Pattison Food Group stands up for the little guy in the grocery business

Save-On Foods president Darrel Jones explains why a team-up between independent stores, and a spark from new CMO Peter Housley, will help it challenge the likes of Loblaw and Walmart.

By Will Novosedlik

It’s tough to be an independent grocer these days.

According to analysis by Sylvain Charlebois, senior director of the Agri-Food Analytics Lab at Dalhousie University, less than 34% of Canada’s 15,500 grocery stores are independently owned and operated, a percentage that is continuously shrinking.

Home-grown grocery giants Loblaw, Sobeys and Metro, alongside U.S. companies like Walmart and Costco, have tremendous clout. They can and are charging higher fees to suppliers to finance their own capital projects – like Walmart’s new $500 million Canadian distribution facility, announced months after it joined the ranks of grocers that had increased supplier and merchandising fees. Independent grocers just can’t bully the supply chain like the big guys can.

This may be partly what’s behind the formation of the Pattison Food Group. Darrell Jones, president of Save-On-Foods, has been leading the newly formed group since its formation in February of this year. Save-On-Foods, Buy-Low Foods and Quality Foods now report to the newly formed PFG, along with a long list of specialty operations and wholesale divisions: PriceSmart Foods, Urban Fare, Bulkley Valley Wholesale, Everything Wine, Pure Integrative Pharmacy, Nature’s Fare Markets, Meinhardt Fine Foods, Nesters Market, Choices Markets, Associated Grocers, Van-Whole Produce and Imperial Distributors Canada.

Asked why adopt the new structure, Jones predictably cites increased efficiencies, better synergies, and lower operating and product costs.

“Bringing together companies of different sizes allows us to leverage synergies and strengths in supply chain, warehousing and procurement,” explains Jones. “It also allows us to share resources in each of our companies. For example, where we have a robust IT team, we can lend technical expertise and support to smaller companies who don’t have that structure in place.” Other synergies include Save-On-Foods’ meat plant and The Pattison Food Group’s bakery and cut-fruit facilities that the other PFG companies can now access.

Jones claims that the pursuit of efficiency and synergy will not affect the value that each unique retail and wholesale operation delivers to its customers today. Given the competitive ferocity of the retail grocery space and the category’s notoriously thin margins, this will be the thing to watch.

But independent grocers also offer something different to customers. Sometimes it’s products you might not find elsewhere, sometimes it’s personalized service. And if the pursuit of efficiency creates consistency and uniformity across banners, it’s hard not to imagine at least some loss of individuality among such an eclectic mix of brands.

To help execute this delicate balance, PFG brought on Peter Housley for the CMO role in September. The marketing veteran brings a varied experience set: he was most recently CRO and CMO at DTC menswear brand Indochino, but has also been president of restaurant chain Milestones, CEO of dating site Lavalife and head marketer at both Zellers and Eatons.

“Peter brings a wealth of experience that complements our existing marketing team perfectly,” Jones says about bringing on Housley. “We expect to see a little disruption from Peter – and we are looking forward to that.”

It’s an unorthodox move, since Housley is not a grocer, but PFG is looking for innovation, something that would be less likely had the company chosen to go with a conventional grocery marketer. “We’ve seen already that he changes the way people look at things.”