Sobeys grows distribution centre

Hey there, time traveller!
This article was published 24/02/2012 (5123 days ago), so information in it may no longer be current.

After a false start a few years ago, Sobeys is about to build a massive new distribution space in Winnipeg, in part to handle the new business it’s going to be doing with Target stores in Canada.

Almost five years ago, the Nova Scotia-based grocery chain announced plans to build a big new distribution centre in Headingley to replace its aging Inkster Boulevard location.

But circumstances conspired against the company and that project was scrapped some time ago.

Instead, the company is about to break ground on a 121,000-square-foot expansion to its 200,000-square-foot Winnipeg centre at 1800 Inkster.

Mike Lupien, the Edmonton-based spokesman for the company’s western Canadian operations, said, “It’s a 30-year-old building. It’s done a good job for us but now it’s time to put some money into the facility.”

In addition to adding 50 per cent more space to its Winnipeg footprint, the centre will be outfitted with bigger freezers and refrigeration space and a reconfigured dry-goods area.

The development is part of a pan-western upgrade to Sobeys’ distribution facilities. The company is building a 150,000-square-foot facility on 7.6 hectares of land near the Victoria Airport. It’s also renovating its 200,000-square-foot centre in Calgary.

Lupien would not disclose the investment the company is making.

The expansions come on the heels of last fall’s announcement that beginning in early 2013, Sobeys will supply Target’s food and grocery requirements for frozen, dairy and dry grocery products.

Lupien said the investment in the distribution network in the West was in the planning stages before the Target deal was contemplated.

But analysts have already noted the bump expected to Sobeys’ operations, given its distribution centre will start operating at higher levels.

Sobeys is the first new Canadian supplier to be confirmed for Target’s much-anticipated arrival into the Canadian market.

The Minneapolis-based retailer is planning to open 125 to 135 stores in Canada in former Zellers locations — including at least four in Winnipeg — starting in March 2013.

On Thursday, Target Corp. issued strong year-end financial results with sales up 4.1 per cent to $68.5 billion and earnings of $2.92 billion.

It was the same day it opened a pop-up store in Toronto to give Canadian retailers a taste of what’s to come.

Richard Talbot, a retail consultant with Talbot Consultants International Inc., said there likely will be opportunities for other Canadian suppliers to serve the successful chain that has 1,763 stores in the United States.

But he said, notwithstanding that, Target executives have expressed a desire to make the stores as Canadian as possible, they are not likely to go out of their way to stock Canadian goods if there’s better value elsewhere.

“I think, generally any of these major retailers would prefer to source goods from within Canada if it’s possible,” Talbot said. “There’s reduced transport costs and duties and all that stuff.”

But he said Canadian consumers are not necessarily as loyal as all that.

“There will be business opportunities (for Canadian suppliers), but Canadian consumers won’t buy Canadian if the price is better or the quality is better elsewhere,” Talbot said. “Look at all the cross-border shopping that goes on all the time.”

Lupien said the expansion of Sobeys’ distribution centres will make its operations more efficient in general.

martin.cash@freepress.mb.ca

Taking stock

Sobeys’ expanded Winnipeg distribution centre will service Manitoba, northwestern Ontario and eastern Saskatchewan, where the company has:

— 17 Sobeys stores

— 12 IGA stores

— 3 Cash & Carry

— 1 Price Chopper