Canada's biggest food/drug retailer plans $1.3 billion capital investment

BRAMPTON, Ontario — Loblaw Cos. plans a spate of retail store enhancements, including at its Shoppers Drug Mart chain, as part of a $1.3 billion capital investment.

Canada’s largest food and drug retailer said the investment will expand and improve its store network, including properties owned and operated by its Choice Properties REIT.

Shoppers Drug Mart has seen a strong response thus far to the rollout of fresh food departments at its stores.

Plans call for the opening 30 new stores and more than 500 store remodels. That includes the continued roll out of Click & Collect e-commerce, improved health and wellness services, and the inclusion of fresh food at select Shoppers Drug Mart stores.

Loblaw added that its capital expenditure will produce an estimated 10,000 retail, trade and construction jobs.

“Our investment will create improved retail experiences for customers and local jobs for communities,” Loblaw Cos. chairman and chief executive officer Galen Weston said in a statement. “Our focus is clear: Across our network, we will provide greater access to fresh, affordable, innovative food and more robust health and wellness services for Canadians.”

As of the end of its 2016 fiscal year on Dec. 31, Loblaw had 1,326 Shoppers Drug Mart locations (+13 versus a year ago), 565 corporate-owned supermarkets (-26 year over year) and 533 franchised grocery stores (+8 versus a year ago). The company’s total retail square footage grew 0.4% to 70.2 million.

Shoppers Drug Mart has continued to see outstanding results with consumables, Weston told analysts in a conference call on Loblaw’s fiscal 2016 results.

“Think about the role of food. We did our full sort of deployment of President’s Choice [Loblaw’s private label] , the revised planograms as part of the coming together of Shoppers and Loblaw. So we saw a huge boom in 2015 and the first part of 2016. We are starting to lap that, [but we’re] still very, very pleased with the performance of food in Shoppers Drug Mart.”

The successful rollout of fresh food at Shoppers Drug Mart in urban markets has also been gratifying, Weston noted in the call. “We continue to aggressively expand that in the right urban locations. You will see more of it showing up in key markets over the balance of 2017. And we are still working our way through the right combination of assortment and pricing for the suburban ­proposition.”