Sobeys pushes ahead with FreshCo, Farm Boy expansions

After the recent debut of FreshCo in western Canada, Sobeys Inc. has unveiled plans to convert six more Safeway stores in British Columbia to the discount grocery banner.

The Canadian supermarket retailer also aims to convert a Sobeys store in Ottawa to Farm Boy banner, part of a planned Ontario expansion for the fresh market chain, acquired last year.

Sobeys said that this fall it will shut its 100 Mile House, Williams Lake, Kamloops Sahali, Kelowna Dilworth, Vernon Downtown and Powell River Safeway stores for remodeling to the FreshCo format. The 100 Mile House location is slated to be closed Oct. 5 and the other five stores on Nov. 23 for the conversion.

The six FreshCo stores are expected to reopen in the spring of 2020, depending on the timing of construction schedules and permits, according to Stellarton, Nova Scotia-based Sobeys. Store closure costs for the Safeways to be rebannered are estimated at $15 million and will be charged to fiscal 2020 first-quarter earnings, the company said.

So far, Sobeys has announced 18 FreshCo locations in western Canada, five of which are now open in British Columbia and Manitoba. In December 2017, the company said it aims to convert up to 25% of its 255 Safeway and Sobeys full-service stores in the region — more than 60 locations — to FreshCo outlets over the next five years.

Related:FreshCo comes to western Canada

“Western Canada is responding extremely well to our smaller-box discount format,” Michael Medline, president and CEO of Sobeys parent Empire Company Ltd., said in a statement. “We’ve been hyper-focused on selecting the right locations for FreshCo stores and are converting poorly performing Safeway and Sobeys stores. Opening FreshCo stores in these locations is allowing us to not only leverage existing real estate within our network, but also win market share we simply couldn’t compete for in the past.”  

The first FreshCo in western Canada opened on April 25 in Mission, B.C. That was followed by stores in the Kildonan and Jefferson sections of Winnipeg, Manitoba, on May 2 and two others in the Broadmoor and Blundell neighborhoods of Richmond, B.C., on May 16.

Sobeys updated the planned openings of two FreshCo outlets in the Strawberry Hills and Newton sections of Surrey, B.C., to July. The company also gave a projected timetable for FreshCo openings in five previously announced British Columbia locations: this fall for stores in Aldergrove, Ladner, Maple Ridge and downtown Chilliwack, and winter 2020 for a store in Abbotsford.

“Customer response to our first five FreshCo locations in B.C. and Manitoba has been overwhelmingly positive,” according to Mike Venton, general manager for FreshCo. “Discount is the fastest-growing retail segment and we’re now participating in a meaningful way in Western Canada, providing customers with more choice and market leading low prices. Customers have been very excited about our international product offering and easy-to-shop store format, and we’re ready to continue building on our progress in B.C. and Winnipeg.”

Related:Third-quarter sales edge up at Sobeys

Meanwhile, Sobeys has moved forward with expansion of Farm Boy, purchased in an $800 million (Canadian) deal that closed in December. Plans call for the company to ramp up the rollout of the Farm Boy concept in greater Toronto and southwestern Ontario through new construction and conversions of some current Sobeys stores.

The newest location will be a Sobeys Urban Fresh store on Metcalfe Street in downtown Ottawa slated to close on Aug. 6 for renovation and reopen next spring as a 28,000-square-foot Farm Boy outlet.

Farm Boy specializes in local fresh produce and meat, offers a wide range of ready-to-eat food prepared in-store and features a strong private label program. The Metcalfe Street store, for example, will feature a fast-casual restaurant experience including a hot bar, salad bar, gourmet pizza, freshly rolled sushi and a made-to-order grilling station offering breakfast, lunch and dinner options

Ottawa-based Farm Boy, which operates as an independent unit of Sobeys, currently has 28 stores in southeastern Ontario. The chain opened its first store in the greater Toronto area in December in Oakville, followed by another at the end of January at Leslie Street and Lake Shore Boulevard in Toronto.

“Busy commuters and shoppers working in the downtown Ottawa area will be thrilled with our healthy, fresh, wholesome foods and friendly service,” said Farm Boy co-CEO Jeff York. “We launched our first fresh urban concept store in Ottawa’s Westboro neighborhood in 2017, then added another at CF Rideau Centre. We can’t wait to expand our proven fresh urban concept further in Ottawa’s downtown core.”

Medline has said Farm Boy offers a strong growth vehicle for urban and suburban markets. Over the long term, Empire aims to expand the format to other parts of Canada. Farm Boy’s private label products also are slated to be added to Sobeys' Ocado-based e-commerce business, expected to launch in the Toronto market in 2020.

Overall, Sobeys owns, affiliates or franchises more than 1,500 food and drug stores in all 10 provinces under such banners as Sobeys, Safeway, IGA, Foodland, FreshCo, Thrifty Foods, Farm Boy and Lawtons Drugs.