Winnipeg Free Press - PRINT EDITION

Sobeys expects stores to sell

But finding owners might prove difficult

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People who shop at the Canada Safeway on Main Street at Luxton Avenue said they expect to be inconvenienced when the North End store is sold.

WAYNE GLOWACKI / WINNIPEG FREE PRESS Enlarge Image

People who shop at the Canada Safeway on Main Street at Luxton Avenue said they expect to be inconvenienced when the North End store is sold. Photo Store

Regular shoppers at the five grocery stores that have been put on the block as part of Sobeys' acquisition of Canada Safeway need not worry -- they won't be shuttered or turned into furniture outlets.

According to the ruling handed down by the federal Competition Bureau on Tuesday, Nova Scotia-based Sobeys must sell a total of 23 locations across Western Canada to other grocery store operators.

"They have to be sold as viable grocery stores," said Sobeys spokesman Andrew Walker. "The point of the Competition Bureau's ruling is they want to maintain competition in the markets that they have identified as a concern. For us to close them would only exacerbate a competition concern."

The five stores in Winnipeg include four Safeway outlets -- Grant Park Shopping Centre, St. Vital Shopping Centre, Main Street and Luxton Avenue and on Vermillion Road in Southdale -- and the city's lone Price Chopper location at the corner of Pembina Highway and Stafford Street.

Even after the stores are sold, Sobeys will still end up acquiring 190 Safeway locations across Western Canada as part of its $5.8-billion deal announced earlier this year. It's too early to say who might buy them or what companies are even being approached, but Walker said they will remain open until they are sold.

"These are really great stores. We fully expect there will be interest from other grocery retailers to purchase them," Walker said.

But not everybody shares his optimism. Peter Kaufmann, a real estate broker at CBRE and longtime grocer in Winnipeg, including part-owner of Kaufmann Foods at the corner of Donald Street and Broadway until 1999, has his doubts Sobeys will find buyers for all of the stores.

"Who's going to buy the one on Main Street? That isn't exactly the greatest location," he said.

Some possible suitors include Trader Joe's and Piggly Wiggly, he said.

The challenge for any would-be grocer in Winnipeg, Kaufmann said, is the grocery market has changed dramatically over the past decade. Today, 17 per cent of all groceries are bought at big-box retailers such as Costco, Walmart, Target and Shoppers Drug Mart.

John Winter, a Toronto-based retail analyst, echoed Kaufmann's concerns about finding buyers. When the Competition Bureau made a similar ruling after the merger of Chapters and Indigo bookstores in 2001, the newly merged company wasn't able to sell a number of its stores.

"Expansion is difficult because of the inroads made by Walmart and Target. It's certainly competitive at the moment. For a traditional supermarket chain, Safeway maintains its stores very well so there's probably an opportunity to take over a store in a relatively poorly-served neighbourhood," Winter said.

The Jim Pattison Group, a Vancouver conglomerate that includes banners such as Save On Foods, Cooper's Foods and Buy-Low Foods, is one player that has the resources to expand beyond its traditional markets of B.C. and Alberta.

President Jim Pattison declined to comment specifically on the situation in Winnipeg but said Save On Foods is definitely interested in growth opportunities. It opened its first location in Calgary last week and will open two more in the city over the next 10 days.

geoff.kirbyson@freepress.mb.ca

If a local person buys the extra Safeway stores, would it affect your grocery shopping? Join the conversation in the comments below.

Republished from the Winnipeg Free Press print edition October 24, 2013 B7

History

Updated on Thursday, October 24, 2013 at 6:35 AM CDT: Replaces photo, adds map

10:59 AM: Map fixes: Removes Cavalier Sobeys, which has changed hands, and corrects location of marker for Regent Avenue West Safeway.

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