Red River Co-op adding three new stores

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This article was published 19/06/2018 (2827 days ago), so information in it may no longer be current.

Red River Co-operative Ltd. is picking up three more grocery stores — this time outside the city — and continues to look for more locations inside Winnipeg, as well.

The co-op announced it is picking up Marketplace stores in Selkirk, Stonewall and Lorette from Federated Co-operatives Ltd. (FCL), which is transitioning out of retail.

The leases are for 20 years with options to purchase, said Doug Wiebe, Red River chief executive officer. Depending on how the operations perform, that will determine a final purchase price, he said.

“We’ve put together some feasibility studies and we want to make sure the numbers we’ve identified for growth are achievable. That will dictate whether we continue to lease or if we look at acquiring the stores,” Wiebe said.

Red River Co-op entered the grocery sector in 2014 when the federal Competition Bureau ordered Sobeys, which had acquired Safeway, to sell off some stores across Western Canada.

The co-operative network ended up buying 14, including four by Red River Co-op: in St. Vital Shopping Centre, Southdale, Grant Park Shopping Centre and on North Main Street. The Main Street location was later closed.

The acquisition of an additional three stores enlarges its footprint in the grocery sector, but also expands its services to members beyond the Perimeter Highway.

Red River already has gas bars in Selkirk and Stonewall.

Wiebe said there will be extensive upgrades to the three Marketplaces, including new equipment, refrigeration upgrades, relocation of assets and new decor. “You’ll see the co-op shields just like at our gas bars,” he said.

Red River also wants to expand inside Winnipeg, where it has 300,000 members but no services outside of gas bars in many parts of the city.

“We are pursuing other sites in the city,” Wiebe said. “We’re fairly new in the food game — it’s since mid-2014 when we entered the food business — so we continue to look at sites to expand in the city. We know we need more.”

Wiebe said its former Main Street store was a very old facility that Red River managed to grow significantly. Then an abandoned Extra Foods store next door was reopened as a No Frills and the co-op grocery lost volume. As well, the landlord refused to sell the property and wanted a significant increase in rent. So Red River shuttered the store.

Federated Co-op vice-president Pat Smith said earlier this year FCL was looking to divest itself of the Marketplace stores and focus on its core business as a wholesaler.

He reiterated that in a prepared statement on Monday.

“FCL’s primary business is serving the more than 180 independent retail co-operatives across Western Canada, largely as a wholesaler,” Smith said. “This is an opportunity for Red River Co-op to expand its network and allow FCL to step back from directly operative brick and mortar stores.”

Red River wasn’t interested in acquiring the Marketplace store on Henderson Highway. That is slated to be closed.

“That one has been underperforming for some time,” Wiebe said.

“We knew it wasn’t going to be a viable option.”

With the Henderson Marketplace closing, that leaves just the Marketplace in St. Norbert as the last one owned by FCL. It was closed in January due to flood damage from a water-main break.

It is being rebuilt into a larger grocery store, in the 25,000 to 30,000 square foot range, that will reopen next year. FCL’s Smith said earlier this year the St. Norbert store will be leased to another co-op, as well. An FCL spokesman said Monday that retail co-ops are evaluating and conducting feasibility reviews on the store.

Wiebe said a new Red River store in Winnipeg wouldn’t have to be gigantic like many newer grocery stores. Current Red River Co-op grocery stores include the 57,000 square feet on Grant Avenue — and 48,000 square feet in Southdale.

“I think if we were building a store today, we’d probably be looking in the 35,000-square-foot range,” he said.

Red River Co-op members enjoy membership benefits, including profit sharing.

In 2017, Red River Co-op members shared in $29.3 million of profits.

About 150 staff working at the three rural Marketplace locations will continue their employment.

Both sides have agreed to work together to ensure customer service during the transition. The dates when the stores will open under Red River Co-op ownership are:

July 12: Selkirk — 335 Main St.

July 17: Stonewall — 420 Main St.

July 19: Lorette — 11 Laramee Dr.

bill.redekop@freepress.mb.ca