CEO Ken Keelor talks to Canadian Grocer about the importance of deeper relationships with suppliers, making his stores the most trusted places to shop and his goal to put more “Calgary” in Calgary Co-op
Ken Keelor’s path to the top position at an Alberta retail co-operative is a bit of a winding one. He studied physics as an undergraduate in India before shifting gears and earning an MBA in marketing. He developed his “love for consumer products” after landing a gig at Procter & Gamble, working on brands like Vicks VapoRub and then working through “all the different sales and marketing functions” at the company.
In 1995, Keelor made a geographical shift, moving to Canada, where his career in retail took root. A nearly six-year stint at B.C.’s Save-On-Foods was followed by a decade at Sobeys in Toronto, where he held various roles related to merchandising, replenishment, marketing and more. He was at Rexall for a bit (serving as the drug chain’s chief merchandising officer) then it was back to Sobeys. Since 2014, however, Keelor has been at the helm of Calgary Co-op, one of the largest retail co-operatives in North America. Established in 1956, Calgary Co-op is an operation that spans pharmacy, gas, liquor, home health care centres and, of course, grocery with 23 stores serving 447,000 members and generating annual sales of around $1.2 billion.
The past few years have been busy ones for Calgary Co-op. In late 2019 it acquired Community Natural Foods—a three-store operation—which Keelor says is a good fit culturally with Calgary Co-op. “We’re learning about natural foods from them and they’re learning from us in other areas,” he says. “It’s been an exciting acquisition, and we’re very pleased with it one year later.” And in a bold move, one that ruffled a few feathers, Calgary Co-op switched food distributors from Federated Co-operatives Limited to Save-On-Foods last spring. As a result of that move, Calgary Co-op embarked on an ambitious private-label program with a sharp focus on local. On top of all that there was the pandemic to navigate, too.
In a wide-ranging interview, Canadian Grocer talked to Keelor about everything from getting the word out that Calgary Co-op is open for business to its private-label push, expansion plans and more. Here are edited excerpts from the interview:
What has it been like leading Calgary Co-op during a pandemic? Actually, it’s been a very interesting year because we are very much a community-based organization—we have 447,000 members out in the community—and I think to our community, we grew even more in importance through the pandemic. Carrying out an essential service is one thing on a day-to-day basis when they [customers> know you’re there, but through the pandemic it became a really critical visit to the store to pick up what was needed. It even became an important social experience for customers because it’s one of the only outings [they’re making>. And look, our members and team members really have come together in a co-operative spirit, as they always do. I think the pandemic has bonded us together even more.
Were there any big surprises this past year? I think more so than surprise, I would say I’ve been thrilled at how agile the organization has been. And by our organization, I mean our team members and our community. Throughout the pandemic not only have we been able to focus on health and safety for all of our stakeholders, but we’ve also undergone an unprecedented transition of switching our food supplier [from Federated Co-operatives Limited to Save- On-Foods>. When you think about it, it sounds like we’re just buying groceries from a new distributor, but actually we also rolled out a new flyer, which is exclusive to us and produced by us, where it wasn’t earlier. And we also launched private brands Cal & Gary’s and Founders & Farmers, where we never had our own private brand controls earlier.
You’ve said that Calgary Co-op is open for business—what do you mean by that? With the recent transition to the new food distributor we now have control of our product assortment, the development of our private brands and our flyer program and advertising. So, we are working with an increasingly large number of suppliers, including both local suppliers and national suppliers to bring products to market quickly. We want to make sure we’re first to market on these products. We want to give suppliers the opportunity to test their concepts at Calgary Co-op.
Calgary Co-op is making a big push with its private brands. What’s the strategy behind this? It’s been very exciting. Not only did we realize through our research that our members are looking for this unique local focus and things curated for them, but we also realized we are in a small geography, which is a massive advantage to focus on private brands for our local clientele. Our private brands program is curated specifically for Calgarians’ tastes. When developing these two brands, we did a lot of listening to what the members want in terms of the unique assortment, the quality, the value for money and we’ve tried to raise the bar, even with the packaging and the name of these products. So, when you think about our two brands, Cal & Gary’s and Founders & Farmers, they’re both unique. Founders & Farmers goes back to producers, ranchers, local farmers—you know, the roots of Calgary Co-op. And then, of course, Cal & Gary’s brings the city’s name to the fore with some pride. And we have things like Cal & Gary’s AAA beef, French bread, and an ever-expanding lineup in produce and meat, all the way to cleaning products and more. We’re continuously adding more items.
We hear a lot about the growing importance of local to consumers and grocers. What is Calgary Co-op’s approach? I would say to you that for 65 years, since our inception, local in its various dimensions has been a focus of Calgary Co-op’s. So, firstly we’re committed to the local community; with every visit to a Calgary Co-op store, members know they’re supporting Alberta agriculture, Western Canadian products, and the hard-working people that are behind those products and agricultural services. As the Alberta economy is challenged, our members are more focused on that than ever before. We know in Calgary, especially with the decline in oil prices, which has affected the city, keeping our local businesses and retailers motivated and keeping them in business is very important. For Calgary Co-op, it’s not just about buying a product and selling it, some of it is about keeping these businesses and retailers afloat. The challenge, of course, is not everything can be found locally, but we do our best; we set ourselves a goal to double the number of local products in our stores when we changed distributors and we are right on track. We have about 2,400 local items now. We’ve got 180 producers and their families that we support—fresh beef, chicken and lamb from Alberta, products like Spolumbo’s sausages, Paradise Hill Farm tomatoes, Byblos Bakery, and All Clean Natural cleaning products.
