Freshco Ltd. Is a Canadian discount supermarket chain of stores owned by Sobeys Inc. It was opened in May 2010. As of March 2015, there were a total of 88 FreshCo stores, in all of Ontario.
In December 2017, Sobeys Inc. announced plans to re-brand up to 64 stores in western Canada currently under the Safeway and Sobeys names into the FreshCo banner.
FreshCo intends to offer clients new, great sustenance at markdown costs in a cutting edge shopping setting.
FreshCo expects to achieve the look of a “very well-appointed fresh-format store”, rather than a discounter store boasting the cheapest prices in the market. Freshco’s aim is to make the store walkways more open and spacious.
Freshco offers a wide range of frozen and chilled ethnic products which reflects the community in which they operate. FreshCo also has an aisle named”Fresh Hall” which features on ly fresh products and daily baked goods made from the community bakeries, and a variety of Ontario cheeses and meats. These feature aisle provides customers with great savings opportunities
FreshCo uses the slogan, “Fresher, Cheaper.” If customers are not satisfied with the freshness of the product they can get a refund of their money.
Sobeys Inc. is the second largest food retailer in Canada, with over 1500 stores operating in Canada under a variety of banners. Sobeys Inc has its headquarters at Stellarton, Nova Scotia. It is a wholly owned subsidiary of Empire Company Limited, a Canadian conglomerate.
Sobeys was founded in Stellarton, Nova Scotia by John W. Sobey in 1907 as a meat delivery business. In 1924, his son Frank H. Sobey convinced him to expand into a full grocery business, serving the industrial Pictou County region. From that point until his death, Frank was the driving force behind the business. Sobeys opened its first self-serve supermarket in 1949.
In 1998, Sobeys purchased the Oshawa group and became the second-largest grocer in the country.
Acquisition of Safeway’s
In June 2013, Sobeys purchased Safeway’s Canadian operations for $5.8 billion, subject to regulatory approval. The acquisition added Safeway’s 214 locations to its portfolio. In June 2014, Sobeys announced that it would close 60 of its “underperforming” locations, in the wake of the Safeway purchase. The stores affected were primarily in Western Canada, although some in Ontario and the Atlantic region were also affected.
In July 2016, Empire Company CEO Marc Poulin abruptly left the company after Sobeys reported a $942.6 million loss, which was primarily due to difficulties in integrating the Safeway chain into Sobeys overall operations.
The Financial Post also reported that Sobeys discontinued the loyalty program, and replaced Safeway’s house brands with Sobeys brands, reports of poorly stocked inventories at Safeway locations had impacted the chain’s customer loyalty.
Situation Analysis of the company
Sobeys has decided to finally launch its FreshCo discount chain in Western Canada in 2018 as it races to to catch up with its rival brands that have expanded their presence in a fast – growing segment of food retail.
Empire Co. Ltd., the parent of Sobeys, will begin their transition in 2018 to convert almost 5 of its 225 Safeway and Sobeys stores in Western Canada to Freshco, with bulk of the changes expected to come in the next four years.
As of now, 91 FreshCo stores in Ontario are run by Sobeys and it has been considering to expand beyond that province with the low-cost format. Due to its miscalculated $5.8 billion takeover of Safeway in Western Canada in late 2013 has resulted in several operational mishaps and weak financial results. And it has resulted in huge uncertainties and unexpected expenses as it races to turn around its business.
“The absence of a large discount banner has put us at a structural disadvantage,” Michael Medline, who took over as chief executive officer of Sobeys and Empire almost a year ago, said at an analyst conference call. Discount grocery is the fastest growing segment of the bricks-and-mortar market. As Sobeys prepares to introduce more discount stores, it struggles with a customer perception of overly high prices, added costs of rising minimum wages and a massive transformation.
Empire was also hit by restructuring and transformation charges, which made it post a loss of $23.6-million, compared with a profit of $33.1-million, a year ago. Adding to their woes, investors reacted by pushing down Empire’s shares almost 6 per cent to $24.59 on the Toronto Stock Exchange.
Despite these uncertainties and vulnerabilities, discount section represented 13% of its overall sales and FreshCo ranked 6 among the country in the discount banners. Discount-food selling makes up 40.5 per cent of the estimated $100-billion-plus food-retail market in Canada, according to researcher Nielsen.
No Frills and Real Canadian Superstore, the discount chains owned by market leader Loblaw Cos. Ltd., are among the top low-cost grocery players, while discounters Wal-Mart Canada Corp. and Costco Canada have been rapidly ramping up their grocery offerings very recently.
Mr. Medline has quoted that there is a lot of white space in the discount grocery market and it is picking up quickly than expected.
Mr. Medline said Sobeys has plans to convert the unprofitable stores of Safeway outlets and some of Sobeys to FreshCo outlets in the upcoming years. They also have plans to shut down a limited number of underperforming stores in Western Canada rather than turning them into FreshCo stores.
Sobeys will learn from its FreshCo stores in Ontario, including tweaking the offerings in some of the supermarkets to reflect the tastes of people in their surrounding ethnic communities.
Areas of inefficiency
Wipf , one of the regular Sobeys loyal customer has said that,”A lot of the stuff in the flyer you never have. Prices keep increasing. …I want to keep supporting Canadian companies, but you are sure making it difficult!”
N.S.-based company posted a staggering $942.6 million loss due to the continued fallout from its botched Safeway integration, which, aside from annoyed consumers complaining about out-of-stock products, included logistical snafus, systems integration problems and disgruntled staff members on both sides.
Consolidating buying operations
· Freshco with the use of technology should combine the buying operations of products sold at its stores as well as website. This helps in stamping out duplicate efforts.
· Freshco should implement IoT enabled devices to understand the consumer behavior inside their stores and also mingle the online customer behavior to create an omni channel experience for the end user.
· Freshco should enable On time in full mechanism like Walmart to ensure availability of goods at the right time at the right place. Incorporating this helps them to improve their on shelf availability of products for a greater amount of time.
Empowering the users through the inclusion of intelligent shopping apps
o Freshco doesn’t have a app of its own and this introduces the limitations of understanding their consumers shopping behavior.
o Freshco apps should be enabled with Geo Fencing capabilities to help their customers locate the products in the store.
o Intelligent and intuitive apps to help their customers create shopping list.
Setting up Data Labs
· Setting up data labs like Walmart will help Freshco in understanding the data available from their apps and IoT devices. Mining these data will give rich insights in to the customer behavior; which inturn will improve the competitive edge of Freshco in the market.
· Setting up data labs can help Freshco in introducing bundle values to coupon based on the preferences of the customers.
· Customized product recommendations can be given to the customers through the apps.
Price Comparison app like Walmart
Introducing price comparison apps will bring trust onto the brand