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FreshCo heading to Winnipeg

Sobeys plans to convert more than 60 Safeway locations to FreshCo in Western Canada over the next five years

Sobeys has chosen Winnipeg to open its first FreshCo stores outside Ontario.

The company plans to convert more than 60 Safeways to the FrechCo banner in Western Canada over the next five years. The two Winnipeg Safeway stores will close Oct. 13 for renovations and reopen next spring. The stores will include new branding and consumer experience that were introduced in London, Ont. late last month.

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The London stores have a new logo, a more open concept with additional space for fresh product, updated displays and price messaging to support a new tagline: lowering food prices.

The price positioning is also being reinforced by three, new customer guarantees. The FreshCo stores will match lowest prices from competitors, provide rain checks with 10% off discounts on any item out of stock and what it's calling a “double fresh guarantee”—replacing and reimbursing a product if a customer is unsatisfied.

“The new branding reflects the stronger discount tone while retaining our commitment to quality fresh foods,” said CEO Michael Medline during an analyst call to discuss Q4 results. “It includes the change to our logo, our tagline, and our store décor. We launched four pilot stores in London, Ontario with the new branding on June 21.” He said converting to FreshCo’s was one of the key moves to fix “underperforming Safeway and Sobey stores in the West.”

Taking FreshCo to Winnipeg became possible after the company negotiated an agreement with UFCW 832 to amend the contract that covers 2,200 Safeway workers across Manitoba.

“We are the first Western province to get a contract done and to get stores converting,” Jeff Traeger, president of UFCW Local 832, told Canadian Grocer.

Negotiations included “very tight concessionary bargaining,” he said. With Safeway sales declining, Sobeys said it had to convert some stores to FreshCo or close locations. That meant accepting the lower wage rates for the FreshCo stores than what was set for Safeway employees in the most recent contract signed earlier this year.

Employees at the stores being converted were given four options, said Traeger. The most senior 20% of staff could stay at FreshCo with their Safeway salary; others could transfer away from the FreshCo store to another Safeway store; they could take a buy-out and leave the company, or they could take a lower salary along with a one-time lump sum payment.

Early this year, Sobeys said it planned to open five FreshCo stores in British Colombia if it could negotiate favourable terms and conditions in a new labour agreement. In April, with contract talks stalled, the government appointed a mediator at the union’s request. Both sides have submitted written proposals, which are being reviewed by the mediator.


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