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Canada Retailers Tout Innovations

TORONTO — With the specter of a U.S. supercenter invasion hanging over them, representatives from Canada’s big three conventional supermarket chains last week said they would rely on innovation and differentiation to defend their turf amid a coming explosion in retail square footage.

As previously reported, Minneapolis-based Target is scheduled to enter Canada by taking over former Zeller’s stores beginning early next year. Wal-Mart Stores, based in Bentonville, Ark., is in the midst of a large-scale conversion of its discount stores to the supercenter format and is adding about 40 new sites a year.

“Everyone’s getting ready for a more competitive environment over the next two to three years,” Perry Caicco, an analyst at CIBC World Markets, said at the CIBC Retail and Consumer Conference here last week, where representatives from Loblaw Cos., Sobeys and Metro all spoke. “We’ve seen a little less strategy and a lot more tactics than we’ve seen before.”

Vincente Trius, president of Brampton, Ontario-based Loblaw, detailed plans to lead Loblaw on its own growth plan beginning in 2013 but said his top priority is to “do what’s right for the customer” by making sure Loblaw adopts a more customer-centric focus.

“Customers tell us they absolutely love our brands, but when you push them to tell us what we could do better they challenge us from a standpoint of value. They challenge us from a standpoint of selection and they challenge us from a standpoint of service. But most of all they challenge us on consistency,” he said.

Loblaw can maintain its share of the food market with around 500,000 square feet of organic growth per year, Trius added, saying he saw an opportunity to experiment with smaller-format stores. Other avenues of growth include its Joe Fresh apparel line and a loyalty card program to be introduced next year.

Eric LaFleche, chief executive officer of Metro, in a separate presentation said the Montreal-based retailer has prepared for competition by emphasizing differentiation in its fresh departments, both in conventional and discount banners. In Quebec, where Metro is a market leader, the impact from six new Wal-Mart supercenters so far has been “quite modest,” he said.

“When they get to 16 or 26, we’ll see how it goes,” LaFleche said. “So far their impact is negligible, and we did prepare. We are ready to compete.”

Bill McEwan, CEO of Stellarton, Nova Scotia-based Sobeys, said his company needs to “accelerate” in order to take advantage of having developed a “best in food” positioning and leading productivity initiatives.

“We need to do whatever is necessary to put ourselves in a position to execute on a different plane than we have for the last 10 years,” he said.

Its initiatives include more robust customer insights and acquisitions he said can enhance Sobeys’ overall offering, using for example its recently completed purchase of Shell gas stations.

“Rather than wait for some magical solution in a big acquisition that absolutely fits our food focus strategy, what are elements that can fit with our strategy? What are things that don’t compete with our strategy but can enhance it?”

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