OTTAWA – Shoppers in Ottawa have headed to Farm Boy grocery stores for years, fans of its high-quality fruits and vegetables, locally produced artisanal cheeses and private-label soups and tourtieres.
With Farm Boy’s commitment to both local farmers and products made by local suppliers, as well as the growing line of store-brand products, the retailer has a loyal following in Canada’s capital region.
Now the chain is looking for new devotees as it brings its brand of fresh and local to the massive southern Ontario market.
Over the last two years, Farm Boy has opened stores in London, Kitchener, Brantford and Whitby.
“Each market is a little different, but at the end people want great food, great service in a friendly shopping environment,” Farm Boy chief executive Jeff York said in a recent interview.
The company has avoided Toronto and its sky-high rents so far, but York has his eye on the market.
Farm Boy is working on what York is calling the chain’s first “urban concept” store set to open in Ottawa later this summer with more fresh prepared food and improved options for eating it in the store. He says the smaller format amounts to a laboratory where they’ll work out the design close to home before taking it to the big city.
“We’ll make our mistakes in Ottawa, and once we can hone the model, we can go into Toronto and maybe pay a buck or two more in rent,” he said.
In November 2012, U.S. firm Berkshire Partners made an investment in the privately held company. While terms of the deal were not disclosed, it helped give the company access to cash and expertise to fuel its expansion.
When Berkshire made its investment, Farm Boy had 13 stores in Ottawa, Cornwall and Kingston. Today, the chain is set to open store No. 22 this fall in Pickering, Ont., east of Toronto.
York said his sights are set on $1 billion in annual sales in the next five to eight years, an increase that would represent a tripling of what Farm Boy does now.
Founded in 1981 in Cornwall, Ont., Farm Boy has made its name with a focus on high-quality produce, meat, bakery and prepared foods and private-label products.
York says he gets lots of ideas from U.S. chains like Trader Joe’s, Whole Foods, Fairway and Dean & DeLuca and tries to incorporate them in his stores.
Farm Boy isn’t a one-stop shop, and York makes no apologies that you can’t pick up your dish soap, paper towels and shampoo at the same time as you buy your carrots and bread.
“We don’t want to pretend we can compete in all the different areas,” he said. “We just want to fill that niche for the best fresh experience.”
The grocery store business is a competitive field with major Canadian players like Loblaw and Sobeys as well as big U.S. players like Walmart and Whole Foods.
Ian Lee, who teaches strategy at Carleton University’s Sprott School of Business, noted Farm Boy faces a number of hurdles, including finding prime locations that haven’t already been snapped up and raising brand awareness in markets where it’s not yet established.
“It’s going to be a tough slog because Loblaws is formidable, Whole Foods is formidable,” Lee said of Farm Boy’s expansion. “Location we know in retail of any kind, including grocery stores, is always extremely important, so they’re going to have to really spend money.”
He added Farm Boy needs to be cautious in its expansion plans.
“As long as Farm Boy does a controlled, slow, incremental expansion, so that they learn from each area that they’re going into, whether it is Pickering or Mississauga or Toronto or whatever, they should be OK,” he said.