A new pilot program being trialled by Canadian grocery retailer Loblaw – the same firm responsible for the successful Real Canadian Superstore and Loblaws grocery brands, as well as low-priced apparel company Joe Fresh- could bring a new form of discount retail to select cities.

Loblaw operates a number of No Frills stores – budget-friendly grocery outlets – in suburban areas, and is now looking to expand the concept into inner city locations.

The first of these new urban discount stores is the 10,000 sq ft store Box by No Frills, which recently opened in the western Canadian city of Calgary. In comparison, a standard No Frills store generally occupies up to 25,000 sq ft.

There are currently more than 150 franchised No Frills stores in operation across Canada.

The Globe and Mail reports that if Box, which was opened on May 31, is deemed a success, the retailer may consider opening up other similar stores in urban areas throughout the country – a trend also being embraced by the likes of Metro and Sobeys.

The launch of Box is just one response to a number of recent shake-ups affecting the Canadian grocery industry. As US retailer Target continues its expansion north of the American border, retailers such as Wal-Mart are increasing their grocery offering in an effort to stand out from the competition.

In Western Canada, Sobeys – the nation’s second-largest grocery retailer after Loblaw – just purchased the Safeway chain of supermarkets in an acquisition thought to be worth $5.8 billion.

Global News reports that Sobey’s, which currently operates more than 1,300 stores across Canada under various retail banners, will add a further 213 Safeway stores to its portfolio as a result of the acquisition.