Winnipeg Free Press - PRINT EDITION

Grocery stores battle for shoppers, and customers are winning

At least 10 major players are battling it out for your hard-earned food dollar

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At least 10 major players are battling for Winnipeggers' hard-earned food dollars.

WAYNE GLOWACKI / WINNIPEG FREE PRESS FILES Enlarge Image

At least 10 major players are battling for Winnipeggers' hard-earned food dollars. Photo Store

It wasn't that long ago Winnipeg's grocery wars featured two giants -- Canada Safeway and Supervalu -- and a lot of little neighbourhood foot soldiers.

Over the last 25 years, most of those mom-and-pop shops have fallen by the wayside, replaced by a growing number of locations from those two powerhouses -- those stores are getting bigger and bigger, too, of course -- and non-traditional players have got in on the game.

Who could have imagined 10 years ago you could pick up milk at Shoppers Drug Mart, grapes at Walmart and bread at Target?

About the only non-grocery retailer that doesn't want a piece of the food pie is Canadian Tire. It entered the business five or six years ago but pulled the plug not long after it discovered bread and cereal weren't complimentary to cordless drills, spark plugs and lawn furniture.

The competition is only going to heat up from here with Target building a Super Target store, complete with a giant grocery component, at Polo Park and Walmart intent on adding more groceries to its stores.

Red River Co-op

The newest player in the game. The Winnipeg-based company, best known for its booming gasoline retail business, as well as its convenience stores and car washes, has agreed to buy four Canada Safeway stores in Winnipeg. The quartet -- at 1441 Main St., 77 Vermillion Rd., 850 Dakota St. and 1120 Grant Ave. -- represent the company's first foray into the food business since it sold off its food stores in 1983 to keep the company afloat.

Service offering: Premium, lots of fresh produce.

Loyalty program: Profit-sharing with its members will mirror the equity and cash back they get for gasoline purchases.

Quotation: "We don't want to create any false aspirations. The fuel business is very different than food. The margins on food are lower, so (profit-sharing) won't be as lucrative." -- Doug Wiebe, Red River's general manager.

Target

Although Target's results since entering the Canadian market last March have been disappointing -- many customers complain the prices are too high compared to their U.S. stores -- there's no question they have carved out a significant niche. Their grocery offering isn't huge; it's mainly dry goods such as cereal, plus items such as frozen pizza and soft drinks.

Service offering: Low prices, limited selection.

Loyalty program: Customers can save five per cent at the till by using the Target Redcard debit or credit card.

Quotation: "Because (the Grand Forks and Fargo stores are more than two hours away), we'll stay with trying to make sure we're competitive in the marketplace that's right here (in Winnipeg). We want to make sure in any marketplace that we have (some) of the lowest prices and that we offer a great experience." -- Derek Jenkins, senior vice-president of external relations at Target Canada.

Real Canadian Superstore

Known as "Supervalu" in the olden days of Winnipeg's grocery wars, Superstore has firmly ensconced itself as the low-cost provider. It hasn't been all smooth sailing, however. Parent company Loblaw closed down two Extra Foods locations a couple of years ago and still owns the shuttered properties.

Service offering: Fewer services, lower prices. Bag your own groceries. Supervalu charges for plastic bags.

Loyalty program: The PC Plus card, which you can register for by downloading its smartphone app. Customers will receive a reward for buying what they always have and even more rewards if they buy outside of their shopping comfort zones.

Quotation: "Our (loyalty) program is designed to make sure we drive more value and more share of wallet out of our best customers." -- Uwe Stueckmann, senior vice-president of marketing at Loblaw.

Walmart

Already the largest grocery retailer in the U.S., Walmart is aggressively building out its "Supercentre" concept in Canada. These stores include a full-service grocery store, which features meat and poultry, baked goods, a delicatessen, frozen foods, dairy products, garden produce and fresh seafood. Every other player in the grocery business ignores them at their peril. Two weeks ago, they announced their intent to expand the fresh food in their stores.

Service offering: Low prices.

Loyalty program: No traditional loyalty-card program, although last year it began testing a "Scan & Go" app, which offers store-specific weekly ads, upcoming sales and personalized coupons based on shopping habits.

Quotation: "Our customers are shopping differently than they ever have before -- they're using their mobile devices to search for coupons, compare prices and navigate aisles. So in order to meet their ever-changing needs, we're experimenting with innovative technologies like mobile self-checkout, saving them time and money." -- Walmart (U.S.) spokeswoman Ashley Hardie.

Sobeys Inc.

