Wal-Mart opened two Canadian stores Wednesday that feature fresh produce, launching a battle that its supermarket competitors have long been dreading.

The Wal-Mart stores, one in London, Ont., and the other just outside Hamilton in Ancaster, Ont., are actually expansions of existing Wal-Mart stores, but carry an extra name on the storefronts — "Your Fresh Market." 

Wal-Mart is expected to open Your Fresh Markets across Canada.
(CBC)

In addition to an abundance of fresh food, each new Wal-Mart supercentre carries natural and organic products, offers take-out and prepared meals and has an in-house bakery and deli.   

Wal-Marts in Canada have long carried some food. But so far, most of the offerings have been canned, boxed or frozen goods. Fresh produce was rare. Not any more.

Wal-Mart will open a third Your Fresh Market in Stouffville, Ont., next month and will follow that with others — first in the key Ontario battleground. Eventually, analysts expect a Canada-wide rollout.

Wal-Mart's foray into the fresh food business poses a major challenge for the established grocery chains like Loblaws and Sobeys because they'll have to lower prices to compete.

"How much of a bloodbath Loblaws, Sobeys … can afford nobody knows," retail analyst Richard Talbot told CBC News. "But there will be a bloodbath."

Loblaw Cos. Ltd. won concessions from its unionized Ontario employees earlier this month, largely because of the looming food fight with non-unionized Wal-Mart.

The new Loblaw contract will let the company convert 44 of its Ontario stores to Real Canadian Superstores — which sell many non-food items in addition to groceries — or other food stores "which have equivalent labour economics," the company said.

As the grocery battles play out, grocery shoppers can look forward to lower bills at the checkout as the slim profit margins in the food business shrink even further.