we look at where we’re saturated with stores that are full serve, because we bought the Safeway banner a number of years ago but there’s many Sobeys that are located in very close proximity to other stores. And then we have stores that were just not performing in the full serve. A number of factors we analyze pretty closely and then we make decisions,” he said.
“Everybody’s looking for value. That hasn’t gone away. The market is getting more and more competitive. Discounters are getting better. Options for shopping discount in terms of customer satisfaction and in terms of what they find is significantly better than it was previously. I think of us in that regard and I think of competitors. We’ve just improved. One area for sure is fresh food . . . I like to think too that we appeal to smart shoppers that know value and come to us. They might be driving a BMW, who knows, but we also appeal to the customer that needs to make ends meet. And this is where they come as well. So we have quite a dichotomy of customers if you look at our base.”
Empire said it will work with the unions representing affected Safeway employees in Alberta and Northern Ontario to ensure all terms of the collective agreements are met.
“We will also work with the respective unions to provide options to impacted employees, including the opportunity to work at Safeway stores within the network or in the new FreshCo locations,” it said.