Empire Co. Ltd., the parent company of Sobeys, has announced the closure of its Voilà e-commerce facilities in Alberta, incurring a staggering $750 million writedown on the struggling business. The decision, made public on Wednesday, stems from disappointing financial outcomes that did not align with the company’s projections for its online grocery service.
Closure of Fulfilment Centres
The closure will see the immediate shutdown of the fulfilment centre located in the Calgary area, which had been operational for less than three years, alongside a smaller facility in Edmonton that supported the Voilà initiative. Empire’s analysis revealed that the potential for the e-commerce market in Alberta was far more limited than they had initially anticipated. Instead of relying on its own fulfilment network, the company plans to enhance partnerships with third-party delivery services to meet customer demands.
In a strategic pivot, Empire has also announced plans to collaborate with DoorDash, a move expected to bolster its delivery capabilities in the coming months.
Financial Impact and Future Strategy
Empire will recognise approximately $750 million in non-cash impairment and associated cash charges in its upcoming third-quarter financial results, a direct response to the underperformance of its online grocery segment. Despite this setback, the retailer anticipates that the refinements to its e-commerce strategy could contribute around $95 million to its annualised operating income in the next fiscal year.
Historically, the Voilà brand was launched during the pandemic in 2020, a time when online services saw a dramatic surge in demand. However, the company has since admitted that the e-commerce operations were not generating the expected returns. In 2024, Empire had already paused the development of a fourth distribution centre in Vancouver, which was intended to extend Voilà services to that region.
Continuation of Other Operations
Despite these closures, Empire’s other Voilà fulfilment centres in Toronto and Montreal remain operational and continue to attract a loyal customer base. President and CEO Pierre St-Laurent expressed optimism in a recent statement, indicating that this marks a new chapter in refining their e-commerce approach to better align with customer expectations.
“This is just the beginning of the next chapter in reshaping our e-commerce strategy as we respond to the evolving needs and expectations of our customers,” St-Laurent stated.
Why it Matters
The closure of Voilà’s Alberta facilities underscores the volatility and challenges within the online grocery market, particularly in regions where demand did not meet expectations. As Empire pivots towards a partnership model for delivery services, this move may reflect a broader trend in the retail sector towards collaboration rather than direct competition. The outcome of these changes could have significant implications for how grocery retailers adapt to a post-pandemic landscape, balancing operational efficiency with customer service in an increasingly digital marketplace.