The Halifax-based company didn't even have a presence in the Winnipeg market until 1998 when it purchased IGA. Since then, it has competed with Canada Safeway for the upper end of the market, culminating in the acquisition of its top competitor for $5.8 billion last summer. After selling off five locations, four Safeway stores and its own Price Chopper outlet, Sobeys will have 34 locations in town (22 Safeway, 12 Sobeys and three IGAs). Branding of all of the Winnipeg stores is not an immediate priority so both Safeway and Sobeys banners will continue for the time being at least.

Service offering: Premium, lots of fresh produce and meats. Don't even think about bagging your own groceries.

Loyalty program: This will also remain unchanged in the short term with Safeway stores continuing to offer Air Miles while Sobeys locations counter with the Club Sobeys program. (Club Sobeys enables customers to build up points that can be redeemed for in-store savings on your grocery bill, Aeroplan miles or items in its rewards catalogue.) Bet on Air Miles being the loyalty program into the future.

Quotation: "Branding of the stores is not an immediate priority in the integration. Our focus is on IT/systems integration to get Safeway on the same technology as Sobeys. The rewards offering remains unchanged for the time being. We have, however, said that we will eventually move to one rewards program and understand the importance of Air Miles in the Safeway customer proposition." -- Andrew Walker, senior vice-president of communications and corporate affairs at Sobeys.

Costco

The grocery warehouse giant is perhaps the ultimate in big-box shopping, where you can walk in planning to stock up on steaks and produce and walk out with all of that plus a chainsaw and a big-screen television. Its model is to use low prices to lure as many customers as possible so it can move large volumes.

Service offering: Low prices. Bring your own bags or boxes.

Loyalty program: An annual membership fee enables members to shop at the store. No membership? No shopping.

Quotation: "Affluence is a big part of what makes us successful. (Affluent people) are almost always the smartest shoppers and are looking for value. We're pretty used to competition. We compete in the most competitive market in the world, the U.S." -- Costco co-founder Jim Sinegal.

Food Fare

The five neighbourhood stores owned by the Zeid family throughout Winnipeg are a throwback to a bygone era when the cashiers knew your name, the butcher knew your favourite cut of meat and the owner would help bag your groceries and take them to your car.

Service offering: High-end, personalized service and competitive prices.

Loyalty program: None.

Quotation: "Customers don't want to walk a football field-length parking lot to get to the door. They want to be in and out to pick up their things in a matter of minutes. We're finding people want quality and service, and they're willing to pay a little bit extra." -- Munther Zeid, owner/manager.

Shoppers Drug Mart

Grocery stores have had pharmacies for years, so it only made sense companies such as Shoppers Drug Mart would try to return the favour. Food and household items make up about one-third of Shoppers' sales as it focuses on convenience and value in the food category. Shoppers, which was bought last year by Loblaw for $12.4 billion, has recently introduced food brands such as Simply Food and Nativa Organics, and currently sells about $1 billion in grocery items annually.

Service offering: Convenience. Pick up some groceries while you wait for a prescription. Shoppers charges for plastic bags.

Loyalty program: The Optimum card, which lets customers build up points to use for future discounts.

Quotation: "The thing about retail is you can't not change. Retail constantly changes. Not everything you do works, but you have to try, because otherwise, somebody out there is doing it, and you're going to be roadkill." - Maureen Atkinson, senior partner at retail consultancy JC Williams Group.

Giant Tiger

Canada's largest chain of discount stores, which is owned by the Winnipeg-based North West Company, also uses the low-price, high-volume model. Each store has control over the merchandise that is purchased to best suit the needs of its community. It offers many dry goods, such as cereal, chips, pasta and garbage bags, as well as milk, bacon and eggs.

Offering: No frills.

Loyalty program: Scrubs loyalty card.

Quotation: "The real growth is going to come out of food and services. We commit to bringing shoppers the same convenience and outstanding selection of food, fashion merchandise, everyday products and low prices that they have come to expect from us." -- Edward Kennedy, president and CEO of the North West Company.

Amazon

The retailing giant, best known for selling books, announced plans to get into the grocery business late last year. It plans to start out shipping dry goods, such as coffee, cereal and baby food and eventually expand its product offering. Most food items, including brands such as Campbell, Nestlé, Pepsi and Kellogg, can be shipped using its two-day subscription service, Amazon Prime.

Loyalty program: N/A

Quotation: "No one customer is the same, so our focus is on providing a broad selection of brands so customers can easily and instantly find and buy exactly what they are looking for." -- Amazon.ca country manager Alexandre Gagnon

Republished from the Winnipeg Free Press print edition March 14, 2014 ??65535

History

Updated on Friday, March 14, 2014 at 6:44 AM CDT: Changes headline

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