Federated Co-op to close Calgary distribution centre

(Dave Bedard photo)

The main supply outlet for Co-op grocery stores in southern Alberta and British Columbia is set to close in April as one of its main users takes its business elsewhere.

Federated Co-operatives Limited (FCL) announced Thursday it will close its Calgary food distribution centre in April, a decision it said will eliminate just over 200 jobs in the city.

The wind-down of the Calgary warehouse will begin “soon,” FCL said, and products for other co-ops in Alberta and B.C. will “gradually” be shipped by way of FCL warehouses in Edmonton and Saskatoon.

The closure follows Calgary Co-op’s announcement in August that it would halt its grocery procurement from FCL as of April 20 and will instead source groceries for its network of food stores from the Alberta distribution arm of Vancouver-based Save-on-Foods.

In a memo to member customers in August, Calgary Co-op said it’s “positioning our food business to further enhance our focus on Calgary with more local products and communications tailored specifically to you.”

Calgary Co-op, which by itself is one of the largest retail co-operatives in North America, includes food stores, fuel stations and convenience stores in Calgary, Airdrie, Cochrane, High River, Okotoks and Strathmore.

The co-operative said in August it plans to continue to source its fuel and convenience store products from FCL. Also, Calgary Co-op noted, its High River food store “will continue to be supplied by (FCL).”

“Our food stores operate in a very competitive environment under continuing challenging economic conditions in Calgary,” Calgary Co-op said in August, adding that the move “provides us with the flexibility to focus our merchandising, marketing and IT programs.”

Calgary Co-op grossed $1.3 billion in sales across its various business lines in 2018, including food, fuel, liquor, home centres, health care and cannabis products. Of that, $671.55 million was in food alone.

Calgary Co-op, in its 2018 annual report, said it holds about 10 per cent of the shares in FCL. Calgary Co-op’s total purchases from FCL in 2018, across all business lines, were valued at $720.5 million, representing about 70 per cent of the Calgary association’s total purchases that year.

“In a city that’s already experiencing significant economic challenges, Calgary Co-op’s decision has led to more jobs being lost, and more families facing challenges,” FCL executive vice-president Vic Huard said Thursday in a release.

“By aligning itself with a competitor, Calgary Co-op has directly and negatively impacted our employees, their families, and Calgary’s economy.”

Also, FCL said, Calgary Co-op’s move is expected to reduce FCL revenue by $400 million, which in turn is expected to have a “negative effect” on profit-sharing returns from FCL to the 170 Western Canada co-ops involved in the Co-operative Retailing System.

That includes Calgary Co-op, which FCL said has received $186.4 million in such profit-sharing over the five-year period ending in 2018.

Saskatoon-based FCL “will also continue to evaluate all aspects of our operations to determine if further steps need to be taken,” Huard said.

Some Calgary Co-op members, he said, “have contacted us asking how this decision to move to a competitor happened without Calgary Co-op’s members being consulted. That’s not something we can answer — it’s really a question they need to ask the CEO and board of the co-op that they, as members, own.” — Glacier FarmMedia Network

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