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Whole Foods cancels Alberta openings as Canadian expansion plan slows

A customer leaves a Whole Foods Market store in Oakville, Ont., Aug.22, 2012. Whole Foods Market says it's cancelling plans to open stores in Calgary and Edmonton.

Richard Buchan/THE CANADIAN PRESS

A plan to quadruple its Canadian presence to 40 stores has hit a snag for Whole Foods Market Inc., which confirms it will not proceed with planned store openings in Calgary and Edmonton.

The gigantic American natural and organic foods supermarket chain says on its website it has a total of 12 Canadian stores: five each in the Vancouver and Toronto areas, one in Ottawa and a new store that opened in Victoria in November.

"Whole Foods Market is committed to expanding in Canada with two stores in development, but we will not be moving forward with the Calgary or Edmonton store locations," spokeswoman Beth Krauss wrote in a one-sentence e-mail late last week.

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In a follow-up e-mail Monday, she said the two stores in development are in Toronto and North Vancouver, both slated for 2017 openings, but did not respond to a request to explain why the Alberta stores aren't going ahead or clarify longer-range expansion plans.

Two years ago, chief executive officer John Mackey told reporters at a Montreal conference the chain would eventually grow to 40 Canadian locations from 10, without giving a specific timeline. He said the chain was then actively looking for a Montreal location.

Whole Foods announced in February, 2015, it would open a 42,000-square-foot location in south Edmonton by the fall of 2016, along with a new store in Calgary by the summer of 2017. It said each store would create an estimated 150 jobs.

In September, a Whole Foods spokeswoman confirmed published reports that the chain had terminated a lease deal for a store in Calgary's North Hill mall because of "timing challenges," but said the company remained committed to expanding in Canada with four stores in development.

Maureen Atkinson, a partner with retail consultancy J.C. Williams Group in Toronto, said Whole Foods' financial results have been slowed by competition throughout North America as grocery competitors including Loblaw Cos. Ltd. and Wal-Mart Stores Inc. introduce organic food sections, with offerings that are often lower priced.

"I don't think formally they've made any announcement that they're not going to continue to expand in Canada but my guess is they will be very careful about where they do that and more selective … than maybe two years ago," Ms. Atkinson said.

She added the low value of the Canadian dollar compared with the greenback makes it difficult for U.S. firms to justify expansions in Canada because the payoff will come in "75-cent dollars."

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Kevin Grier, a retail analyst based in Guelph, Ont., said the poor Alberta economy, hit hard by low oil prices, likely also played a role in Whole Foods' decision.

"An upscale store like that needs a critical mass of affluent, confident shoppers and the fact they are cancelling or postponing stores tells me it's indicative of the market there," he said.

He added Canadians' love of grocery flyers and bargains – and the fact Statistics Canada reported average grocery prices actually fell in 2016 – would also discourage the U.S. company.

On its website, Whole Foods says it has 467 stores, all in the United States except for the 12 Canadian stores and nine in Britain. It started out with one store at its home base of Austin, Tex., in 1980.

In a regulatory filing for the fiscal year ended Sept. 30, Whole Foods said its international stores contributed 3 per cent of its overall annual sales revenue of $15.7-billion (U.S.).

On a conference call in November, Mr. Mackey said the company had adopted a plan to cut operating expenses by $300-million a year to deal with an "increasingly competitive marketplace."

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He also reported the company had opened its first three "value format" stores, called 365 by Whole Foods Market, in the U.S. and would be opening more there.

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