Call me old-fashioned, I don’t care.

I am so pleased to see the return of a major retail company to Edmonton, where the profits, for once, will stay in the city.

The owned-by-its-customers Co-op is back in the city, having purchased two mid-sized grocery stores. The sale was triggered by the government’s Competition Bureau after Sobeys swallowed its much bigger rival Canada Safeway’s 213 stores for $5.8 billion. Co-op also purchased former Sobeys/Safeway grocery stores in Fort Saskatchewan, Leduc and Wetaskiwin.

You shop at a Co-op, you buy a $5 membership. At the end of the year, you receive a cash rebate totalling 3% of your total grocery purchases, 6 cents a litre on Co-op gas. That’s where the profits go, not to out-of-town shareholders who spend nothing in Edmonton.

Co-ops with a small ‘c’ are still a big part of the prairie landscape - Servus is a co-op, as is Mountain Equipment Co-op.

Co-ops are owned by their members, not by shareholders. It’s funny to have to explain this, because 30 years ago, Edmontonians knew all about co-ops. Until the early ‘90s, Co-op had six grocery stores in the city. But those Co-op stores couldn’t handle the new competition (Superstores, Save-On Foods) and the sky-high interest rates of the ‘80s.

The Edmonton Co-op declared bankruptcy and was gone by 1993. Curiously enough, the Calgary Co-op survived that storm. The Co-op banner flies high over 24 grocery stores and 28 gas bars in our sister city to the south.

While the Edmonton Co-op was dead, the Stony Plain/Spruce Grove (now North Central) Co-op with its lone grocery store, gas station and home centre managed to survive, then slowly thrive and grow. It’s the North Central Co-op that’ll own and operate the former Fort Saskatchewan and Hawkstone Sobeys and the former Mill Woods town centre Safeway.

Co-ops, just like conventional businesses, like to grow, must stay competitive and must make money for their members.

“We’d been looking for expansion opportunities,” says North Central Co-op general manager Ed Begley, who’d already opened new Co-op gas bars in northwest Edmonton. “We knew when Sobeys bought Safeway that some stores would have to be sold - already established stores with community connections, which is what we’re all about.”

It’s a mighty leap for the North Central Co-op, from one grocery store to four, from 160 employees to 560 employees, from about $100 million in 2013 revenues to $175 million in the next full fiscal year. But the carefully managed Co-op has no debt and had built up its cash reserves to take advantage of opportunities like this move into Edmonton.

It’s not the sleepy Co-op your granddaddy once knew. When the newly-bought stores were temporarily closed for renovations, Co-op was handing out discount coupons to passers-by. As an opening special, customers get a $10 gift card when they buy a $5 Co-op membership. Its pricing will compete with the Sobeys and Save-Ons of the city.

“We have to be competitive,” says Begley. “Our customers own us! Our strength is our pricing, our quality, our service, our community service culture.”

Certainly Edmonton’s grocery world has fast changed just these past few months. Sobeys now owns most of the Safeways and recently ended the Safeway Club Card program, Walmart has seriously expanded into groceries, Target has some foodstuffs, Loblaws (Superstore) bought Shoppers Drug Mart and is now stocking those shelves with convenience foods. American high-end grocery chain Whole Foods is in B.C. and looking to expand into Alberta.

Consumers are as price-sensitive as ever, but are also demanding healthier, locally grown food. Sign of the times: The winner of Wednesday’s TEC VenturePrize new business competition was Localize Services Inc, a grocery-shelf labelling service flagging locally-grown or regionally-made food products.

It’s always been said groceries are an ultra-competitive business, operating on razor-thin profit margins. But somehow or other, some of Canada’s biggest companies - Jim Pattison Group (Save-On), Loblaws (Superstore), McCain, Maple Leaf, Saputo - grew to their present stature through the processing and selling of food.

Welcome back, Co-op!

Factoids:

Edmonton’s major grocery stores 2013 (not including surrounding cities, compiled from website store locator lists).

24 Canada Safeway

14 Sobeys

13 Save-On

11 Walmart (with grocery sections)

8 Superstore

4 Costco

4 Nofrills

4 H&W Produce

3 Italian Centre

1 The Grocery People

1 Real Canadian Wholesale Club

Edmonton’s major grocery stores 2014

32 Sobeys/Canada Safeway

13 Save-On

11 Walmart

8 Superstore

4 Costco

4 Nofrills

4 H&W Produce

3 The Grocery People

3 Italian Centre

2 Co-op

1 Real Canadian Wholesale Club

Graham Hicks

780 707 6379

graham.hicks@hicksbiz.com

www.hicksbiz.com

@hicksbiz