Sobeys and CST Inc. have struck a deal that will allow them to strengthen their respective brands and presence in Quebec.
Under the agreement to take effect in the new year, CST will acquire four Sobeys locations and convert them to Depanneur du Coin outlets. The outlets will continue to sell Shell fuel while another five Depanneur du Coin stores will start doing so as well.
CST Inc. was spun out of Texas-based Valero Energy Corporation in 2012. Previously a division of the corporation, CST was launched as the second-largest publicly traded fuel and convenience merchandise retailer in North America.
In Canada, CST has more than 840 retails sites in six provinces. Approximately 250 of those are operated under the Corner Store and Depanneur du Coin brands.
“The agreement is in keeping with our plans to expand the presence of Depanneur du Coin in Eastern Canada as a convenience retailer. This is a first for CST Brands, expanding our fuel offerings by broadening our brand offerings with Shell,” said Christian Houle, senior vice-president of retail, CST Brands Inc.
Sobeys to promote loyalty card program
For Sobeys, the deal is all about promoting its brand. The five new Shell stations are in close proximity to IGA stores, a Sobey’s chain, allowing the retailer to better promote its Air Miles loyalty card program.
Leveraging advantages like Air Miles shouldn’t be under-estimated in the current retail environment. Loblaw’s Atlantic Superstore brand is in the process of introducing loyalty cards throughout Nova Scotia.
And in the last few months, Target has opened stores with grocery sections, while Walmart has been aggressively expanding the presence of its supercentres with full grocery options, including produce.
Don Shiner, an associate professor of marketing at Halifax’s Mount Saint Vincent University, said the Superstore loyalty cards are an attempt to keep existing customers, given all the new competition.
Shiner told CBC News: “It’s about keeping the customers you have so they don’t walk down the street.”
Sobey’s purchase of Canada Safeway
In early November, Sobeys completed its purchase of Canada Safeway, a $5.8-billion purchase that opened up Western Canada to the Stellerton, N.S.-based grocery retailer.
Sobeys funded the purchase with $1.85 billion from parent Empire Company Ltd.; $989 million net proceeds from Sobeys’ bond offering; $991 million from selling 70 Canada Safeway properties to Crombie REIT; and $1.97 billion from bank credit and cash on hand.
Empire posted revenue of $17.6 billion in fiscal 2013. Sobeys operates more than 1.500 owned or franchised stores in 10 provinces as well as more than 330 retail fuel operations.
Sobeys’ retail banners include Safeway, Thrifty Foods, IGA, Foodland, Price Chopper, and Lawtons Drugs.