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It’s a daunting task for any chief executive: finding innovative ways to compete with rivals and differentiate their brand by providing a better product or service. Just ask Marc Poulin, President and CEO of Canadian grocery giant Sobeys Inc. and its parent, Empire Company Ltd.
In his business, price wars between major retailers are fierce, profit margins are razor-thin, and keeping the in-store experience current is a costly and creatively demanding job dictated by fast-changing consumer tastes.
For Poulin – a food retail veteran who took charge of Sobeys in 2012 and has held other senior positions with the likes of Provigo Distribution and the Oshawa Group – those challenges are nothing new.
But in recent years, the grocery war has seen retail square footage grow at more than double historical norms across some regions. Stiffer competition among domestic grocers such as Loblaw Cos. Ltd. and Metro Inc., as well as U.S.-based discount retailers such as Costco Wholesale Corp., Wal-Mart Stores Inc. and new player Target Corp., has battered companies’ bottom lines and share prices.
“The industry is at a stage where it’s redefining itself because new entrants create quite a bit of square footage, but we’re also facing something new: aging consumers who tend not to buy as much food,” says Poulin, who joined Sobeys in 1998 when it bought the Oshawa Group, where he was vice president, grocery merchandising. “It’s going to be a challenging market in the next few years.”
To maintain its status as the country’s second-largest grocer, Sobeys – which operates under several retail banners and posted sales of $17.3-billion for the 2013 fiscal year – needed to retool. Poulin understood that staying price-competitive would be critical to his organization’s success. So too would securing the chain’s grip on a key demographic: Canadians who want a high-quality, full-service grocery experience. Poulin took it a step further, though.
About two years ago, he and his team asked how Stellarton, N.S.-based Sobeys could continue selling great products but also make a tangible difference in customers’ lives. In an era of fast food, diminished cooking skills and the demise of the family meal, Poulin envisioned transforming Canadians’ fundamental relationship with food. His goal was to help combat obesity and give consumers healthier meal options, while also establishing a critical point of brand differentiation. The strategic direction was set. Sobeys’ stores would promote better meal planning using fresh foods and hand-picked ingredients. The rallying cry: Better Food for All.
“We want to bring food back to the centre of Canadians’ lives, but in a different way, as an ingredient in a healthy lifestyle,” Poulin explains. “We have to… [help] Canadians in their meal preparation. We’ll make it easy so you can adopt a lifestyle where you take control of your food experience, then teach you about new experiences around food.”
To achieve those lofty goals, the chain opted to expand its geographic footprint and gain access to new customers across the country, moving west beyond traditional strongholds in Atlantic Canada, Ontario and Quebec. Last year, Empire spent $5.8-billion to acquire 213 Canada Safeway Ltd. grocery stores, along with dozens of the company’s other properties in the Western provinces including gas stations, in-store pharmacies, manufacturing facilities and distribution centres.
This purchase not only grew Sobeys’ national market share but gave it access to real estate in key urban markets such as Vancouver and Calgary. “The deal changed the profile of our company,” Poulin says. “We’re much more diversified from a geographic perspective, which will allow us to face the bumps of this business over the long term.”
The Safeway acquisition came on the heels of a deal to supply perishable items to new rival Target, which was preparing to open stores in Canada, and Sobeys’ 2012 purchase of 236 Shell Canada Ltd. stations in Quebec and Atlantic Canada. The latter, non-traditional approach to growth has let Sobeys cross-merchandise products by doing things like selling food in gas stations and offering gas discounts at its grocery stores.
The success of Better Food for All hinges on employees buying into the concept, then living and breathing it every day. How to reinforce that message across some 1,500 stores? Poulin and his team started by communicating the Better Food for All philosophy throughout the organization and encouraging employees to embrace a shared sense of purpose. But he knew that Sobeys needed an authentic ambassador, someone whose persona was built around introducing the kind of nutritional change that Sobeys was promoting.
Enter British celebrity chef and healthy-eating advocate Jamie Oliver. Sobeys had long sold Oliver’s products in its stores and regularly met with his team to discuss various business dealings. At one such meeting, Poulin’s team outlined Sobeys’ cultural shift. Oliver’s people instantly became excited. “Both teams realized we shared the same values and sense of purpose,” Poulin recalls. Oliver signed on as Sobeys’ chief brand spokesperson in 2013, delivering his unique brand appeal and authenticity. “With customers, Jamie’s been a great ambassador,” Poulin explains. “But I would argue at this stage as we embark on our journey and want 124,000 employees to understand [Better Food for All]… the day we announced he would be the spokesperson for Sobeys, a light bulb went on for a lot of our people.”
Better Food for All is also transforming the customer experience at Sobeys stores, which are being transformed as it trains staff to share their unique expertise everywhere from the produce aisle to in-store sushi bars. It’s a move designed to help educate customers and rekindle their interest in food. “Twenty years ago, sushi was exotic, but now it’s mainstream,” Poulin says. “Habits and influences are changing what Canadians are expecting from a food store, and we need to respond to that. That’s our challenge.”
There’s more. A new Sobeys app offers meal-planning tips and healthy recipes to help direct shoppers’ experience; it will eventually enable mobile shopping by allowing purchases directly from smartphones. In-store signage gets specific about the origins of certain products, listing the local farm where fresh apples were picked, for example.
To enact such sweeping change, Poulin keeps it simple: put the right people in the right places, give brand direction and let them go to work. “The Jamie Oliver relationship is something I consider a big win, but that didn’t happen from the C-suite,” he notes. “It happened because our people understood what we’re all about, connected the dots and made it happen. There’s nothing I find more satisfying than seeing people connect those dots to make a difference in our customers’ lives.”