Organic Garage Ltd., one of Canada’s leading independent organic grocers and a developer of plant-based foods, has identified more than 20 locations in southern Ontario where it hopes to expand in the future.
The retailer has engaged Savills Real Estate to locate, negotiate and sign up prospective new Organic Garage sites as the company prepares for its largest expansion plan since the company’s inception.
Founded in 2005, it currently has four stores. Today’s stores are in Oakville (its first location), Vaughan and two in Toronto.
“I am extremely confident in the experienced team at Savills to do what they do best and help drive our most aggressive, and exciting new-site expansion strategy for the Organic Garage brand. We have a long-term strategy that we will be working towards executing while still maintaining financial discipline and ensuring shareholder value,” said Matt Lurie, Organic Garage President & CEO.
“During the last 18 months we have seen first-hand the importance and demand of grocery retail in the economy as a pandemic proof business, along with the continued growth in the Organic and Specialty foods segments of grocery retail. Organic Garage has the brand, combined with the unique retail experience and value proposition that developers have been looking for to differentiate their properties and showcase independent retailers, not just the big grocery chains. Ontario residents want something different – the healthiest products at the lowest prices – and that’s what we do best.”
During COVID, it became clear that the grocery retail sector is pandemic proof as an essential service. That has meant that landlords and developers have a keen interest in grocers for their properties.
“But people are looking for different retail. People don’t want the same big three, especially with the recent consolidation with Sobeys buying Farm Boy and Longo’s. Most landlords only have an option to deal with the top three. It doesn’t necessarily bode well for the style of plaza maybe they want or in their negotiations with them,” said Lurie.
“They’re looking for alternatives. And so we heard a lot during COVID about people reaching out and saying are we interested in additional sites and things like that. At the time, we were just managing through COVID but we started to take a close look at the market. What can the market support for Organic Garage? Where do we want to head as a company? One of the main pivoting factors was our switch to a decentralized distribution model. Previously in our history we had a centralized DC that supplied all our stores. It acted like a hub and spoke model, meaning you could only go so far out with your spokes before logistics became an issue.”
“During COVID we took a close look at that and said we don’t need to operate our own DC. We can leverage our distributors to supply our stores and without a DC we can start looking further and further out than where we looked previously because there were limitations with how far we could ship away from our DC.”
Lurie said the company analyzed the market combined with the renewed interest in real estate and worked with Savills to do a deep dive of the market.
“It became very clear that Ontario specifically could easily support 20 to 30 Organic Garage’s. We analyzed the towns and cities we want to grow in and certain demographics we thought were favourable to our business,” he said.
Those places include Toronto, Mississauga, Brampton, Hamilton, Markham, Kitchener, Richmond Hill, Burlington, Barrie, Guelph, St. Catharines, Whitby, Cambridge, Milton, Ajax, Waterloo, Halton Hills, Aurora, Newmarket, Caledon, Brantford and Pickering.
All sites must preferably be within three kilometres of those towns or cities, and approximately 10,500 square feet in size, and will have to meet the strict financial and operational criteria the company has outlined. The company’s representatives at Savills will be reviewing these criteria when discussing new sites with landlords and developers.
“Savills Retail Team is honoured to have this exciting opportunity to work with Organic Garage on their existing and aggressive expansion plan. With eyes focused on the future, Organic Garage’s timing to move forward and expand across the Greater Toronto Area and beyond could not be better. Developers and Landlords are keenly focused on securing best-in-class tenants and new retail to their properties that deliver an exceptional shopping experience. Organic Garage does just that,” said Jordan Karp, Savills Executive Vice President and Head of Retail Services Canada.
Lurie said the company does feel that there is room to further expand in Ontario outside of the markets it has currently identified. For example, Ottawa has expressed interest in the grocer and could support several Organic Garage stores.
“As soon as that territory (in southern Ontario) is developed then it becomes easier to go much further out,” he said.
Lurie described Organic Garage as an organic and all-natural grocery chain. It covers every category that a consumer would find in a conventional grocery store.
“Our value proposition is being aggressively priced every day. We offer all our products at everyday low prices. That can be anywhere from 18 to 24 per cent cheaper than let’s say a Whole Foods,” he said. “Twelve to 15 per cent cheaper than your average health food chain and eight to 12 per cent cheaper than any national grocer.
“I always put it this simply to people. We carry the best products at the best prices in the coolest environment. So from the consumers’ standpoint why wouldn’t you shop in our stores? It’s a pretty compelling statement. I always say there’s a lot of retailers out there that maybe sell similar products but are not aggressively priced like us and do not have the store environment like us. Or there’s retailers that potentially have a little bit of the store environment but don’t carry the same quality products and definitely not at the same prices. The fact that we’re hitting all three of those creates a big appetite from consumers who we’ve heard loud and clear saying we’d love to have you in our community. And so we’re working towards that.”
Lurie said the only real segments of grocery retail that are growing in double digits are organic and all-natural products and ethnic products. They’re two of the hottest categories in grocery retail these days.
“The appetite is only getting bigger. We’re not fully out of COVID but coming out of COVID there is a lot of renewed interest in people’s health and wellbeing – being the healthiest version you can be,” said Lurie.
“People have a renewed focus on what they are putting in their bodies, on their bodies. What things are they using in their house? All those sorts of things. And that all leads back to organic and all-natural products.”
Earlier this year, Organic Garage acquired a company in the plant-based food space. It’s a subsidiary of the company now called the Future of Cheese.
“We stepped into that space because we know that space very well, given the fact that the organic and natural retailers are really the epicentre of the plant-based food movement. We saw a unique opportunity to capitalize on what was going in the market in terms of the interest in plant-based companies that’s happening not only in the consumer market but the financial markets as well,” he said.
“It was a unique opportunity to tap into that space with a company that has an excellent management team and an excellent product and help them scale their business and grow it not only here in Ontario but nationally in Canada but also internationally in terms of the US market and Europe.”