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In Quebec, a new way to mix gas and grocery

Sobeys' IGA Express lets shoppers fill up their tanks and buy fresh meals, too

IGA-Express-Feb14

Two years ago, when Sobeys announced it was buying from Shell 250 gas stations in Atlantic Canada and Quebec, industry watchers quietly nodded.

Sobeys already operated more than a dozen Sobeys Fast Fuel stations in the Atlantic region, so the acquisition seemed like a smart way to expand its service-station fleet.

But for Sobeys brass in Quebec, where 205 of those Shell stations were located, the deal created some urgency.

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Sobeys needed a new retail concept for the Shell stations that could fit in with the retailer’s existing IGA brand in Quebec. It also had to incorporate elements important to Sobeys’ business, including food and loyalty programs.

The result is IGA Express, a new format of mini-grocery stores that combines supermarket quality, price and atmosphere with ready-to-eat foods, drive-thru windows, Shell gasoline and car washes.

“We really see this concept as an extension of our stores,” Claude Tessier, president of Sobeys Quebec, told Canadian Grocer at the launch of the first IGA Express, near Quebec City, in December.

A second store, also in the Quebec City region, opened in January. Sobeys plans to develop as many as 60 IGA Express stores over the next five years, including a hoped-for 15 in 2014, at an estimated capital investment cost of $100 million.

“There are no hard deadlines for store openings,” said Tessier. “We are moving ahead in step with the opportunities that present themselves.”

Work on the new concept began shortly after Sobeys bought the Shell stations, in December 2011.

A big part of that process was a half-dozen fact-finding trips that Tessier and two colleagues–Pierre Saint-Laurent, Sobeys Quebec’s first president principal business development; and Guy Terroux, VP of marketing–made to Europe and across North America to see the latest gas and convenience outlet trends.

The trio was notably influenced by Marks & Spencer’s Simply Food concept in the U.K. It features grab-and-go prepared foods that are made with fresh, quality ingredients.

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Back in Quebec Tessier and his team put their design ideas on the table. Soon the IGA Express concept began to develop.

“We presented it to dealers in 2012 during our annual trip [to Curacao],” said Tessier. “Everyone loved it [and] many expressed interest in opening one.”

In addition to providing stylish outlets where time-pressed Quebecers can shop while redeeming a five-cent per litre discount they receive with every $70 purchase at IGA grocery stores, the new stores feature Cellier chilled wine sections and varied selections of specialty products and fresh products such as fruit and bread, plus coffee.

The new stores also feature “Table ready in 20” sections that offer items to cook a meal at home in less than 20 minutes, bistro sections with prepared dishes such as sandwiches and salads (with a minimum of 15 grams of protein), and healthy snack products such as cut fruit, veggies and cheeses. These are served in containers that fit in car cup holders. And speaking of drivers, there’s also a drive-thru window for coffee and snacks.

According to Saint-Laurent, the new concept is attracting interest not only from IGA store owners, but also owners of the more than 650 corner stores that Sobeys serves across Quebec, including the BoniSoir, Select, Voisin and Le Dépanneur banners.

“I understand their enthusiasm,” he says. “Our commercial program is present, and the customer recognizes the store and feels like they are in an IGA. But the real magic is that this is the missing link in cross-promotional efforts. It enhances the loyalty link with our partners.”

Though the concept was developed for existing Shell stations, Saint-Laurent says demand, circumstance and geographic and demographic realities resulted in the first few stores being new outlets.

Alain Gagné, who owns four IGA Extra supermarkets in the Quebec City region, built the first, a 4,000-sq.-ft. store. “I’m very happy so far,” Gagné says about the first month of operation at his $4-million IGA Express in St-Augustin-de-Desmaures, 15 minutes west of the provincial capital.

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“The ready-to-eat foods are proving very popular, and we’re seeing a lot of Shell discount coupons from our other stores,” Gagné says.

Sobeys built the second IGA Express for Gilbert Chouinard, co-owner of an IGA Extra store in Ste-Anne-de-Beaupré, 20 minutes east of Quebec City.

“We’re really looking forward to it,” Chouinard said a few days before the mid-January launch of the store, located halfway between his big store and Quebec City on the main highway linking the two. “There is no competition nearby [and] we like the synergy aspect with the Shell discounts.”

That Sobeys dealers are pumped doesn’t surprise Martin Qiu. An assistant marketing professor with the Desautels Faculty of Management at McGill University, Qiu says one-stop shopping for gas and groceries is catching on in North America.

And grocery-meets-gas discounts are wildly popular with consumers, too. “Some of them really get into it,” Qiu says. “They don’t care if they pay premium prices for some items; they want the discount.”

Qiu’s also not surprised by the apparent ease with which Sobeys has incorporated gasoline and the new format into its strategies.

“It’s like drugstores selling cosmetics or bookstores selling candles,” says Qiu. “But like them, Sobeys can expect to attract competitors who will copy successful features of their new concept.”

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