Sobeys Discontinues Voilà Grocery Delivery Service in Calgary Market
Empire Company Limited, the parent corporation of Sobeys, has announced the closure of its Voilà online grocery home delivery service in Calgary. This strategic decision marks a significant shift in the company's e-commerce operations within Western Canada.
Market Challenges Drive Closure Decision
A statement released by Ocado, the British technology and online grocery group that partners with Sobeys, revealed that the automated warehouse in Calgary will be shut down. The closure has been attributed to the relatively small size of Alberta's grocery e-commerce market combined with a slower-than-anticipated rate of expansion in the region.
This development represents a notable contraction in Sobeys' digital grocery footprint, though the company maintains that it remains committed to e-commerce in Canada overall.
Continued Operations in Eastern Markets
While Calgary operations cease, Voilà will continue to serve customers in the greater Toronto and Montreal areas. The company has also confirmed it will continue to pause development of its automated warehouse in Vancouver, indicating a strategic focus on established eastern markets where e-commerce adoption has been more robust.
A banner on the Voilà website now confirms the Alberta delivery service closure, specifically noting that deliveries throughout the province will be discontinued.
Financial Implications and Strategic Shifts
Empire's own statement on Thursday provided significant financial context for the decision. The company estimates that closing the Calgary operation will add approximately $95 million to annual operating income in fiscal 2027. However, this move comes with substantial costs - Empire will take a $750 million writedown due to what it describes as the "rationalization and financial underperformance of its e-commerce network" in Western Canada.
Pierre St-Laurent, Empire CEO, emphasized in the statement: "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 Partnership and Technology Continuation
In a significant strategic pivot, Empire announced it will partner with DoorDash to expand delivery services, with rollout expected to begin in the coming months. This partnership suggests a shift from proprietary automated warehouse systems to third-party delivery platforms.
Despite the Calgary closure, Sobeys will continue utilizing Ocado's artificial intelligence-powered in-store fulfillment software across 87 stores throughout Canada. This indicates that while the automated warehouse model is being scaled back in certain markets, the technological partnership with Ocado continues in modified form.
Partnership Evolution and Historical Context
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."
Steiner further explained: "This has meant addressing some key challenges from early network planning decisions, in particular where the market has not developed as anticipated. It has also led to agreement on deepening our partnership in key markets."
The Sobeys-Ocado partnership began in 2018 with the launch of Voilà utilizing Ocado's Smart Platform technology. After its official Toronto launch in 2020, Voilà expanded to Alberta three years later in 2023, initially serving Calgary, Edmonton and surrounding areas before the current retrenchment.
The closure in Calgary represents a recalibration of grocery e-commerce strategy in Canada, highlighting the challenges of scaling automated fulfillment systems in markets with varying adoption rates and competitive dynamics.
