By Glen Korstrom
Cindy Lee plans to do with Osaka what she did with T&T Supermarket: expand the grocery store chain into a national player.
Lee’s second Osaka grocery store is set to open November 17 and employ 205 people in West Vancouver’s Park Royal Shopping Centre.
When she opened her first Osaka store in Richmond in 1998, it was out of necessity. Her foray into Park Royal is by design.
“North Shore people have high incomes,” said Lee, who built T&T Supermarket from scratch before selling it to Loblaw Companies Ltd. (TSX:L) for $225 million in July 2009.
Osaka will carry higher-end products and be more Japanese-themed than the 17 T&T Supermarkets in B.C., Alberta and Ontario. It will also appeal more to non-Asian shoppers.
Some distinctive aspects of the store will be that:
- shoppers can buy made-to-order sushi instead of ready-made products;
- recipe cards will be available in aisles to educate shoppers on how to use products; and
- there will be a larger selection of health and beauty products, including many brands from Japan.
Competition in the North Shore grocery market is heating up.
On October 20, Empire Co. Ltd.’s (TSX:EMP) Thrifty Foods opened a store on Marine Drive in North Vancouver. It was the 25-location chain’s third opening this year. The two others were in South Surrey and in Abbotsford.
Overwaitea Food Group’s North Shore strategy has been to remodel its Pemberton Plaza store. The Jim Pattison Group company, which operates brands such as PriceSmart Foods, Urban Fare and Bulkley Valley Wholesale, recently opened a Save-On-Foods store in the fast-growing Abbotsford area.
Lee created her Osaka brand in the late 1990s, soon after the Japanese conglomerate Yaohan International Co. Ltd went on an inexorable slide and had to sell the grocery store in its Yaohan Centre in Richmond.
Lee said she and husband, Jack, bought the Yaohan grocery store and underlying land for “millions.”
The store had lost $8 million in the previous three years, so Lee said part of the attraction for the Lees was the “big win” of accumulated business losses they could write off when they did their taxes.
The Yaohan store was a stone’s throw from one of Lee’s first T&T Supermarkets. She was consequently afraid that if she didn’t buy Yaohan, a major grocer would move in, undercut T&T prices and leave her upstart chain bleeding red ink.
“At first I kept the Yaohan name. [But] no matter how much effort I put in, the customers [wouldn’t] come,” Lee said. “I realized that probably the customer didn’t trust the name. So, I decided to change the name to Osaka.”
Three months after the name change, Osaka was breaking even.
T&T Supermarket, in contrast, lost $3 million in its first two years.
Through the years, the difference between T&T and mainstream grocers has narrowed. Executives at Thrifty Foods and Overwaitea, for example, say that they carry many more Asian-themed products in Vancouver stores than they did a decade ago.
T&T Supermarket, conversely, has broadened its number of Occidental offerings as a way to become known as a one-stop-shop for western shoppers.
Lee initially required T&T Supermarket staff to be able to speak Cantonese. Mandarin alone was not sufficient. But after some customer complaints about a lack of English-speaking staff, she started requiring employees to have the ability to speak some English, as well. Since her chain’s sale to Loblaw, however, Lee changed her recruitment standards.
She said all new hires must now speak English and current employees must brush up on their English skills.
“The culture is different, the language is different. It’s a public company versus being a private company. Put it this way: it’s like people of two different nationalities getting married,” she said of T&T Supermarket’s integration into the Loblaw fold.
Stellarton, NS
CEO: Paul Sobey
Employees: 90,000
Market cap: $1.9b
P/E ratio: 13.3
EPS: $4.29
Sources: Stockwatch, TSX, globe investor