Tina Lee, CEO of T & T Supermarkets, is celebrating the Chinese New Year with anticipation for the Year of the Rabbit. On December 15, 2022, she opened the chain’s first store in Québec and the largest of its Asian-centric stores in Canada. It was strategically timed for the run-up to festivities which last from January 22 to February 5, 2023. 

While T&T Supermarkets was opening its 31st store in Montréal’s suburb of Saint Laurent with 70,000 square feet of space, we also noted that Farm Boy unlocked the doors to its 45th store in Aurora, Ontario – a store measuring 28,200 square feet. These chains are both great retailers which have experienced sales growth, while developing a loyal clientele and a unique position in the market. All in the face of Walmart, Costco, discount banners and the pandemic.

Sometimes we forget, these formats are not independent like they started out. T&T Supermarkets is a subsidiary of Loblaw Companies – since July 2009 -- and Farm Boy is  one of the formats owned by Sobeys – since September 2018.  Although they are part of the large corporate entities, T&T and Farm Boy continue to operate more autonomously.

Why retailers buy specialty stores

We have to be realistic.  The large retailers make these acquisitions for a number of reasons:

-  They want to generate a return and they see the profits in these specialty stores as slightly better than the conventional and discount banners.

-  The specialty retailers such as Longo’s (acquired by Sobeys) or T&T had a great culture of delivering a unique shopping experience. The large retailers need to learn how to do that and it is faster to buy the expertise and insights.

-  Often perishable departments have unique products. Similar to the shopping experience, it can be better to learn through acquisitions.

 -  Specialty retailers can have great private label programs with items that will sell in other formats. Rooster brand products originated in T&T but we can now find them in our local Atlantic Superstore which is a Loblaw format.

-  More volume is almost always a good thing. There are some items sold in almost every store, so if Sobeys or Loblaw can add cases to the total number it gives them more leverage with the Cokes and Pepsis of the world.

Maintaining an identity is a challenge

Every time I see a major retailer acquire a smaller chain, I feel uncomfortable. Competition makes everyone better and often smaller specialty stores bring a unique shopping experience to the market. They have to. They are closer to consumers and many of them service new and growing market segments the larger retailers do not focus on. When they are acquired, we risk losing this sparkle in the market.

It is challenging for large retailers to give autonomy to the specialty stores. Big retailers focus on efficiency and stripping out costs. There is always the temptation to supply produce from the same warehouse or use the same plan o gram for snack foods. It would be more efficient. It would also be a mistake.

Considerations for suppliers in our consolidated market

We can’t change the structure of the large retailers. The best answer is to understand the market. If you supply one format such as Zehrs, do not assume they will offer you the opportunity at all of the other Loblaw banners. Their merchandising group will have the responsibility for some stores, but not all.

Be prepared to ask questions and to get referrals if you want to grow your business with them.

It’s the Year of the Rabbit.  Be nimble. Be quick.