FreshCo outlets coming to town

Hey there, time traveller!
This article was published 20/07/2018 (2670 days ago), so information in it may no longer be current.

Sobeys Inc. is going to test Winnipeg’s appetite for discount grocery stores with the opening of the first FreshCo outlets in Western Canada.

Sobeys announced it will convert Safeway stores at Jefferson Avenue and McPhillips Street, and Kildonan Crossing on Regent Avenue, into FreshCo groceries, which have proved popular in Ontario.

Discount grocers appeal to customers whose prime concern is price. The stores claim to offer lower prices by cutting services and product selection to reduce costs. Customers are also required to bag their own groceries.

Such stores tend not to have in-store delis and bakeries, like conventional grocers, although there will be some butchering at FreshCo. They mostly sell meats and bakery products from an outside supplier.

Sobeys said the move follows customer feedback, demographics and the evolving preference of consumers.

“We’re late to the party in that we’re last major retailer to put discount in Western Canada,” said Mike Venton, executive vice-president of Sobeys discount division.

But at the same time, the company feels poised to take advantage of the growing trend to lower-priced outlets. FreshCo will try to be different from other large discount grocers such as Walmart and Superstore by being smaller and easier to enter and leave, like a convenience store.

“We’ll be a convenient, very aggressively priced store with a real focus on fresh food,” Venton said.

The Canadian-owned Sobeys owns 23 Safeway stores in Manitoba. The conversions will bring that number down to 21. Sobeys launched FreshCo in Ontario in 2010 and now has 92 stores in that province.

There is a movement towards discount grocers. Competing firm Loblaws opened discount stores in Winnipeg in 2015, converting four Extra Foods groceries into No Frills outlets.

The two Safeways will be closed for renovations effective Oct. 13. The FreshCo stores will open in the spring of 2019.

Sobeys purchased the Safeway banner in 2014, but the transition has not gone smoothly. Sales have fallen, profits have dropped and Sobeys has lost a significant amount of market share since then.

That left the union representing store workers with little choice but to bargain the best arrangement possible for its members, said Jeff Traeger, president of the United Food and Commercial Workers, Local 832.

“(Management) told us very clearly when we started bargaining in early January that the alternative was to close underperforming stores and that would mean a massive number of layoffs,” Traeger said.

No employees will lose their jobs as a result of the conversions.

“We knew it was not going to be viable for them to just continue to operate (those stores) as Safeway, given that Loblaws moved into the discount market,” Traeger said.

“These type of stores, the discount grocers, are becoming more and more popular in Canada as a larger percentage of the population seems to be primarily concerned with saving money at the grocery store,” Traeger said.

Existing staff have a number of options. The senior 20 per cent of employees have the option to stay in the discount grocery stores and keep their Safeway wages and benefits.

Employees who don’t want to stay in the store can leave that location and bump into any other Safeway store, based on seniority. They would provide the company with a list of preferred stores to work at.

A second option is to take a buyout of up to $50,000 for full-time employees, and $15,000 for part-timers. Another option is a buydown. You can stay at the store under the new working conditions and lower wages at $40,000 for full-timers and $10,000 for part-timers.

Under the new wage scale, the top rate for full-timers would fall from $17.85 per hour to $15.45, and part-timers from $17.85 to $12.15.

“It’s less money, but that’s very traditional in the discount grocery business,” Traeger said.

“There’s not a single… member working in either of these stores that is going to be forced to take a pay cut.”

Traeger expects most employees will choose to stay at Safeway and work at different Safeway locations.

Sobeys owns or franchises approximately 1,500 stores in all 10 provinces under retail banners that include Sobeys, Safeway, IGA, Foodland, FreshCo, Thrifty Foods and Lawton’s Drug Stores. Sobeys, its franchisees and affiliates employ more than 125,000 people.

bill.redekop@freepress.mb.ca