And then there’s the charitable giving dimension; that’s the other thing we focus on locally. Our community is at the very heart of what we do. I’m thrilled this year that our community has stepped up more than ever before. They’ve continued to help us by focusing on the community’s most vulnerable people, and our team and members have raised awareness and funds to help local charities. And in 2020 [through> Calgary Co-op’s giving program, we’ve raised $2.2 million to help address food security issues for vulnerable populations. And it’s all thanks to our members and our team members and our vendors, all three of those segments.
The acceleration of e-commerce has been one of the big stories in grocery this past year. What is Calgary Co-op’s strategy for this area of the business? Calgary Co-op has been very focused on the omni-channel experience. So when we think about our stores we want our e-commerce to be in line with what makes our stores special, which is being local, fresh, being about service, about quality and about community. We rolled out online shopping at our liquor stores, our Co-op Wine Spirits Beer locations in 2019 and we’ve extended that e-commerce focus into our cannabis stores, where we are allowed to offer click-and-collect. We’ve also rolled out e-commerce to food, and we’ve been diligently adding more products and [offering it at> more stores. The reason we’ve been, I would say, more cautious on launching our food e-commerce until recently was because we needed to complete the switch of our food distributor. We knew our product assortment was going to change dramatically, especially our private brands, but really the whole mix with much more local offerings so we had to transition through that. We’re excited about what we’re doing. We know our members will continue to seek that offering online—the assortment, the convenience—and we really want to make sure they get the entire Calgary Co-op experience. We’re not providing e-commerce simply on a product and price basis.
Are there pandemic-related changes you’ve observed that you think will stick around? I feel there’s been a clear polarization here of the discount stores versus stores that provide you service, and a key service is health and safety enhancement. Value continues to be very important, especially in Calgary; our economy is one of the toughest in the country. And I think the pandemic has enhanced our focus on local sourcing of products, for two reasons: one, we needed substantial alternatives to national brands, which couldn’t provide enough to meet our demands. And then second, our community is focused on helping each other and, therefore, wanting to help our local suppliers stay in business.
As you position the business for the future, what will be your key areas of focus? There are five areas of real focus for the next five years. So, a key focus area will be food itself, positioning our food business to continue to be acutely different to the rest of the market. And the biggest way we want to do that is to put more “Calgary” in Calgary Co-op, which is focused locally, but to also make sure that national brand vendors’ innovations are well represented at Calgary Co-op. The second area is real estate, with renovating our stores, build- ing new stores, redeveloping our stores—we are in the process of working on significant projects. Growth of whole health is the third area of focus for the next few years. For us, whole health is the growth of pharmacy, of our natural foods business—both at Calgary Co-op and Community Natural Foods—and home health care, which is another of our lines of business. Petroleum will be another focus for the next few years; not only has there been demand destruction in petroleum through the pandemic and through the events worldwide on oil, but also the increased focus on things like electronic vehicles and alternative sources of energy. While petroleum has been, for many years, a growth engine for Calgary Co-op, we see having to evolve that business and really make sure we’re meeting the changing needs of the consumer in that space.
The last area—and to me a crucial one—is deeper relationships. We already have those deep relationships with customers and our community, and we’ll continue to grow those, but we’re also focused on building deeper relationships with our suppliers than we’ve ever had, especially in food. I think it’s a huge opportunity because our suppliers invest a lot of research dollars on understanding the consumer in their categories and they can help guide us on what’s going on with the customer at a more micro level. Plus, they invest millions of dollars in new initiatives and need reliable companies like Calgary Co-op to work with them to bring those initiatives to fruition quickly and accurately to their brand.
You have new stores in the works. Can you tell us about those plans? There are a few projects coming to fruition. One of them is brand new and it’s at Sage Hill. Sage Hill is an area where we’ve been hoping the population would grow a whole lot faster. We worked with the developer on a timeline, so we will open our food store there in November, and the liquor store and gas bar will reopen simultaneously; those two opened and we shut them down because there just wasn’t the population [to support>, but now we’ll be going back with all three. And, of course, the food store will have a pharmacy as well. We’re excited we’ll be tailoring that as much as we can to the neighbourhood, and it’s definitely a growing locality in Calgary.
The second area is very trendy: Marda Loop. Marda Loop has some really cool restaurants and spaces to walk and mingle, and we are building an urban grocery experience there. It will be different from our other stores; it will be a smaller format, but will integrate a lot of the same services. I think of it as a condensed version of a typical Calgary Co-op store, but trendy to match the neighbourhood.
The third location is called Oakridge, which is a redevelopment that will come together in multiple phases. [Work> will start in the spring. We do have a few older stores that need redevelopment, and Oakridge is prominent among those. It will be what we call a mixed-use design with residential, commercial and office space, and will be much more modern. It’ll be a transformation of the space on that pad today. We also have a site in North Hill that we’ll begin going live with. And again, that’s an area where the neighbourhood is turning over and is becoming much more trendy and with more families.
What do you want Calgary Co-op to be known for? We want to be known for exceptional customer experiences in every dimension, because that is our key differentiator. And those dimensions come through in our values of service, caring and excellence and our vision of being the most trustworthy place you could shop. And that means trust in all its dimensions: being in stock, being right priced, providing a safe environment, all of those things. COVID-19, I think, has taught us to be even more agile and to find more ways to provide that caring and exceptional service to members in our community. We also want to continue to be known for our greatest legacy, which is our people—our team members and our membership that our co-operative is able to leverage to support the community for many years to come.