Sobeys grocery store launches FreshCo

Rebranding of several Price Chopper locations

"The Ontario marketplace, particularly in the Greater Toronto Area (GTA), is changing significantly," said Sobeys president and CEO Bill McEwan. Sobeys Inc. is rolling out a new store concept in the GTA hoping it will help the supermarket chain capture a greater share of Ontario's vast discount grocery market. The former Price Chopper stores are in Ontario in Brampton and Mississauga. This is just the beginning of "dozens" of stores that will be switched over in the next year and a half.

"This isn't just a conversion or a renovation this is the launch of a new brand," he said, describing the bright white buildings that sport a big black FreshCo sign.

"The concept is a result of about 12 to 18 months of extensive research and looking at where do we go next, based on the changes in the consumer landscape, particularly in the GTAbut across Ontario overall." The new stores will contain more fresh produce, more fresh baked goods and more ethnic goods which is something that the competitors do not have, Sobeys' chief executive officer Bill McEwan said in an interview. There is a recognition that each store has a different clientele. The new stores offer multicultural and ethnic foods tailored to the needs and choices of people in the neighbouring communities. "In Brampton, the South Asian population has grown 250 per cent in about 12 or 13 years, and there are varieties of produce that are important and relevant and required to satisfy that marketplace," McEwan noted.

They will offer all that at the same low or lower price than competitors, he added. "We call this discount done right," McEwan said. "Where people are looking for less compromise, we'll be as low as or lower than our competitors,'' he added. "but it's a discount store that's clean, contemporary and unconventionally fresher and cheaper." To keep costs down, the stores will have fewer services, such as staffed deli counters, and will be laid out more efficiently. Customers entering a FreshCo store will first encounter fruit and vegetables in a great hall immediately inside that flows into a deli area, a bakery market, and a local cheese and meat market. "From there you move into an area that's filled with simple shelving units filled with high-value merchandise, which is a main feature of any discount outlet," McEwan said. The FreshCo stores aren't fancy or expensive because the effort is being put into low prices and high-quality products, he said. "It's not about the decor but it's attractive, it's clean, it's contemporary, it's functional and the flow is such that you can get through there with less inconvenience the way it's laid out."

The discount segment of the marketplace is more developed in Ontario than almost anyplace else in North America. "A full 35 to 40 per cent of the food shopping is done in the discount market, so to compete and participate in the retail grocery industry in Ontario, you have to have a strong discount format," McEwan said.

Perry Caicco, managing director of equity research for CIBC World Markets says that aside from improving the assortment of fresh produce he applauds Sobeys for adding higher quality meat, more cheese and baked goods to the FreshCo stores, saying it will help differentiate them from other discounters.

Source:http://www.cbc.ca/consumer/story/2010/05/12/sobeys-freshco-price-chopper

1List and explain the type (s) of Strategic Alternative(s)FreshCo. Is pursuing

2What type of data do you think Sobey's used in their marketing research before they implemented their new strategy. Explain why

3

Can Sobey's new move in the market be considered a case of Product Differentiation in terms of the Positioning Strategy that the company is following?Explain

4 Briefly discuss the Marketing Strategy used by FreschCo to insure they are satisfying their customer needs.