Rival grocers mull Safeway sites up for sale in Greater Victoria

If there’s an Island grocer ready to pounce on one of the three Victoria Safeway locations now up for sale, they are keeping it very quiet.

A day after Sobeys announced it will sell three of its four Victoria Safeway stores as a part of divesting 23 locations in Western Canada to satisfy the federal Competition Bureau, local grocery chains have suggested it’s too early to say if they want one of the spots.

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They have also expressed surprise at both how quickly the Competition Bureau and Sobeys reached an agreement on which stores had to be sold and that Greater Victoria locations were actually included in the mix. The Tillicum store is the only local location is not for sale.

The Safeway stores put up for sale are the large Fort and Foul Bay location as well as stores at University Heights in Saanich and the store on Beacon Avenue in Sidney.

The sale of the stores is required for Sobeys to complete its $5.8 billion purchase of 213 Canada Safeway locations. That deal is expected to close in early November.

“We weren’t expecting the stores in Victoria to be divested, it just happened [Tuesday] so this is all sort of new for us,” said Peter Cavin, director of Country Grocer, which has seven locations on the Island and Saltspring Island. “As to whether or not we would be interested in the stores and whether that would come to fruition I don’t know. We would have to look at our whole landscape ourselves and how we could make that work.”

Cavin noted Country Grocer only recently completed its new Nanaimo location and is unlikely to be in a position to take on a new, large store in Victoria.

“For us to take on something that big we would look at it, but we would have to make a good decision on it. For companies our size, we have to plan for these kinds of things,” he said.

The story was much the same at Errington-based Quality Foods, which now has 11 Island locations.

“It will take some time to have this settle out and to see what opportunities are there and what the whole thing means for us as a company,” said marketing director Rob MacKay. “If this had happened a while ago it might have been different.”

MacKay said Quality Foods had been looking for a Victoria location for years, but is now committed to opening in Langford in the former Ashley Furniture location next spring and in View Royal in a new development near Victoria General Hospital in 2015. He said they may not be in a position to act on the Safeway locations.

“We had been trying to get into the Victoria area, so we were really excited when we finally got these opportunities to get two stores in,” McKay said.

He left the door open for the company to look at further expansion in the Capital Region. “We will consider it, but it will take some time. There are a lot of dynamics at play — location, demographics, can we do it and what resources it would take?”

One company that has taken itself out of the running for any of the locations is Victoria-based Fairway Market which already has stores very close to each of the Safeway locations in question.

“And in one case we’re right across the street,” said Fairway spokesman Robert Jay of the McKenzie Avenue location, which stares directly across to the Safeway at University Heights. “It just wouldn’t be worthwhile to have two locations on the same street corner.”

Jay said it’s also unlikely Fairway, which has 10 locations on the Island, would consider expanding by looking at any of the other locations Sobeys has to sell in Western Canada.

“It’s very competitive out there, margins are very thin and it is a name game,” he said. “On the Island Fairway has built a name and a reputation, but when you move off the Island and onto the mainland they don’t know you and it’s hard to get people to come to a location they don’t know about, especially if it’s just one store.”

As for who is likely to step in and buy the Victoria Safeway locations, or any of the 23 stores Sobeys will put up for sale under the banners of Safeway, Thrifty Foods, Sobeys, IGA and Price Chopper, Cavin believes it is most likely to be a big player with deep pockets.

Judging by the most recent property assessment, the Safeway locations should command a high price.

The Fort and Foul Bay store and its lands were assessed at $19.1 million this year, while the Sidney store was assessed at $11 million. The store at University Heights leases its space at the shopping centre.

“I could see it working for a bigger company coming in and taking over,” said Cavin. “It might be challenging for some of the independents our size who really, in the big picture, aren’t that big to take something on the size of those stores at this point.”

That could leave Jimmy Pattison’s Save on Foods group, Whole Foods or Loblaws to step in.

Loblaws at one point had plans for a $20-million Real Canadian Superstore location at the former site of Mayfair Lanes. That building was demolished in 2006 in the belief the grocery giant would be completed by 2008.

Calls to each of those companies were not returned by press time.

aduffy@timescolonist.com

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