U.S. retail giant Target will go shopping at Sobeys for the dairy goods, frozen foods and dry grocery products to be sold at Target stores in Canada starting in early 2013.

Sobeys, a national grocery store chain owned by Nova Scotia-based Empire Co., announced a new long-term wholesale distribution deal Friday with Minneapolis-based Target that will include national brands as well as Target’s own private-label brands.

“The associated increased revenue, and the supply chain efficiencies which will lower our costs, will continue to strengthen our competitive position,” Sobeys CEO Bill McEwan said in a release.

Both companies also plan to explore “additional supply chain opportunities,” they said Friday.

Sobeys, which operates a network of 23 food distribution centres across Canada, “will be able to provide the same high level of service to Target’s store network as it does to its own network of 1,300 stores across the country.”

The agreement also calls for both Sobeys and Target to leverage each other’s distribution networks to “mutually reduce transportation expenses,” they said.

Target, which at 1,762 outlets is the second-largest retailer in the U.S., announced plans earlier this year to open between 125 and 135 stores in Canada starting in 2013.

The bulk of those will be in space now occupied by retailer Zellers, whose parent, Hudson Bay Co., has agreed to sell the property leases to Target.