FCL posts record sales Officials warn of competitive challenges ahead with Walmart, Target
Federated Co-operatives Ltd. announced record sales for 2012 last week, but delegates at its annual meeting in Saskatoon were warned of increasing pressure from large competitors in key business sectors.
“The marketplace is changing and to compete we need to keep improving. We know that the status quo is not an option,” FCL chief executive officer Scott Banda told the audience.
With big players like Walmart and Target in the retail food sector and Glencore and Agrium in the crop supply business, FCL officials outlined challenges that its rural and urban members across Western Canada will face.
“These competitors of ours continue to get larger and more sophisticated. They are changing their models. They’re changing their strategies, so they can target their customers and compete more effectively,” said Banda.
FCL, which employs about 20,000 people, recorded sales of $8.86 billion in 2012. That’s up seven percent from 2011 and represents growth across its energy, food, home and building supplies, crop supplies and feed businesses.
Sales of crop supplies totalled $353 million, up from $289 in 2011.
“Recent changes to the marketing of grain in Canada has opened up a whole new wave of international competitors in our market,” said Banda. “These competitors are pursuing grain in Canada, but they bring with them a whole number of other business lines with them that compete directly with us.”
Officials outlined plans for a customer-focused brand and marketing strategy, building on its presence in 500 communities.
“Where are the changes happening and where are there maybe some gaps in service areas? We see some geographic opportunities, particularly in the province of Alberta,” Vic Huard, vice-president of corporate affairs, said in an interview.
Investments in new technology and back-end infrastructure and inventory systems will challenge smaller retailers, officials said.
The organization has 234 retail members across Western Canada, down from last year following several amalgamations. FCL’s annual report shows that four members — Burnaby in British Columbia, Kinasao in Saskatchewan, Magrath and Orion in Alberta — were removed from membership.
Huard highlighted the merger of large co-ops in Red Deer and Innisfail, Alta., and said further amalgamations are in the works.
“We know that there are boards out there talking. We encourage them to talk all the time …” said Huard.
“We don’t control that. It has to happen at the retail level. People in the communities have to make these initiatives work.”
FCL reports it spent $1.3 billion in capital projects in 2012, with several slated for completion this year, including an expansion of its refinery complex in Regina, the expansion of its Saskatoon warehouse and a new petroleum terminal near Calgary.