TORONTO — A flood of new square footage for food sales resulting from Wal-Mart Stores’ expansion is proving to be a “disruptive” force in the Canada food retail market, Galen G. Weston, executive chairman of Loblaw Cos., said at an investor conference here.
Wal-Mart, which is converting many of its discount stores across the country to a supercenter format, is affecting fresh food sales in particular, Weston said.
“Even though we’re quite confident about the way we’re competing against them, you don’t open a supermarket with zero sales, no matter how compromised you offer might be,” Weston said in remarks at the Scotia Bank Back to School Conference. “And when you’re putting in footage at the rate they are today, it can’t help but improve their share and it can’t help but come at the expense of those of us who have been around for a long time.”
Weston characterized the market as “soft” lately, noting that although inflation was returning in Canada, shoppers are reacting by trading down. This is resulting in the majority of growth in the discount segment, where Loblaw is well-positioned, Weston said. Weston said that while retailers have been rational, promotional intensity is increasing as retailers in Canada use hot pricing to drive sales.