Canada's largest supermarket chain has big plans for expansion this year, as it increases its footprint in the competitive grocery market.
Loblaw Companies Ltd. says it will build 50 new stores and renovate or improve more than 100 existing stores in 2015. The additions will be across the country, and Loblaw's estimates it will create about 5,000 jobs at its corporate and independently-owned stores.
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If construction jobs are included in the tally, the company says as many as 20,000 new jobs could be created out of the initiative.
The company, which operates several banners including Loblaws, No Frills, Fortinos and Shoppers Drug Mart, will also look to make more investments in its e-commerce offering, supply chain and IT infrastructure.
The total amount Loblaw plans to spend in 2015 on these initiatives is expected to top $1.2 billion.
"True to our strategy, our investment will create better access to fresh food, wellness solutions closer to home, e-commerce convenience, and a family of stores that elevate grocery, pharmacy, apparel and banking experiences," said Galen G. Weston, executive chairman and president at Loblaw Companies, in a statement.
More Joe Fresh
Some of the in-store improvements will concentrate on Loblaw's Joe Fresh discount clothing line, which the company plans to add in 50 more grocery stores this year.
It will also look to renovate Shoppers' locations acquired in a blockbuster $12.4-billion deal announced in July 2013. Since then completing the purchase, Loblaw has been steadily introducing its No Name and President's Choice brand products, along with fresh food, in some locations to the pharmacy stores.
To date, there are more than 800 items, such as baby food and its PC Decadent cookies, sold in Shoppers stores countrywide.
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Loblaw and other Canadian retailers will benefit from Target's decision to close all its Canadian stores but Walmart Canada remains a major competitor.
Target's departure from the country has produced a glut of prime retail space, and Loblaw is one of many companies serving notice it intends to step in to fill some of that gap.
"I think it’s a combination of the fact that they’re doing better financially right now and also Target has left," says Mark Satov, a retail analyst with Satov Consultants.
"I would say also they’re more worried that somebody else will snap up the space," he said in an interview with CBC's The Exchange with Amanda Lang.
Loblaw is worried about Wal-Mart Canada gaining market share, Satov said.
Wal-Mart recently announced it plans to expand seven stores and open two new ones this fiscal year. Walmart will also convert 20 of its Canadian stores into supercentres by adding a grocery section.
Wal-Mart Canada estimates the cost at $230 million, with an additional investment of $75 million to expand its distribution network and $35 million on e-commerce initiatives.
Loblaw spokesman Kevin Groh said the company views competition in the Canadian grocery market "still heavy," but noted that the pace of retailers opening or building new stores has actually slowed compared to previous years.
Loblaw is looking at experimenting with e-commerce, but Satov warns there is no real model that works in the grocery sector.
“Lots of grocers trying to figure it out, I don’ think anyone’s there yet,” he said.