H.Y. Louie closes wholesale division

Monday, February 01, 2016

After 110 years, H.Y. Louie is closing its wholesale business and will instead source grocery products from the Overwaitea Food Group (OFG). The company’s warehousing and distribution operations will close by July 22, 2016.

“The grocery industry is undergoing significant change. As a result we have been adjusting our business model to remain competitive within our retail brands,” Gary Sorenson, executive vice-president and chief operating officer, said in a memo to staff. “The efficiencies of continuing to operate a small wholesale operation like this are non-existent.”

OFG president Darrell Jones told Business in Vancouver that his company has entered an agreement to supply all of H.Y. Louie's IGA stores with dry goods, which comprise about 40 per cent of the banner’s grocery store sales.

“We just opened a new warehouse in Edmonton both for fresh and for [dry goods,]” Jones said. “We have a good amount of capacity in Western Canada to distribute more groceries and do it more efficiently. So, when the opportunity came up to partner with the folks at H.Y. Louie and support them, we thought it would be a good fit.”

OFG may also deliver dry goods to H.Y. Louie’s former wholesale customers, which include about a dozen smaller stores. "Our customers have been notified that we're out of the wholesale business and it is up to them to decide what to do," said Mark McCurdy, H.Y. Louie’s general manager of marketing and brand development.

H.Y. Louie senior management has recently addressed under-producing assets and operations with the closure of franchise stores and Cash & Carry stores, as well as the sale of four corporate stores. All of these changes had an impact on the supply side of the business, the company memo said.

Last month, H.Y. Louie sold three IGA stores in British Columbia to Overwaitea, which is converting them to the Save-On-Foods banner.

H.Y. Louie will continue to operate 28 IGA stores and has plans to significantly increase the number of stores in its new two-store Fresh St. Market grocery store chain, McCurdy said.

H.Y. Louie was founded in 1903 when Hok Yat (H.Y.) Louie opened his first grocery store. Soon afterward, he launched a wholesale division. The Louie family, which continues to own the company, also owns the London Drugs chain, which has its own wholesale supply system and is operated separately.


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