Winnipeg Free Press - PRINT EDITION

Adding groceries pays off for Co-op

Business close to that of Safeway stores it acquired

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RED River Co-op's addition of produce, pastries and pasta to its petroleum business will be paying dividends next winter.

The newest player in the city's ultra-competitive grocery business is pumped about the early returns since taking over four Canada Safeway stores in May.

"We're very happy," said Doug Wiebe, Red River's general manager. "We're on our target. We're very close to what Safeway was doing (year-over-year). Our traffic counts are almost equal."

'Many people will shop at the nearest store no matter what the banner is, because it's more convenient'

The four long-time Safeway locations, at 1441 Main St., 77 Vermillion Rd., 850 Dakota St. and 1120 Grant Ave., were sold by Sobeys Inc. in conjunction with a ruling from the federal competition bureau following the Nova Scotia-based company's $5.8-billion purchase of Safeway last summer.

Red River is also setting itself up for some serious cross-promotion. It has seen some good uptake on discounts offered at its gas bars -- such as a coupon for a free pineapple, for example -- for shopping at its grocery stores, Wiebe said.

He is also pleasantly surprised by the numbers he's seeing considering the four store openings were "soft" and the grand opening won't take place until Sept. 6 at its St. Vital location. Since getting back into the grocery business for the first time since 1983, Red River has seen new memberships soar by 11,000. That has pushed its total well past 250,000 and a far cry from the 70,000 it had just seven years ago.

Red River members share in the co-operative's profits every February.

It's too early to say if Red River will look to further diversify its Manitoba business through the purchase of more grocery stores, Wiebe said.

"We've just pulled off our first couple of financial statements and the board hasn't had a chance to dig into that and assess the information. It will be a couple of months before we consider any new builds or acquisitions (for groceries)," he said.

In the meantime, Red River is preparing to expand its gas-bar network with a new location, including a convenience store and car wash, in the Bridgwater development in south Winnipeg, which is set to open in early 2015.

The good news for Red River, Toronto-based retail analyst John Winter says, is it will get a chance to keep the vast majority of Safeway customers from the four locations in question.

"Many people will shop at the nearest store no matter what the banner is, because it's more convenient," he said.

Provided Red River is competitive from a price and service point of view, Winter said it should "dominate" in a 1.6- to 3.2-kilometre radius around its stores.

"That's the way Canadians shop. You don't travel huge distances for food as long as your expectations are met," he said.

geoff.kirbyson@freepress.mb.ca

Republished from the Winnipeg Free Press print edition August 13, 2014 B4

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