July 21, 2009 / 3:28 PM / 9 years ago

UPDATE 1-Wal-Mart plans supercenters for Western Canada

* To open two supercenter stores in Saskatchewan in 2010

* Sees more than 80 supercenters across Canada by year-end

TORONTO, July 21 (Reuters) - Wal-Mart Stores (WMT.N) said on Tuesday that it plans to open its first supercenters in the Canadian province of Saskatchewan, a move bound to heighten grocery price wars in the region.

The world’s biggest retailer will open two of the big-format stores, which feature a complete grocery store with fresh produce, meat and baked goods, along with Wal-Mart’s merchandise shelves.

The 185,000-square-foot stores are slated to open in Regina and Saskatoon in early 2010.

Analysts said the move into the largely agricultural-based province will heighten competition among existing grocers.

“It definitely will make them sharper on their price points if they are not there already, but I don’t think that overall it does anything to the companies just because obviously they have been competing with Wal-Mart for several years now and it is nothing new there,” said Brian Yarbrough, a retail analyst at Edward Jones in St. Louis, Missouri.

Canadian grocery chains in Eastern Canada, such as Loblaw (L.TO) and Metro Inc MRUa.TO, have already been forced to cut prices on key staples as they look to fend off stiff competition from Wal-Mart.

In Western Canada, U.S.-based Safeway Inc SWY.N is also a major player in the supermarket sector.

Wal-Mart, which currently has 312 stores in Canada, moved into the Canadian grocery business in late 2006 with two supercenters in Ontario. There are now 58 and by the end of this year it expects to have 82 across the country.

“Since November 2006, Wal-Mart has been opening an average of two supercenters per month and, so far, there’s no sign of letting up,” Winston Lee, an analyst at Credit Suisse, said in a note.

Earlier this year, the retailer said it planned to spend C$115 million ($104.4 million) to build a 400,000-square-foot distribution center in Balzac, Alberta. The facility is expected to open in late 2010 and act as a distribution hub for fresh food in Western Canada.

$1=$1.10 Canadian Reporting by Scott Anderson; editing by Rob Wilson

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