Sobeys, Safeway owner expands discount model

Empire Co., the owner of Sobeys, plans to convert up to 25 percent of its 255 Safeway and Sobeys full service format stores in Western Canada to its discount FreshCo banner over the next five years.

“This is a very attractive strategic and financial opportunity for us that will grow our market share in the western provinces in a profitable way,” said Michael Medline, Empire chief executive officer.

“Our comprehensive research and analysis shows that the West is fertile ground for ‘small box’ discount, and that our FreshCo banner will resonate with consumers in Western Canada.”

The company’s Freshco brand of stores currently operates in Ontario, focusing on lower prices but high quality produce.

A number of locations will provide an enhanced ethnic offering that has been introduced in the Ontario market.

In the fourth quarter of fiscal 2017, Empire launched Project Sunrise, a three year transformation intended to simplify the organizational structure and reduce costs.

The transformation is expected to result in about $500 million in annualized cost savings by fiscal 2020.

Empire bought Safeway in 2013 but has struggled to incorporate the chain into its business and has posted poor financial results.

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