WESTERN CANADA – There is a new face around the towns of Western Canada, and its not your run-of-the-mill new neighbor experience. FreshCo, a discount food chain, is moving into Western Canadian neighborhoods next year. This is a move by its parent company, Sobeys Inc., as it plays catch up with its competitors who have stepped into the low-cost food retail arena.

"The absence of a large discount banner put us at a structural disadvantage," Michael Medline, Chief Executive Officer of Sobeys and Empire, told an analyst conference call on Wednesday according to The Globe and Mail. "Discount grocery is the fastest growing segment of the bricks-and-mortar market…We need to participate to a greater degree in this higher-growth segment."

While the majority of the changes will take place over the coming four years, Empire Co. Ltd., the umbrella company under which Sobeys and Safeway reside, has its eyes set on transitioning 65 of its 255 of the two retailers' stores in Western Canada to the discount chain locations.

FreshCo is not a new face to every customer, as it has an established consumer base in Ontario. The movement to Western territory has been long in the making, but the retailer has gone through some difficulties along the way, including the anti-climactic financial results of its Safeway takeover in Western Canada for $5.8 billion in 2013.

Sobeys is welcoming more discount stores to challenge competitors’ perception of high prices. Project Sunrise, the company’s attempt to realign its operations in the coming months, is another way it is tackling the evolving market.

Estimates for minimum wage costs show up to $25 million in 2018 and $70 million the following year, a financial offset the company is already weighing. That being said, hope FreshCo could pervade the discount market, which currently makes up 40.5 percent of Canada’s $100 billion+ food retail market, is the next strategic step. On top of that, FreshCo is ranked the sixth discount banner in the country, according to Medline in the same article.

While looking to new and improved tactics to highlight its low pricing, FreshCo is offering a word to the wise, too, as Medline expressed in the same article that Sobeys will be altering offerings based on consumers’ tastes and surrounding communities.

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FreshCo Sobeys