TORONTO (FNS) -- Loblaw Cos. here is planning to open three new supercenters in Ontario by year-end similar to its Real Canadian Superstore, a chain of 50 warehouse-sized stores it operates in western Canada.
About 35,000 square feet of the 115,000-square-foot outlets will be dedicated to an expanded selection of existing merchandise, such as apparel and housewares, and will include new categories such as electronics, cosmetics, bed and bath goods and photo lab.
While the expansion will help Loblaw to compete better with Wal-Mart Canada, Zellers and Costco, it's also part of its strategy to provide one-stop shopping, according to retail analyst Cynthia Rose-Martel at Harris Partners here.
"General merchandise and private label [such as Loblaw's Kloz for Kids] is a lot more profitable than selling a bag of carrots. That's why they launched PC Financial."
Although food brings shoppers into Loblaw's stores every week, the threat of Wal-Mart expanding its grocery offerings makes it necessary for Loblaw to expand its general merchandise to protect its base, according to John Winter of John Winter Associates.
"Costco is now the sixth-largest retailer in Canada," added David Howell of NPD Group, "and Loblaw recognizes the growth opportunities in apparel and general merchandise."
If the three superstores are a hit with shoppers, more will be added, and the company will also expand general merchandise in existing supermarkets, according to Loblaw spokesman Geoff Wilson.
"As the model becomes developed and successful, we will continue to move to larger stores where space is available," he said.