Walmart and Sobeys pump millions into huge Metro Vancouver distribution centers
As grocery store supply chains are strained and inflation spins out of control, the good news for consumers is that grocers have injected billions of dollars into making operations more efficient.
Walmart has spent $175 million to build a 300,000 square foot distribution center which opened in April in the Campbell Heights industrial estate in Surrey.
The spending is part of Walmart’s planned $3.5 billion to improve infrastructure and efficiency in Canada between 2020 and 2025.
Rival Sobeys didn’t put a price on its nearby 530,563-square-foot warehouse and distribution facility that opened in 2020, but the project was likely worth hundreds of millions of dollars.
“Both the Sobeys deal and the Walmart deal were made and committed long before COVID-19,” Beedie industrial president Todd Yuen told BIV.
He said the pandemic has caused a significant increase in demand for groceries and grocery delivery.
“There is a high probability that you will see even more demand [for warehouses] grocery groups and groups looking to deliver groceries to your doorstep in the near future. »
Indeed, Sobeys’ parent company, Empire Co. Ltd., announced plans in February to build a new fulfillment center somewhere in Metro Vancouver that would open by 2025.
Grocers’ distribution centers supply stores, while Empire’s distribution center would ship orders directly to customers.
The market for direct-to-customer grocery delivery is increasingly competitive, with fledgling companies such as Vancouver-based Tiggy rapidly expanding its geographic footprint. Tiggy aims to deliver grocery orders to customers within 15 minutes of ordering.
Amazon.com Inc. has estimated its investment in British Columbia over the past decade at more than $3 billion.
Last year, the company opened five sites in the Lower Mainland that were either distribution centers, delivery stations or sorting centers.
These measures are intensifying grocers’ battle for consumer food budgets as new investments help them get produce to stores faster, ensuring fresher food and lower transportation costs.
Walmart’s first foray into grocery delivery in British Columbia came in 2018, when it sublet about half of a 74,000 square foot Food-X Urban Delivery-managed warehouse in Burnaby for provide e-commerce deliveries to consumers.
The company ended that arrangement in 2020, when it switched to pickers fulfilling orders at Walmart’s 45 stores in British Columbia. The drivers then delivered the food to consumers.
A big part of its $3.5 billion investment in Canadian operations is upgrading infrastructure and technology to improve store efficiency, said John Bayliss, Walmart’s executive vice president of transformation. Canada to BIV.
“When 65% of Canadians live within 10 minutes of a Walmart, that’s a really big advantage for us,” he said.
Part of the value of the new Surrey distribution center is the reduction in trucking costs and delays as products are first sent to a facility near Calgary and then repackaged and returned by truck.
Bayliss said all beef Walmart sells comes from Alberta and the company tries to buy Canadian product as much as possible, but previous practice was to receive product and other items from California and Washington State in its Calgary warehouse. Workers there repackaged items to be sent to stores in Vancouver.
Products are now trucked directly to Surrey from the west coast of the United States for distribution in British Columbia, reducing countless hours of transportation, he said.
Sobeys also supplied stores in British Columbia from a distribution center in Alberta before opening its Surrey site.
Although Amazon spent $13.7 billion buying Whole Foods Market in 2017, Amazon is lagging behind in the food delivery game.
Whole Foods stores in British Columbia do not offer online ordering. Customers can purchase products in-store and have the products delivered by Eeko third-party couriers to their homes, a Whole Foods customer service representative told BIV.
Amazon spokesman Dave Bauer confirmed that the company’s shipments to customers come from Amazon’s fulfillment centers and are shelf stable products.
“I can’t say details about future product launches or diversions until we’re ready to make an announcement,” he told BIV.
Other grocers with stores in British Columbia have long had distribution centers in Metro Vancouver.
Loblaw Co.Ltd. opened a 410,000 square foot distribution center in South Surrey in 2010. This facility handles frozen and perishable foods sent to Real Canadian Superstore, No Frills, Your Independent Grocer, Shoppers Drug Mart and T&T Supermarket stores.
Save-On-Foods operates two Langley distribution centers that opened in the early 2000s and combine to have approximately 800,000 square feet.
These sites supply food to stores, where pickers fulfill customer orders that the company delivers in its own trucks.
The Louie family’s HY Louie recently rebranded their grocery business as Georgia Main Food Group.
No one within the company was available to discuss logistics for its IGA Marketplace and Fresh Street Market store banners. •