|Title:||Canada top 12 food retailers by sales in dollars for 2010|
Start of full article - but without data
Top Canadian Food Retailers
(Estimated 2010 sales in billions)
Loblaw Cos., Ltd. $XX.XX
Sobeys $ XX.XX
Costco Canada * $X.XX
Canada Safeway $X.XX
Walmart Canada * $X.XX
Overwaitea Food Group $X.XX
Alimentation Couche-Tard * $X.XX
Shoppers Drug Mart * $XXX.X million
The North West Co. * $XXX.X million
H.Y. Louie Co. $XXX.X million
* Food sales only
Amounts are shown in U.S. dollars using conversion rate on
Source: CIRC World Markets, Canadian Grocer Annual Directory
of Chains and Groups.
Canada has been satirically called "The Great White North" and ridiculed unmercifully by television's South Park. Then there is the long-standing joke about its four seasons-winter, still winter, almost winter and road work/construction.
The fact is that the country, which is X,XXX miles wide and has XX provinces and three territories, is home to one of the world's most highly diversified and vibrant economies with a population that is about one-tenth that of the U.S. Moreover, the recession was mild, housing prices have not plummeted and the unemployment rate is far lower than in the U.S.
It is also a place where the daily battle for food sales is escahating--particularly in Ontario and Quebec--thanks to daily "in-your-face" pricing and well-entrenched chains and independents. Cross-channel competition is also about to heat up, as Walmart steps up its game and Target explores a Move north. [See sidebar, page XX]
On another level, Canada is a confusing market, with chains supplying competing independents and franchisees, chains supplying other chains and retailers with distribution operations supplying everyone else. Asked how this all happened, one source says: "It just grew up that way."
But the prize is 2010 grocery sales of $XX.X billion (U.S. dollars), up X.X% over the prior year, according to figures from Canadian Grocer magazine and CIBC World Markets. However, that figure may only include pure-play supermarket chains and independents, not the burgeoning number of ethnic stores in urban and suburban areas, which could bring total grocery sales to about $XXX billion.
Meanwhile, a report by OSEC Switzerland's foreign trade promotion unit, estimates that retail food store sales will grow at a rate of X.X% annually through 2014, making Canada a prime export destination for manufacturers. However, the largest retailers are also the predominant national distributors and private label purveyors so they usually have the upper hand in negotiating with manufacturers.
Additionally, Canadian grocery retailing is highly concentrated. The top three chains--Loblaw, Sobeys and Metro account for nearly XX% of supermarket sales. Loblaw Cos., which operates XX different banners is the leader with more than $XX billion in sales. It is followed by Sobeys at $XX million and Metro at $XX.X billion. Walmart is sixth in grocery sales at $X billion.
But Walmart is banking on international expansion to offset slower growth in the U.S., and sees a great deal of potential north of the border. Moreover, indust') observers say Canada could be an ideal place for expansion of its Neighborhood Market format and even the new Walmart Express.
Overall, chains have an estimated XX% share of food sales across all provinces. The exception is Quebec, where chains have a XX% share. This can be attributed to the Province's labor regulations and strong union presence, which have delayed the growth of large Canadian grocers as well as Walmart.
Target looks north
But the big buzz in Canadian retailing--albeit two years away--is the planned entry of Target--the chain's first foray outside the U.S.
"People drive across the border to go to the Target stores in Buffalo and bet that on any given clay half the license plates are from Ontario," says Rob Gerlsbeck, editor-in-chief of Canadian Grocer magazine.
The question asked by observers is whether consumers will be as excited about Target and its brands when it is not across the border but down the street.
Interestingly, the most intense competition on the shelves does not take place between brands and private labels, but between multitiered private label offerings, which can account for XX% or more of retail.
Some fed the competitive nature of the market has been overplayed. Grocers in Canada have been generating good returns over the past several years and part of the reason is that they kept their powder dry in terms of price competition and avoided damaging price wars," says Kevin Grier, senior market analyst for the George Morris Center, a Guelph, Ontario-based agricultural think tank.
However, he concedes mat walmart has upped the ante and companies such as Shoppers Drug Mart and Canadian Tire are starting to have an impact. "Canadian Tire is getting serious. They've announced that every new store will have food departments," Grier says,
But Toronto-based Loblaw Cos., whose $XX billion in annual sales is twice that of its nearest competitor, remains Canada's big gun. Its extensive private label program, headed by President's Choice, has changed the eating habits of a nation. About X,XXX items were added this year alone and controlled labels account for approximately $X.X billion in sales.
This formidable chain has more than XX distribution centers and the largest fleet of trucks in Canada. It operates X,XXX corporate and franchise stores under XX different banners across the country and supplies numerous independents.
It also has XXX stores known as "associate" stores. The definition is hard to pin down. They are not franchise operations, since the chain owns the store and the real estate. They are run by owner-operators who are responsible for such things as inventory and payroll.
Despite inroads by Walmart, Loblaw's nofrills format, most of which are franchised, has garnered the largest market share of any discounter in Canada and is now considered the company's strongest banner. Meanwhile, Loblaw, which was in financial crisis a few years ago, is in the fifth year of a five-year turnaround and rebuilding plan.
"They let the company go down too far in terms of basic capabilities like the supply chain, procurement, category management, billing, marketing and merchandising and have had to address then all simultaneously while sales were declining and morale was poor," says Dave Marcotte, senior vice president, retail insights for Kantar Retail, an inter national research firm with U.S. headquarters in Cambridge, Mass. "A lot of moving parts stopped moving and four or five years ago a lot of people wouldn't have given them a XX/XX chance. But they've done very well and are back to a growth projection of X% to X% annually."
The chain's renewal plan has included the largest technology infrastructure program ever implemented by Loblaw, including deployment of enterprise resource planning, warehouse and transportation management systems.
Loblaw is also revamping its store network. In 2010, it renovated XXX stores and expanded its nofrills banner with nine additional units in Western Canada and six in the Atlantic Provinces. It also franchised XX Provigo stores, strengthening its position in the Quebec market. Additionally, the company repositioned XXX Maxi and Maxi & Cie stores. Maxi is the Quebec equivalent of nofrills, while Maxi & Cie is a hypermarket. Both were originally founded by Provigo. The company also reportedly plans to double the size of its T&T Asian-oriented stores over the next few years.
This year, the chain is completing the integration of the new planning, forecasting and replenishment system for the stores, but restructuring supply chain technology is expected to continue for another XX months, say company officials.
Sobeys adds to distribution strength
One of Loblaw's main competitors is Sobeys. Based in Stellarton, Nova Scotia, Canada, the chain is owned by the Empire Co. Ltd., a holding company also based in Stellarton. It is controlled by the Sobey family and got its start as a distributor. The holding company is still in that business through its ownership of TRA Atlantic and its foodservice operation supplies just about every operator in the Atlantic and Maritime Provinces. Empire is now beefing up its retail distribution capability in Quebec with plans to build a new automated warehouse in Terrebonne that will significantly lower distribution costs.
Sales are nearly $XX billion on about X,XXX stores, including XXX corporate supermarkets., convenience stores, drug stores and gas stations, while supplying XXX franchise operators.
Sobeys has the IGA banner in Quebec and Western Canada. At one point it planned to convert IGAs in Ontario to Price Chopper stores. But most Price Choppers are being converted to the highly successful FreshCo discount format in a direct assault on Loblaw's nofrills and Metro's Food Basics, sources say.
"FreshCo is a more up-to-date concept than Price Chopper," says Natalie Berg, global research director for London-based Planet Retail.