Sobeys’ results - although by no means spectacular - are thoroughly respectable in a Canadian grocery sector that is becoming ever more competitive.

Canadian grocer Sobeys has published its fiscal 2010 results, noting that operating income totalled C$425.3m (£272m), an increase of 6.5%. Sobeys’ sales increased 3.2% to C$15.2bn (£9.74bn), with net earnings up to C$259m (£166m).

Sobeys’ results - although by no means spectacular - are thoroughly respectable in a Canadian grocery sector that is becoming ever more competitive.

In the face of aggressive incursions into the grocery sector from Walmart’s Supercentre business and up against two decent local competitors in the shape of Loblaw and Metro, Sobeys has managed to defend its position through a combination of well-timed format innovation and an impressive development of its private-label business.

Private label is a massive issue in the Canadian food market, thanks in no small part to Loblaw’s early and comprehensive development of the President’s Choice brand, which is virtually omnipresent and marketed as an independent FMCG brand in its own right. It is now one of Canada’s largest consumer brands, meaning that Sobeys has had its work cut out in developing and improving its own private-label portfolio.

Its efforts are yielding strong results. On recent store visits to Sobeys and IGA stores in Canada, we were hugely impressed with the progress that Sobeys has made across the board in terms of private-brand development.

Led by chief marketing officer Belinda Youngs - previously with Sainsbury’s - Sobeys has created a comprehensive own-brand portfolio that generates broad appeal. With its S!gnal economy brand, the Compliments mainstream and premium brand and the very stylish Gourmet Minute range of chilled convenience and ready-to-eat foods, Sobeys has ensured that it has a great selection of alternatives to national brands that appeals to a wide variety of shoppers.

The retailer is taking a similar approach to its store network, stating that it is finding early success from the recently launched FreshCo discount concept. Saying it was “very encouraged” with its first eight conversions, Sobeys said on its earnings call that it is planning

to convert “dozens” more of its Price Chopper discount stores to the new FreshCo format over the next 18 months.

In a market where the shadow of Walmart is looming ever larger and Loblaw is looking to regain momentum, Sobeys deserves credit for its proactive and innovative approach.

Bryan Roberts is global research director of Planet Retail.

Planet Retail

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