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Loblaw to test health store format

New "Nutshell" banner will likely take on Whole Foods stores

In a Nutshell, Loblaw Cos. Ltd. is getting into the organic food space.

A company spokeswoman confirmed to the Financial Post last week that the grocery retailer is opening a new “food and healthy living store” this fall.

The 9,000-square foot store, Nutshell Live Life Well, is set to open on Toronto’s King St. West.

On its Twitter feed, Nutshell said that the store would offer “fresh, natural and convenient food choices,” as well as a pharmacy built around a “preventative approach” and a supplement section.

A company spokesperson also told the National Post last week that the store would carry a wide array of packaged, fresh and prepared foods, as well as natural health and beauty products, vitamins and supplements.

READ: Canadian Grocer’s feature on Loblaw’s health strategy

Toronto-based retail consultant Ed Strapagiel said that the downtown Toronto location gives Loblaw another “card to play” in a setting where real estate is typically tight.

The move appears destined to bring Loblaws into direct competition with Austin, Tex.-based health food retailer Whole Foods, which has been ramping up its Canadian presence in recent months.

Speaking at the C2-Mtl conference earlier this year, co-chief executive John Mackey said that Whole Foods could ultimately open 40 or more stores in Canada and that the market could ultimately account for $1 billion in annual sales.

“It’s an experiment, but a serious experiment,” said Strapagiel. “Loblaw has been an innovator and experimenter for decades, so this development shouldn’t be surprising.”

Nutshell will give Loblaw an important foothold in what Strapagiel called the “relatively upscale” market, away from the highly competitive discount segment – where its No Frills banner competes with the likes of Sobeys Inc.’s FreshCo and retail giants like Walmart.

Strapagiel said the concept could provide alternate revenue for Loblaw, particularly since the health and natural foods sector is unlikely to get dragged into the price war being waged by the likes of Walmart, Target and Costco.

Loblaws also appears to be incorporating more customer involvement in its plans for Nutshell, said Strapagiel. “It almost sounds like a foodie Lululemon,” he said.

Nutshell Live Life Well has a presence on social media, although it as portrayed as a grassroots-type venture, with no mention of the corporate parent.

The company recently launched a recruitment drive for employees, which it deemed “Health Nuts,” through both a meet and greet and an event called “Yoga in the Sun.”

Once considered a niche market, global consumption of organic foods reached US$63 billion in 2011 according to the International Federation of Organic Agriculture Movements.

Agriculture and Agri-Food Canada said there has been dramatic growth in organic agriculture in recent years, with consumption developing at a faster rate than production.

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