Wednesday, October 23, 2013

Odd Choice.

Safeway has long been a fixture on the Canadian retail landscape.  But its future became unclear when rival grocer Sobeys announced its acquisition of the chain earlier this year.  The federal Competition Bureau has now approved the 5.8 billion dollar sale, but one of the conditions is that Sobeys will have to sell off some of its assets in Western Canada, including both Safeway stores and its existing Sobeys, IGA, and Price Chopper stores.

Yesterday Sobeys announced the 23 stores it will need to sell off.  The single location to be sold in Saskatoon is the Safeway located in the Centre at Circle and  8th shopping plaza.  It's a decision that's sure to leave many Saskatoon residents with questions.  That location is in one of Saskatoon's major shopping centres, and does lots of business.  It has been renovated in the past few years, and also includes a gas station that just opened last year.  If there was a Saskatoon Safeway that seemed doomed to disappear it was the other 8th Street location, located in the Cumberland Square Shopping Mall.  That store is small by modern Safeway standards, has no room to expand, and needs some reno work.  More importantly it is located immediately across the street from a Sobeys.  Of course it is possible this store will simply be closed by its new owners.

Who might buy Centre Mall Safeway?  There wouldn't seem to be any obvious candidates at the moment. Canadian grocery retailer Loblaws already operates a Real Canadian Superstore grocery on 8th Street. Perhaps a chain not already operating in Saskatoon would be interested, although operating a single store might not be the most efficient way to go.

Even with the sales Sobeys will see its holdings increase by 190 stores.  Whether any of these will stay as Safeway stores, or will be rebranded as Sobeys or some other name, it still unclear at the moment.

Loblaws itself is in the middle of buying the Shoppers Drug Mart chain.  The deal is currently under Competition Bureau evaluation.  And it's a big deal, worth 12.4 billion dollars in cash and stock, which should be an indication of how major a brand Shoppers is in Canada.  Besides health care products Shoppers sells various other products, including a considerable amount of food products, which presumably means we'll see Loblaws brands appear on Shoppers shelves if the sale goes through.

No comments: