story by Kim Souza
WIth many global markets in turmoil, retailers are scrambling to invest in regions where they can score market share as well as profits. For now that’s Canada.
Wal-Mart said Tuesday (Feb. 4) that it plans to invest $500 million this year adding 35 new supercenters, improving its supply chain distribution system and expanding its e-commerce operation in Canada.
In the process the retailer said it will create 7,500 new jobs with this expansion effort. Walmart Canada operates a chain of 389 stores, including 247 supercenters, serving more than 1.2 million customers each day. In addition, Walmart Canada’s flagship online store, walmart.ca, is visited by 300,000 customers daily.
“Customers in every region of Canada are looking to save money on their entire list of shopping needs,” said Shelley Broader, Walmart Canada’s president and CEO. “Delivering on our commitment to help lower the cost of living is our top priority, and our growing network of supercenters and our expanding e-commerce offering enable us to do just that.”
Wal-Mart's expansion plans comes a week after Target Corp said it would open nine new stores across Canada, adding to the 124 it opened last year. Over the past year U.S. retailers such as Wal-Mart and Target have expanded in Canada, posing a threat to local retailers such as Loblaw Cos Ltd, the country's largest grocer, and Empire Co Ltd's Sobeys grocery chain.
Much of Walmart Canada’s investment will focus on growing its share of the food and grocery market, converting stores to its supercenter format and building out its supply chain to support it growing number of stores, according to Stewart Samuel, program director and analyst with IGD Services (Canada) Inc.
“While Walmart is targeting primary shopping missions, Target’s food and grocery offer is more focused on top-up and convenience driven missions,” Samuel said. “Walmart offers a much broader range of products particularly in terms of fresh foods and produce.”
He said the other big difference for Walmart is the e-commerce piece.
“This is a priority development area for Walmart, as it continues to expand the number of products offered online. Target has not yet brought its e-commerce proposition to the Canadian market,” Samuel said.
Walmart Canada detailed that it plans to spend $378 million this year, adding one million square feet of physical retail space. Another $91 million is earmarked for distribution network improvements to grow the company’s fresh food capacity. The remaining $31 million is tagged for e-commerce projects.
The retailer said each supercenter carries more than 100,000 items in addition to offering specialty services like pharmacies, garden centers and vision care. Walmart Canada’s online products total 150,000, with everything from toothpaste to fitness equipment. The site also offers free shipping throughout most of the Canada as well as Canada Post pick up.
In October, then Walmart International CEO Doug McMillon told investors, “We are growing quite a bit faster than the market in Canada that's driven not only by our comp store, new store performance, but also the 39 Zeller stores that we took over and converted earlier in the year. so happy to see us growing a lot faster than the market in Canada.”
He said the retailer would continue to invest in Canada, particularly in e-commerce to ensure it is standing tall there.
Overall, Samuel said the new investment plans highlight how Walmart Canada is focused on expanding the reach of its grocery offerings to new catchments and shoppers, and in the context of the broader Canadian food and grocery market, it will continue to account for the majority of new space growth.