Sobeys Discontinues Voilà Automated Grocery Delivery Service in Calgary
Empire Company Limited, the parent company of Sobeys, has announced the shutdown of its Voilà automated grocery delivery service in Calgary. This strategic decision marks a significant shift in the company's e-commerce operations within Western Canada.
Market Challenges Drive Calgary Closure
According to a statement released by Ocado, the British technology and online grocery group that partners with Sobeys, the closure of the automated warehouse in Calgary stems from specific market realities. The Alberta grocery e-commerce market's limited size combined with a slower-than-anticipated expansion rate contributed to this business decision. A banner on the Voilà website now confirms that Alberta deliveries are being discontinued.
The company emphasized that Voilà will continue operating in the greater Toronto and Montreal areas, though development of the automated warehouse in Vancouver remains paused. This selective approach suggests a strategic refocusing on markets with stronger e-commerce penetration and growth potential.
Financial Implications and Strategic Shifts
Empire's own statement revealed significant financial dimensions to this decision. The company expects the action to add approximately $95 million to annual operating income by fiscal 2027. However, this comes with a substantial $750 million writedown attributed to what Empire describes as the "rationalization and financial underperformance of its e-commerce network" in Western Canada.
Pierre St-Laurent, Empire CEO, stated in the release: "We remain highly committed to grocery e-commerce in Canada and on continuing to make online shopping more convenient for our customers, while delivering immediate bottom-line improvements to our e-commerce business."
New Partnerships and Technology Integration
In place of the automated warehouse model in Calgary, Empire announced a partnership with DoorDash to expand delivery services, with rollout expected "in the coming months." This represents a shift from capital-intensive automated facilities to third-party delivery partnerships.
Simultaneously, Sobeys will continue utilizing Ocado's artificial intelligence-powered in-store fulfillment software across 87 stores throughout Canada. This suggests a hybrid approach combining different e-commerce strategies rather than a complete retreat from technological innovation.
Partnership Evolution and Market Adaptation
Tim Steiner, CEO of Ocado Group, commented on the evolving partnership: "Sobeys is an important partner to Ocado, and we have taken a pragmatic approach to refining the network and placing our partnership on the right footing to secure long-term, sustainable growth in the Canadian market."
He further explained that this decision addresses "key challenges from early network planning decisions, in particular where the market has not developed as anticipated."
Historical Context and Service Timeline
The Sobeys-Ocado partnership began in 2018 with the launch of Voilà utilizing Ocado's Smart Platform technology. After its official Toronto debut in 2020, the service expanded to Alberta three years later in 2023, initially serving Calgary, Edmonton, and surrounding areas before the recent Calgary closure announcement.
This development reflects the ongoing challenges and strategic recalibrations within Canada's competitive grocery e-commerce sector, particularly in markets with varying adoption rates and economic conditions.
