Your local Safeway store could be changing, or it could just stay the same and keep operating with a new owner – Sobey’s of Nova Scotia,
The announcement came last week as Sobeys announced it was buying the chain for $5.8 billion.
Safeway has 213 stores across Canada.
The purchase could be a sign that Safeway is leaving an increasingly tough market as the super chains such as Wal-Mart and Target move in to the food business, said marketing professor Lindsay Meredith, at the Beedie School of Business at SFU.
“It’s a very nasty competitive arena out there.”
Sobeys, which also owns Thrifty Foods, hasn’t yet decided if it will keep the Safeway name or reflag the stores under one of its brands.
Sobeys already has a presence in B.C. through its IGA and Thrifty Foods brands.
Adding Safeway’s 75 B.C. stores will give Sobeys 107 outlets in this province.
That compares to 101 for Overwaitea Food Group, 84 for Loblaws, 25 Wal-Marts and 14 Costcos.
Beedie said if Sobeys owns both Safeway and Thrifty, it could allow for harmonization of prices between Thrifty Foods in the downtown, and Safeway in west Maple Ridge.
But it’s possible some stores could close, if they’re cannibalizing each other, he added.
Meredith added that in suburban areas such as Maple Ridge, price is a major factor for younger shops, as opposed to high-rise areas, where there are many households with only one resident and where profit margins are healthier.
The arrival of Wal-Mart 20 years ago “shook up the whole market,” Meredith said.
“A lot of Canadian retailers suffered.”
The deal with Safeway Inc. also includes numerous in-store pharmacies, gas stations, liquor stores and other distribution or manufacturing facilities across western Canada.
The change of ownership may also mean changing product lines for customers who continue to frequent the stores, as well as possibly different loyalty card systems.
Both Sobeys and Safeway offer Air Miles reward points, but the new operators indicated they will move to eliminate separate loyalty programs.
Big supermarket chains face growing competition as other retailers add groceries to their shelves.
“This is a significant and historic event for Sobeys, which has been proudly serving Canadian food shoppers for 106 years,” Empire president Paul Sobey said.
He called the acquisition an “excellent strategic fit” that strengthens the chain presence in western Canada, and leverages its existing assets to better compete.
Empire officials intend to sell off Safeway stores’ real estate holdings and lease the properties back.
The planned purchase is subject to Competition Bureau approval.
Not everyone’s likes the deal.
Some shoppers posting on Canada Safeway’s Facebook page were critical of Sobeys, while others on Twitter doubt the takeout of a major grocery player will benefit consumers.
“Get ready for higher prices and less competition,” tweeted Vancouver’s Pete Quily.
– with files from Jeff Nagel, Black Press
