Sobeys closes Winnipeg warehouse

Sobeys is closing one of its Winnipeg distribution centres. The warehouse, on King Edward Street, will be shuttered in about a year.

The warehouse was among several run by Canada Safeway in the western provinces. Sobeys bought Safeway in 2013.

Keri Scobie, communication manager for Sobeys West, told Canadian Grocer that the business from the shuttered warehouse would move to other facilities. Sobeys operates two other warehouses in Winnipeg: the Safeway Empress Freezer warehouse and a Sobeys' warehouse on Inkster Boulevard.

The closure is a result of Sobeys’ efforts to integrate Safeway into its businesses and find $200 million cost savings. That’s the number Sobeys estimated it could save over three years by combining Sobeys and Safeway.

Scobie said that Sobeys began to examine its distribution network in the western provinces last year and found room to reduce the number of DCs in Winnipeg.

“Even with the growth that we expect in the coming years, the combined capacity of these facilities is more than the business is going to need,” she explained in an email, noting that the King Street warehouse’s lease is also set to expire.

Around 172 employees who worked at the warehouse will lose their jobs. Some, however, could find work at Sobeys other two warehouses in Winnipeg, given that those facilities are expected to see an increase in business, Scobie said.

She added that Sobeys is still in the process of analyzing the future of the rest of its distribution network in Western Canada.

In an earlier column on Canadian Grocer, logistics expert Mark Wulfraat of MWPVL International, examined Safeway's and Sobeys' combined distribution capabilities and found that the "the most obvious overlap in distribution infrastructure exists in the cities of Winnipeg, Calgary and Edmonton."

He also noted several limitations for the King Street warehouse in Winnipeg. Among them: its age (it was opened in 1962) and the fact there is little room to expand the 427,000 square foot facility.