Grocery Giant Empire Announces Massive 3-Year Growth Strategy Investment

Canadian grocery giant Empire Company Limited is launching an aggressive three-year growth strategy for core business expansion and ecommerce acceleration

The initiative, Project Horizon, will include a more than $2 billion capital investment.

The company said its new three-year strategy will deliver an incremental $500 million in annualized EBITDA by the end of fiscal 2023. Building from the overwhelming success of Project Sunrise, Empire’s previous three-year strategy, the company is well positioned to accelerate a new ambitious growth plan, it added.

“Even though we exceeded our Project Sunrise savings target of $550 million, there is still substantial value to unlock through Project Horizon”

 

“Empire now has the team, the structure and the vision to achieve its sales and earnings potential,” said Michael Medline, President & CEO, Empire, in a statement. “Even though we exceeded our Project Sunrise savings target of $550 million, there is still substantial value to unlock through Project Horizon. As the retail landscape in Canada continues to react and shift, under the seismic waves caused by the pandemic, it is clear now, more than ever, that we must be able to serve customers where, when and how they want to shop. We will invest in our core store business to drive growth and will move much faster with Voilà customer fulfillment centres and a new, exciting store pick solution, using Ocado technology.”

Empire said it will accelerate investment in physical assets, through renovations and conversions, and store processes, communications, training, technology, and tools. Capital spend is expected to average approximately $700 million annually over the next three years, which includes approximately 20 new Farm Boy locations in Ontario and the conversion of approximately 30-35 conventional stores to FreshCo in Western Canada.

In fiscal 2021 capital spend is expected to be $650 – $675 million with approximately half of this investment in renovations and new stores. Empire will open approximately 10-15 FreshCo stores in Western Canada and expand the Farm Boy footprint by approximately eight stores in Ontario. It will also invest approximately 15 percent of its estimated spend on advanced analytics technology and other technology systems. Empire’s total investment in Voilà for fiscal 2021, including its share of the investment in the Montreal CFC (Customer Fulfillment Centre), is approximately $65 million.

“It must be spending week by big retail in Canada. First Walmart now Empire. Are we going to hear from Metro and Loblaw this week too? I think Empire indeed has some strong opportunities to grow — specifically with the expansion of FreshCo in the West and Farm Boy in Ontario,” said Bruce Winder, author of RETAIL Before, During & After COVID-19 and President of Bruce Winder Retail. Winder was referring to Walmart Canada’s $3.5 billion investment recently.

“I think they are playing the Ocado card well with further growth of markets to serve and the test and potential roll out of micro-fulfillment technology at select stores in smaller markets. They are definitely chasing grocery ecommerce aggressively which I think is the right move. Time will tell if Ocado will be their secret weapon to get to best-in-class in food delivery.

“The use of AI and other technology is a given and will be used by all grocers soon if not being used now so I think they will have a harder time differentiating themselves on this front. Personalization is expected and has been in operation for a while at Loblaw.”