A new player touting itself as "fresher, cheaper" joined the field of discount grocers in Canada on Wednesday as Sobeys Inc. has transformed eight locations into FreshCo stores.
The former Price Chopper stores are in Ontario in Brampton and Mississauga, the vanguard of "dozens" that will be switched over in the next year and a half, Sobeys president and CEO Bill McEwan said in an interview prior to the grand opening.
"This isn't just a conversion or a renovation — this is the launch of a new brand," he said, describing the bright white buildings that sport a big black FreshCo sign.
"The concept is a result of about 12 to 18 months of extensive research and looking at where do we go next, based on the changes in the consumer landscape, particularly in the GTA [Greater Toronto Area] but across Ontario overall."
There's a recognition that each store has a different clientele. The new stores offer multicultural and ethnic foods tailored to the needs and choices of people in the neighbouring communities.
"In Brampton, the South Asian population has grown 250 per cent in about 12 or 13 years, and there are varieties of produce that are important and relevant and required to satisfy that marketplace," McEwan noted.
Sobeys Inc. has more than 1,300 stores from coast to coast that include Sobeys, IGA, Foodland, Thrifty Foods and Lawtons Drug Stores. In Ontario, there are 79 Price Choppers and now eight FreshCo stores.
About 60 per cent of the stores nationwide are run by franchisees, McEwan said.
No plans for total changeover
Customers entering a FreshCo store will first encounter fruit and vegetables in a great hall immediately inside that flows into a deli area, a bakery market, and a local cheese and meat market.
"From there you transition into an area that's filled with pallets of high-value merchandise, which is a hallmark feature of any discount outlet, but we've merchandised it in a way that it's very, very abundant," McEwan said.
There won't be a full-scale change from Price Chopper to FreshCo, he said, but he met with franchisees Tuesday and they were enthusiastic about the concept.
"Market by market, if we determine through our market research … that a FreshCo is a requirement, I can't imagine a single franchisee not wanting to proceed with it," McEwan said.
"We're not prepared to say where's next for competitive reasons, but in some cases it won't make sense to convert from a Price Chopper because … [it] actually provides a better option in that marketplace. It's not a franchisee's decision or our decision — we do it together."
The discount segment of the marketplace is more developed in Ontario than almost anyplace else in North America.
"A full 35 to 40 per cent of the food shopping is done in the discount market, so to compete and participate in the retail grocery industry in Ontario, you have to have a strong discount format," McEwan said.
The FreshCo stores aren't fancy or expensive because the effort is being put into low prices and high-quality products, he said.
"It's not about the decor — but it's attractive, it's clean, it's contemporary, it's functional — and the flow is such that you can get through there with less inconvenience the way it's laid out."