Target Enlists Sobeys Support in Canada

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September 27, 2011

As Target gets closer to opening stores in Canada, it's teaming up with Sobeys to supply locations with private label and national brand groceries and food.

Nova Scotia-based Sobeys operates a coast-to-coast network of 23 food distribution centers and will supply Target's Canadian stores with select food and grocery products including frozen, dairy, and dry grocery products -- both national brands and Target’s private label brands. Sobeys also services its own network1, 300 stores throughout Canada. The two companies have also agreed to leverage each other’s distribution networks to mutually reduce transportation expenses.

“Target is excited to be working with a partner like Sobeys. We look forward to building a strong relationship that creates value across both companies for a long time to come,” said Tony Fisher, president of Target Canada. “We are pleased to welcome Target as a valued wholesale customer. The associated increased revenue, and the supply chain efficiencies which will lower our costs, will continue to strengthen our competitive position,” said Bill McEwan, president and CEO of Sobeys Inc.

In addition to the wholesale distribution arrangement, both companies will also explore additional supply chain opportunities.

Target announced plans to expand into Canada in January, saying it would acquire lease interests for up to 220 former Zellers stores. Last week Target finalized its real estate transactions and will take a total of 189 of those stores. Rights to the additional 39 locations have been transferred to Walmart, and Target has acquired a former Walmart store in exchange, which will re-open as a Target.

Target plans to open 125 to 135 stores in Canada, the majority of which will open in 2013. Target will open stores in four cycles beginning in March. The retailer plans to invest $10 to $11 million remodeling each location and in the next few months will announce the first round of store openings in March 2013. Stores in subsequent opening cycles will be announced throughout 2012.

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