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GAIN Report #CA9142

Page 10 of 19

Costco’s Canadian head office is located in Burnaby (Vancouver) BC , listing decisions for the 25 western outlets are made from this location. There has been an attempt to centralize/coordinate functions between the western and eastern businesses, however with limited success to date. In recent years there has been a significant focus on private label, a strategy followed from Costco US ( Kirkland Signature brand ). It is important to note that if an entry strategy in western Canada includes Costco, then a well thought out plan will be required as traditional grocery stores such as the Loblaw Company’s RCSS will demand the identical product as Costco.

  • C.

    - Other Non Grocery Sub-sectors - Trends and Company Profiles

    • 1.

      Drug Stores

The two key drug store accounts that carry high value food products are Shoppers Drug Mart and London Drugs. Of the two, London Drugs dominates the segment, with Shoppers Drug Mart clearly de emphasizing food products. Food sales have been on a decline in this segment and it’s share of total food sales has decline from 2.7% in 1995 down to 1.9 % in 1998.

London Drugs London Drugs is a Vancouver based super drug store. All procurement and merchandising decisions are made at the Richmond (Vancouver) head office. There are 50 London Drugs stores in the West ( 35 in BC and 15 in Alberta ). The stores range in size from 20-30,000 square feet and carry a variety of everything from computers to photo finishing, to electronics and automotive, hardware, housewares, small appliances, as well as drug, health and beauty aids, and a limited amount of food products. While London by far dominates food sales in the drug segment, food sales are still relatively minor and an expensive proposition for most food manufacturers.

2. Mass Merchandisers The mass merchandiser segment consists of Zellers and Wal-Mart. This segment is a dynamically growing segment, with market share building from 2.6 in 1997 to 3.0 in 1998. This growth has been stimulated by the entry of Wal-Mart into Canada. All other segments have their eyes on this one and specifically Wal Mart as this company expands it’s Super Center grocery store concept. Many of the trends that we have observed in the traditional grocery segment (e.g., neighborhood store with it’s higher levels of service) are in preparation for future inroads being forecast by the mass merchandiser segment.

Zeller’s owned by the Hudson’s Bay Company of Toronto they are run as a separate entity with it’s head office in Brampton Ontario. Zeller’s has 295 stores in Canada, 82 of them in western Canada. square footage of the stores ranges from 40,000 to 145,000 a discount department store with a full array of merchandise procurement and merchandising decisions are made at the head office level.


Foreign Agricultural Service/USDA

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