Sobeys to convert IGA stores to Sobeys brands

Last Updated: Monday, August 28, 2006 | 12:08 PM ET

CBC News

Sobeys Inc. is planning a major shakeup of its IGA stores in Ontario that will see most of them re-emerging under the Sobeys, Foodland or Price Chopper banners.

Craig Gilpin, president of Sobeys Ontario, told IGA franchisees in a confidential letter obtained by CBC News Online that he plans to convert most IGA stores in Ontario to the Sobeys' brands.

As part of the corporate reorganization, Sobeys is offering to buy out any of the IGA independent franchisees who do not wish to convert their stores to the new corporate look.

"All IGA franchisees will be offered the option to sell their business to Sobeys according to a fair-value, buy-out formula," Gilpin said.

But Sobeys says it will continue to honour its franchise agreement with any IGA independent franchisees who want to keep their IGA brand.

Under a major re-organization, Sobeys is converting its stores to five formats. They include:

• Full-service flagship stores under the Sobeys brand.
• Community-service stores under the Foodland banner.
• Fresh-service Sobeys stores.
• Lower-priced Price Chopper.
• Convenience stores under the Sobeys Express name.

The IGA stores will show up under the Sobeys format, Foodland or Price Chopper brands.

The change is expected to happen over the next few months. Sobeys is already converting some of its IGA stores to the new look with major rebuilding programs.

In his letter, Gilpin said Sobeys is trying to "clearly differentiate" itself in a highly competitive supermarket environment.

"We have been transitioning from a banner-focused, wholesale-driven organization to a customer occasion-based format, retail-focused set of stores and operating regions," he wrote.

"We have developed five formats, each serving the need for different offerings in different markets, based on the varying requirements of our customers and local market characteristics."

Gilpin chose the Foodland banner for many of the IGA stores because many of them are franchise-owned stores with a strong sense of community service.

In his letter, Gilpin also referred to a long-standing issue at Sobeys, the difficulty of dealing with independent franchisees, who do not necessarily want to follow the corporate line.

"Many IGA franchise operators seek a more collaborative working relationship with Sobeys than is currently possible with an advisory group that is intransigent, confrontational and unwilling to work collaboratively with Sobeys to grow the business."