FreshCo

Business model

According to then-president and CEO of Sobeys, Bill McEwan, the creation of FreshCo offers customers fresh food at discount prices in a modern shopping setting. McEwan said that FreshCo stores were not fancy or expensive which allowed the savings to be put into low prices and high-quality products.[1] FreshCo also carries higher quality goods to differentiate it from other discount supermarket chains, including organic groceries. According to an article, "the first impression of the FreshCo store in Oakville, Ontario — a burgeoning community in the Greater Toronto Area (GTA) where farmland is swiftly being overtaken by housing developments — isn't of a discount supermarket". FreshCo aims to accomplish the look of a "well-appointed fresh-format store" or "market feel", instead of a discounter with a "price-impact banner boasting the cheapest prices in the market", by making the store aisles more spacious. [2][3]

FreshCo aims to deliver a diversity in ethnic products instead of the typical grocery shopping experience. Understanding that each community is unique, FreshCo products reflect the community in which they operate. The store is organized to fit customers' needs. There are extensive frozen and chilled ethnic items in the front of the store. Produce aisles called the “Fresh Hall” feature fresh products. Baked goods are baked daily in community bakeries. Further into the store, there is a wide variety of Ontario cheeses and meats. A feature aisle provides with savings opportunities for the customers.

FreshCo uses the slogan, “Fresher, Cheaper.” If customers are not satisfied with the freshness of the product they can get a refund of their money.

Predecessor: Price Chopper

Price Chopper had operated in Ontario in the 1990s under the ownership of Oshawa Group. Oshawa Group, including the Price Chopper chain, was acquired by Sobeys in 1998 as part of the latter's entry into the Ontario market. The 87 Price Chopper stores were scattered around many neighbourhoods in Ontario, particularly low-income communities.

By the late 2000s, Price Chopper was facing increased competition from Loblaw Companies, which was opening more No Frills discount grocery stores in Eastern Canada.

According to an analyst from CIBC World Markets, Price Chopper had been regarded as an unprofitable also-ran for decades, under both Oshawa Group and Sobeys, with no lasting improvements from repeated turnaround efforts. The chain's few private-label offerings hurt its gross margins. Price Choppers was not contributing much to parent Sobeys' bottom line and lagged far behind Loblaw's No Frills and Metro's (formerly A&P Canada's) Food Basics in discount supermarket share, which was particularly significant in the Ontario market where discount grocers held 35 to 40 percent of the food shopping market. Overall, Sobeys was struggling in Ontario, having only made 25% of its profits there despite that province containing 40% of its retail real estate, due to an outdated supply chain and unfavourable locations. [4]

Sobeys closed some Price Chopper stores in the Atlantic provinces, or converted them to its Foodland banner.

Sobeys hired Rob Adams, who was previously with Loblaw Companies managing its No Frills discount grocery division, to run its discount grocer chain. Adams came up with the idea for FreshCo to carry higher quality goods to differentiate them from other discount supermarkets.[5]

According to parent company Sobeys, FreshCo is considered to be a new brand and not just a replacement for Price Chopper. However, most FreshCo stores were renovated and converted from existing Price Chopper locations, with only a handful of FreshCo stores which were newly built or converted from other retailers, essentially making FreshCo the de facto successor to Price Chopper. The first eight FreshCo stores were launched on May 12, 2010 in Brampton and Mississauga, Ontario. By April 2012, FreshCo expanded to 68 stores in Ontario.

Reportedly, customer reception to FreshCo has been positive, and Sobeys has enjoyed the highest same-store increase in sales among major Canadian supermarket chains over the past few years.

Chalo! FreshCo

In 2015, FreshCo announced the opening of a South Asian–focused store in Brampton. Known as "Chalo! FreshCo" (chalo meaning "let's go" in Hindi, Punjabi, Gujarati and Urdu), the store offers a greater variety of groceries and spices from the Indian subcontinent, while offering the same services as other FreshCo stores. A second Brampton location opened in 2016.

Ontario

89 FreshCo locations:

Manitoba

1 Price Chopper location:

Ontario

3 Price Chopper locations: