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Canada’s largest grocers are ramping up store openings after years of slow growth, but simultaneous expansion across the industry could strain earnings.
“Acceleration across the industry will be problematic,” said John Zamparo, equity research analyst at Scotiabank, in a report. He predicts the move will result in one or more of lower returns on invested capital or margins, lower price-to-earnings multiples, higher lease costs or altered plans.
“It seems highly implausible to us that all five of the major grocers in Canada can concurrently accelerate square footage growth, particularly in a flat/declining population scenario with no downside,” he added. In the first quarter of 2025, Statistics Canada reported that population growth was so small it amounted to 0.0 per cent growth.
While major grocers like Loblaw, Empire and Metro are investing in new store openings and renovations to meet shifting consumer preferences for discount and fresh-food formats, flat population growth, and therefore fewer new customers, could limit sales growth.
Retail expert Bruce Winder says this likely accounts for the grocers’ specific short-term expansion plans. “They’ve left quite a bit of room for manoeuvring in subsequent years,” he said.
Zamparo expects industry-wide square footage growth won’t become topical for at least a few more quarters as projects get underway.
Loblaw (L.TO) plans to open 80 new stores in 2025 as part of a $10 billion, five-year investment, with about 50 of those being hard discount locations like No Frills. It also plans to renovate over 300 grocery and pharmacy locations. Sobeys’ parent Empire (EMP-A.TO) will add 24 new locations in fiscal 2025, including Farm Boy and FreshCo banners.
Metro (MRU.TO) is expanding its discount banners in 2025, with seven new Food Basics stores planned in Ontario—three already open—and five new Super C locations launched in Quebec over the past year, a spokesperson told Yahoo Finance Canada. Both banners are set to continue growing into 2026 with more store openings planned. The company has also added a new Metro store in Ontario and will open a new Adonis specialty store. Metro is consistently renovating existing locations, though not all renovations will result in an increase in store size, the spokesperson says.
Walmart Canada (WMT) is investing $6.5 billion to build dozens of new stores and expand its supply chain, starting with five new supercentres in Ontario and Alberta by 2027. Costco (COST), meanwhile, plans to open 27 new warehouses in fiscal 2025, at least two of which will be in Canada.
