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Overwaitea looks to win in the West

Competition is on the rise, but Overwaitea Food Group is fighting back with a new store design and, oh yeah, 15 ex-Sobeys stores

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Darrell Jones says the Overwaitea Food Group is like one big family, and it certainly seems like it today. As we walk through a new Save-on-Foods in White Rock, B.C., Jones greets every employee by name.

One staffer at the Metro Vancouver store tells him how much she loves the new format of the store. Another stops to congratulate him on his promotion to president.

READ: Overwaitea to convert PriceSmart stores to Save-on-Foods

Actually, Jones is no newbie, in his job or at Overwaitea. He was named president two years ago, replacing longtime head Steve van der Leest, who retired.

Jones started bagging groceries at a company store in Cranbrook 37 years ago and he’s put in time at 23 different Overwaiteas since, including a stint as store manager, in 1997, at the same White Rock store we’re now in, before moving up the executive ranks at the Langley, B.C.-based chain. Jones figures he’s worked in every grocery department during his career except one: meat cutting.

Today, a typically overcast morning in February, is the official opening of 11 converted Overwaitea stores. Up until before Valentine’s Day all 11 carried the chain’s blue PriceSmart Foods sign. Now, they’re flying the white and green of the company’s biggest banner, Save-on-Foods.

Jones takes me on a tour. First, we stop at the bakery where I try his favourite dessert–marshmallow dipped in chocolate and smothered in Skors. A new batch of pumpkin fudge is being whipped up behind the counter.

Over at the meat department, Jones has his manager wrap up some purple sausages. They turn out to be maple-blueberry pork. Yum! Green ones nearby are made with kale and chicken.

READ: HMR opportunities abound for retailers

All of the sausages come from local producers, and it’s Overwaitea’s plan to make sure that, when shoppers think of local food, they think of Overwaitea first.

“Local is very important to us, and it’s important for us to be attached to the community,” Jones says.

He also wants each of his stores to be unique to the community it serves. For example, the Save-on in White Rock has an unusually large area dedicated to what Jones calls “food to go.” That’s because the surrounding area has an older, more affluent clientele.

“Natural foods and health foods are very important to them. [And] we’ve put in a kitchen because they want quick solutions to dinner,” he says.

Next we head to the HMR section where a pizza oven beckons. The secret to great pizza, I learn, is to let the crust slowly rise over several days before fire- roasting it in the oven. A chef carves off steaming hot brisket at the Smoke and Flame BBQ. It cooked for 15 hours.

Meanwhile, sushi made daily, vegetables in steamers and sandwiches and salads are ready to eat in or take home.

Founded in 1915, near Vancouver, Overwaitea is a B.C. institution. Most of the company’s 100-plus stores are located in the province. But it has a sizable and growing presence in Alberta as well.

Of course, competition is mounting. Since the 2008 recession, Canada’s economy has drifted westward. Grocery sales have, too.

READ: After the Sobeys deal, a few new sheriffs come to town

In the last three years, grocery store sales in Alberta have averaged 3% growth annually. The gain in Ontario: just 0.5%. National chains such as Sobeys, Walmart and Target naturally want a bigger piece of the western pie.

But Overwaitea remains undeterred. It too is expanding. Last month, the grocer (privately held by the Jim Pattison Group) bought 15 stores in Alberta and B.C. from Sobeys. Eight were units the Competition Bureau in Ottawa ordered Sobeys to sell in order for Sobeys to get its hands on Canada Safeway’s more than $6 billion in annual revenues in the West.

Once the former Sobeys stores are added in, Overwaitea will have 144 stores in B.C. and Alberta across six banners: Save-on-Foods, PriceSmart, Overwaitea, Cooper’s Foods, Bulkley Valley Wholesale and Urban Fare.

Tom Barlow, president and CEO of the Canadian Federation of Independent Grocers, says independents such as Overwaitea will be successful if they offer a point of difference in fresh and HMR.

“In traditional grocery, the centre aisle is under attack,” he says. Converting the 11 PriceSmart stores to Save-on would, therefore, seem to makes sense.

In Alberta, meanwhile, Overwaitea is building a distribution centre in Edmonton and, last fall, opened three Save-on-Foods in Calgary, its first stores in that city. Another six stores overall are on the drawing board, four of which will likely open in Alberta in the next year.

READ: Meet the godfather of ethnic grocery in Canada

Alberta expansion could help springboard Overwaitea across the Prairies. “Saskatchewan and Manitoba are growing and dynamic provinces and we think we’d be a great fit there,” Jones says. “We plan as rapid a growth as is possible. Will we be across to Manitoba in the next five years? We absolutely want to be.”

Tailoring each new store to the community will help to reinforce Overwaitea as a unique grocer, thinks Jeff Doucette, general manager at Field Agent Canada, in Calgary.

“They are not following anybody else’s model, and there’s a lot of people out there who would rather pay more than have to shop at a Walmart or a Superstore on a Saturday because that experience can be highly frustrating,” Doucette says.

Jones says that with industry consolidation putting the squeeze on grocers, it’s vital smaller chains and independents be different.

“We don’t focus on our competitors, we focus on who we are,” he says. “We focus on delivering the supermarket that best suits the neighbourhood and the community and we think if we do that and provide our customers with outstanding service and great value, we can be successful and be, to some degree, what the big guys aren’t.”

Before leaving White Rock, Jones answers the question that’s on many industry watchers’ minds: Is Overwaitea for sale? After Sobeys bought Safeway last summer, analysts figured Metro needed to make an acquisition. Overwaitea, and its more than $2.7 billion in sales (as estimated by CIBC World Markets), was most often mentioned as the target.

READ: After big Loblaw and Sobeys deals, will Metro go west?

But Jones is unequivocal: Overwaitea is not for sale.

“I’ve been with the company for 37 years, and every year for those 37 years there’s been speculation that someone is going to buy us,” he says. “We have been in business coming up to 100 years, and in 100 years we’ve had two owners. We are not likely to have a new owner anytime soon.”

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