PRESS RELEASE: JANUARY 31, 2011

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Wal-Mart Targets Grocery Buyers

Walmart's food section will offer a wider variety of cheeses, particularly Quebec cheeses, than the company's supercentres carry in other provinces, says company spokesperson Alex Roberton.

Wal-Mart Canada Corp. said yesterday it is entering the Quebec grocery market with the transformation of existing stores into two new supercentres in Laval and one in Mascouche.

The Montreal-area stores are three of 40 new supercentres -regular Walmarts expanded to include a full grocery section -being rolled out this year in Canada, as part of a $500-million investment by the world's largest retailer. And with Wal-Mart now looking to set up a distribution centre in Quebec, it appears that the world's largest retailer intends to grow in la Belle Province.

Yesterday's announcement comes at a time when Wal-Mart is poised to face an onslaught of 100 to 150 Target outlets in Canada, beginning in 2013. But Wal-Mart's plans to expand from 124 to 164 supercentres nationally by 2012 is expected to have a greater impact on Quebec's grocery chains - Metro Inc., Sobeys Inc. which operates under the IGA banner, and Loblaw Cos. Ltd. -each of which controls about a third of the market. Indeed, some observers expect the arrival of supercentres in Quebec will put downward pressure on prices and increase pressure on workers in the province's heavily unionized grocery sector, almost five years after the stores' launch in Ontario sparked a food war.

Shares in Metro dropped 74 cents yesterday to close at $42.88 in Toronto trading. A Metro spokesperson couldn't be reached for comment.

"What we've seen in other markets is that it (the arrival of supercentres) has pushed prices down," said Alex Roberton, spokesperson for Wal-Mart Quebec. "But we'll have to see what the impact is going to be in the new markets where we're putting supercentres. At this point, our focus is on providing our customers with good quality fresh produce at a price that doesn't force them to choose between their budgets and having good produce."

In the short term, the long-expected arrival of supercentres in Quebec will affect neighbouring stores north of Montreal, said Marie Claude Michaud, a food marketing consultant at Groupe Dancause Inc. The longer-term impact is contingent on how quickly Wal-Mart rolls out its grocery stores.

"I think there will be some games with prices, but I think Wal-Mart's arrival will play out on two-levels and many of these chains will focus on customers' shopping experience," Michaud said. "If they only play the price game with Wal-Mart, they won't win." Compared with consumers in the rest of the country, Quebec shoppers are willing to spend more for specific products and are more particular when it comes to fresh foods like cheeses, Michaud said.

 

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