OTTAWA, Ontario – Wal-Mart Stores plans to expand its fresh-food offerings to every store in Canada from about 50 percent now as it takes on grocer Loblaw Cos. and girds for Target’s arrival in the country this year.
Wal-Mart will add food sections to stores in Canada’s Maritime provinces this year and plans to increase its food line to as many stores as possible, Shelley Broader, chief executive officer and president of Wal-Mart’s Canadian unit said last week in Toronto.
The addition of fresh food through supercenters a few years ago has really not only driven our growth trajectory in Canada, but it is really meeting the needs of the consumer base that was underserved, Broader said. I would like to put fresh food in every facility that I can.
The Bentonville, Ark.-based retailer, said it will spend $454 million to build new stores and renovate other locations in Canada, adding at least 37 superstores in the next year to the 379 current locations.
The fresh food expansion allows Wal-Mart to set it apart from Target, which is more focused on clothing and housewares.
Target, based in Minneapolis, plans to open about 125 Canadian stores starting in March or April in its first expansion outside the United States.
Lisa Gibson, a spokeswoman for Target Canada, could not immediately comment on the company’s plans for Canada and competition with Wal-Mart.
Target joins a push north by U.S. companies including clothing retailers Express and J.Crew just as Canada’s economy starts to lag the U.S. and consumer debt levels reach records.
Home-improvement retailer Lowe’s and department store Nordstrom are also expanding in Canada.
The world’s 11th-largest economy grew 0.6 percent in the third quarter, compared with 3.1 percent in the U.S., while the ratio of consumer debt to disposable income reached a record 165 percent, according to Statistics Canada.
The growth in household debt has prompted policymakers such as Finance Minister Jim Flaherty to warn Canadians against taking on too much debt.
Wal-Mart Canada data show Canadians may be taking heed.
The company’s spending power tracker showed that while disposable income per household increased $96 in November from a year earlier, people devoted the excess cash to savings, Broader said. About eight out of 10 Canadians shop at Wal-Mart now, the CEO said.
In the more touchy-feely aspects of dealing with our customers they tell us that they are concerned about meeting their budget, that low cost of food is incredibly helpful for them, that they are willing to travel further to get to a store that will provide them with lower-cost basic needs, Broader said.
Wal-Mart will create more than 7,000 store and construction jobs through the expansion. The company’s 94,000 Canadian employees represent about 4 percent of its workforce and puts it among the top five employers in the country, Broader said. Its staff exceeds the 80,000 employed by Royal Bank of Canada, the biggest publicly traded company.
Some of the work may be needed for older stores that don’t have the special equipment needed to sustain a fresh food section, said Kenneth Wong, who teaches marketing at Queen’s University in Kingston, Ontario.
For everyday items Wal-Mart should be able to offer the best value, he said. That’s what I think the renovations are all about.
Wal-Mart last year had $318 billion of sales in the U.S. or 72 percent of its total, versus $125.9 billion abroad.