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Sobeys sees sales surge amid coronavirus outbreak
Canadian grocer shifts strategic plans as pandemic changes outlook
Russell Redman
April 15, 2020
5 Min Read
Sobeys parent Empire Company Ltd. reported sales growth as high as 37% in the weeks leading up to Easter, thanks to coronavirus-driven customer demand.Sobeys
Citing coronavirus-driven demand, Sobeys parent Empire Company Ltd. reported sales growth as high as 37% in the weeks leading up to Easter.
Empire said Wednesday that same-store sales for the first weeks of the fourth quarter exhibited strong growth, continuing momentum from the latter half of the third quarter. But starting Feb. 28, the Canadian food and drug retailer saw a jump in sales that continued to accelerate from March 8 onward as shoppers began stocking up for possible stay-at-home orders.
Same-store sales for the four weeks beginning March 8, excluding fuel and Easter sales, surged about 37% year over year, according to Empire. Though by March 22 the sales intensity began to subside, it remained well above prior-year levels. For the two weeks before Easter, excluding fuel, same-store sales growth averaged 24%, the Stellarton, Nova Scotia-based retailer said.
“Management’s top priorities are ensuring the health and safety of our teammates and customers, keeping our shelves stocked, and supporting charitable organizations to immediately address urgent needs in communities across Canada,” Empire President and CEO Michael Medline said in a statement. “All of our grocery and pharmacy locations have adapted to ensure we can continue to operate as an essential service, providing Canadians with affordable food and other vital products during this terrible pandemic. A huge thank you to our teammates in our stores and distribution centers, who are working so hard to serve our customers.”
Initial demand amid the COVID-19 outbreak trended toward shelf-stable grocery items yet has since returned to “more usual levels” across grocery and fresh categories, Empire said. The company reported ongoing higher demand for canned goods, baking supplies, and cleaning and sanitization products.
Meanwhile, with Canadians sheltering in place, Empire’s fuel business has plummeted. The company said fuel sales have dropped about 40% since March 1 because of fewer liters sold due to travel restrictions and a plunge in gas prices.
“In these unprecedented times, it is too early to forecast sales in the medium term, but management anticipates a percentage of consumption will shift from restaurants and hospitality businesses to grocery stores for as long as stay-at-home restrictions remain in force,” Empire stated.
Empire Company expects certain FreshCo and Farm Boy store openings to be delayed, while other stores slated to be closed as part of conversions to the FreshCo banner will stay open in the medium term.
Given shifting priorities and an uncertain outlook, Empire said it’s re-evaluating the impact of the pandemic on its nearer-term strategic plans, including store openings and remodels. Management expects certain FreshCo and Farm Boy store openings to be delayed, while other stores slated to be closed as part of conversions to the FreshCo banner will stay open in the medium term.
Higher online volume, however, is pushing Empire to move up its e-commerce plans. The company said its online businesses in Quebec through IGA.net and in British Columbia through Thrifty Foods have seen a significant increase in orders during the pandemic. As a result, the customer launch of the Voilà online grocery home delivery service has been accelerated to meet the rising demand. Pilots of the service, announced last May, are now due to start the week of April 26 in the greater Toronto area. Voilà's phased rollout to customers across the GTA will get under way once testing is completed, Empire said. The service will be powered by an Ocado automated warehouse in Vaughan, Ontario.
“Online grocery penetration is growing dramatically across the country, which management anticipates will likely remain elevated in the long-term as customers become more comfortable with online grocery delivery,” Empire said.
The customer launch of the Voilà online grocery home delivery service has been accelerated to meet the rising demand caused by the coronavirus crisis.
Through mid-morning April 15, Canada had 27,557 total cases of COVID-19 and 954 deaths, according to Health Canada. Quebec has the most coronavirus cases with 14,248, followed by Ontario at 8,447.
Empire noted that the company has stepped up its investment in customers and employees as the virus has spread. Safety measures in stores include plexiglass shields for cashiers, personal protective equipment (PPE) for associates, reduced store hours to allow more time for cleaning and stocking shelves, and more frequent wipe-downs of common areas.
In addition, the retailer has designated an exclusive shopping hour for seniors in most markets, installed floor markers at checkout and throughout the stores to encourage a two-meter distance between customers, implemented one-way aisles to ensure compliance with social distancing and initiated shopper limits in stores. The latter is based on the number of customers and a store’s square footage and number of open cashier lanes.
“We are doing everything in our power to maintain our stores to the highest standard of cleanliness and safety, including investing in plexiglass shields and personal protective equipment, limiting the number of customers in our stores at one time, and placing floor markings and signage in our stores to promote physical distancing,” Medline added. “We are grateful for our customers’ trust in us and humbled by the efforts our 123,000 teammates are making every day to support the needs of Canadians. Recognizing the significant demand on our frontline and distribution center employees across the country, we also implemented our Hero Pay program.”
Under the temporary Hero Pay program, store and distribution center workers will receive another $50 a week, regardless of the number of hours worked. Employees who work more than 20 hours a week get an additional $2 hourly premium after exceeding 20 hours, in addition to the $50 bonus.
Higher customer demand and employee absenteeism also is leading Empire to fill more jobs. The company said it has hired more than 8,000 workers over the past six weeks, including temporary hires from partners in related industries — such as restaurants and hospitality — that have been negatively impacted by the pandemic.
Empire operates its food retailing business through subsidiary Sobeys Inc. Overall, Sobeys’ retail network includes more than 1,500 food and drugstores in all 10 provinces under banners such as Sobeys, Safeway, IGA, Foodland, FreshCo, Thrifty Foods, Farm Boy and Lawtons Drugs.
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