The wholesale arm of Sobeys Canada has signed a long-term distribution agreement with U.S. retail giant Target for the supply of select food and grocery items to its Canadian stores, which set to open in 2013.
Sobeys will supply Target Canada with frozen, dairy and dry grocery products, stocking its shelves with both national brands and Target’s private label products. The companies say there are shared benefits in reducing transportation costs by mutually leveraging their distribution networks.
“We are pleased to welcome Target as a valued wholesale customer,” said Bill McEwan, Sobeys president and CEO, in a statement. “The associated increased revenue, and the supply chain efficiencies which will lower our costs, will continue to strengthen our competitive position.”
Retailers such as Target and Walmart have been making gains in the grocery category. When asked if Sobeys had any concerns about supplying a competitor to its retail brand, Andrew Walker, vice-president, communications and corporate affairs, offered a direct “no.”
“If we were worried about that, we wouldn’t be in the wholesale business,” Walker said. “We’re a food retailer and wholesaler–we deliver to thousands of wholesale accounts that would be considered competitors. We’ve been a wholesale distributor for decades.”
On Friday, Target also identified the final 84 Zellers locations it would take over in addition to the 105 stores announced in May. Hudson’s Bay Co., which previously operated the Zellers stores, claims that that tens of thousands of jobs will be created by Target and other retailers through a comprehensive career transition program.
“We are very proud of the continuing dedication of the team in our stores, pharmacies and home office during this transition period,” said Mark Foote, Zellers president and CEO. “Our associates continue to do a great job serving our customers and remaining focused on our business.”