Calgary to step out of Federated Co-op grocery system

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Calgary Co-op’s grocery business plans to get all its goods from suppliers other than Federated Co-operatives (FCL) starting in April next year.

Saskatoon-based FCL said Thursday it had received notice from Calgary Co-operative Association that it would “discontinue the procurement of all products for their grocery stores from FCL” at that time.

The Saskatoon StarPhoenix newspaper on Wednesday quoted a Calgary Co-op spokesperson as saying the grocery chain “operates in an increasingly challenging economic and competitive market” and will “reflect our members’ needs” by “positioning our food business model for unique differentiation.”

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The Calgary association told the newspaper it plans to continue working with an increasing number of local producers.

FCL, which is owned by retail co-operatives across Canada’s West, said Calgary remains an FCL member co-op and its decision affects its grocery procurement alone.

Calgary Co-op, FCL said, continues to be part of the Co-operative Retailing System (CRS) and will continue to get its fuel supply from FCL.

The CRS serves member co-ops’ grocery stores, gas stations, convenience stores, agro centres, home centres and liquor vendors.

“Working together is at the heart of Co-op, which is why this news is so disappointing,” FCL CEO Scott Banda said in a release Thursday.

“It’s sad to see (Calgary Co-op) moving away from the co-op family they’ve helped build, and that has supported them in the past, but our senior leadership team and board of directors had prepared for this possibility and we’re now evaluating impacts and planning our next steps.”

That review will look at impacts from this decision on other local co-ops across Western Canada, FCL said, and at the “hundreds of positions” at FCL’s distribution centres in Calgary, plus the “business support positions (at FCL) that are largely dedicated to serving Calgary Co-op and its grocery business.”

Banda said Calgary’s move will have a “short-term impact” on the CRS, but FCL “remains committed to ensuring that local co-ops continue to provide high-quality food store services in their communities.”

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. –– Glacier FarmMedia Network

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