Empire Company, the owner of Sobeys, has announced that it will be converting up to one quarter of its Safeway stores, largely located in Western Canada, into outlets under its discount banner FreshCo.
The move comes in the wake of Safeway’s poor performance since Empire acquired it for $5.8bn back in 2013, whilst several discount retailers having grown their market share throughout the same period.
“This is a very attractive strategic and financial opportunity for us that will grow our market share in the Western provinces in a profitable way,” said Michael Medline, President and CEO, Empire. “Our comprehensive research and analysis shows that the West is fertile ground for ‘small box’ discount and that our FreshCo banner will resonate with consumers in Western Canada.”
Discount grocery services are the fastest growing segment of the market, currently accounting for almost 44% of all Canadian food retail sales.
Empire is launching the initiative under its Project Sunrise transformation scheme that is expected to result in approximately $500mn in annual cost savings by 2020.
“This expansion is one piece of a comprehensive strategy to execute the transformation of our company through Project Sunrise, greatly improve our conventional offering, bolster our brand and grow our industry leading market share in ecommerce,” Medline continued.
Empire bolstering its position within the market is likely to result in increasing competition between retailers, with the likes of Loblaw and Metro being the other key players.