A man leaves a Loblaws store in Toronto on Thursday, May 3, 2018.THE CANADIAN PRESS/Nathan Denette

A man leaves a Loblaws store in Toronto on Thursday, May 3, 2018.THE CANADIAN PRESS/Nathan Denette

Grocers transforming themselves to adapt to shifting consumer demands

Canadian grocers doubled down on transforming themselves into destinations for time-strapped shoppers this year.

Canadian grocers doubled down on transforming themselves into destinations for time-strapped shoppers this year, ramping up delivery options, acquiring meal kit companies and adding in-store eateries.

Shifting consumer demands and tech titan Amazon’s recent acquisition of Whole Foods Market are pressuring grocers to evolve, yet experts say it’s only the beginning of a transformation in how Canadians shop for food.

In the near future, consumers will order online on autopilot; shop at smaller markets bustling with experiences; and embrace in-store technology that eases the hassles of shopping.

“Fundamentally, grocery stores are still planned and built and managed and even measured from a productivity standpoint in the same way they were in 1917,” said Doug Stephens, founder of Retail Prophet, an advisory firm.

That year, Clarence Saunders filed for a U.S. patent for “store equipment or furniture and a system for arranging” it to allow shoppers to grab what they wanted rather than be served from behind a counter, according to the patent application. His first such store, the original Piggly Wiggly, opened the previous year in Memphis, Tenn.

“And yet, as we all know, everything else around us has changed dramatically as a consequence of technology,” Stephens said.

“So, I believe that we really and truly are in for a revolution.”

Canadians feel increasingly comfortable ordering online. In September, retail e-commerce sales accounted for $1.4 billion or 2.8 per cent of total retail trade, according to Statistic Canada’s most recent figures. That’s a 16.9 per cent year-over-year increase.

That will grow even more as Canada continues to lag its southern neighbour in online sales, said Sylvain Perrier, CEO of North Carolina-based Mercatus, which helps grocers better use technology.

He anticipates a two to three per cent growth in online grocery sales over the medium term.

Read more: Loblaws closing 22 stores, launching home delivery ahead of ‘difficult year’

Read more: BC resident calls for national plan to tackle plastic

Canadians will start to overcome the fear of having a stranger select their fresh food — a barrier that’s hampered the growth of e-commerce in grocery — more broadly, Perrier said. That will come as the country’s grocers get better at having good quality produce on hand.

Consumers are also creatures of habit, said Stephens, with about half of their purchases being the same each time they visit the grocery store. Shoppers will likely start purchasing these types of routine items — like laundry detergent or oatmeal — online instead.

With the increasing coverage of the internet of things, interconnected appliances will one day place those orders for their human owners, he said.

Those creations would be an extension of already existing smart refrigerators — ones that can show residents what’s in their fridge and prompt them to order certain items via an embedded screen, among other capabilities.

Some auto-order products already exist. Amazon’s dash buttons, which first required a human tap, now monitor supply levels in certain items and automatically reorder when the product, like printer ink, runs low.

“Fifty per cent of the things we’re buying will just come to us,” Stephens said.

With more food stuffs ordered online, the centre aisles in supermarkets will begin to vanish, resulting in smaller stores that mostly sell fresh goods. These markets will strive to become destinations for shoppers, offering experiences to draw in consumers, Stephens said.

That trend is already taking shape with the rise of so-called grocerants, where stores offer dining options that, depending on the store, may include sushi, full-service bars and freshly cooked seafood selected from freezers in stores.

Stephens expects to see more nutritionists and nutritional information in supermarkets to help shoppers tailor purchases to their health conditions, as well as more chefs demonstrating how to cook specific foods or dishes.

Technology in grocery stores will become more advanced and widespread. Electronic labels, for example, could automatically change an item’s price based on demand or competition, Stephens said.

Some technology, though, will likely go the way of the Dodo bird. Handheld scanners, already tested by the likes of Walmart and Loblaw, likely won’t survive, he predicts.

These contraptions relegate a task to the consumer rather than create a frictionless shopping experience, he said, like that offered by Amazon Go stores.

Amazon launched a check-out free concept in Seattle several years ago. Consumers scan an app when they enter and the technology charges their account for whatever they leave with to eliminate line ups, cashiers and self-checkouts.

While the model has now grown to eight locations in Seattle, Chicago and San Francisco — with two more slated to open in the near future — it’s unlikely to become widespread in Canada any time soon, Perrier said.

Three major players — Loblaw Companies Ltd., Metro Inc. and Empire — control the grocery landscape in the country, he said.

“So any investment that is too risky, that may cause any of those three to falter or to kind of slip up could result in some significant loss and the gain in traction by any one of the other two,” said Perrier.

Still, grocers seem keen to develop their in-store technology.

The goal of any technological addition is to “delight customers” and make them feel good about being in the company’s stores rather than reduce labour costs, said Michael Vels, chief financial officer for Empire Co. Ltd., in a recent conference call with analysts.

“The really significant benefit here is improving our sales,” he said.

As grocers navigate their way into the future, data becomes more important.

Loblaw, which earlier this year merged two loyalty programs into one, uses that trove of consumer information to personalize marketing offers. That tactic can increase how much shoppers buy — what’s known as their basket size — and is why grocers value having their own loyalty programs or partnering with third-party systems, Perrier said.

“It’s really to take that data to the next level and secure their future.”

Also important is a company’s ability to accumulate data in real time, parse it and deploy against it, said Stephens.

In the U.S., one grocery chain was able to significantly reduce its average checkout line up time, for example, by using data to determine how many cashiers to deploy at any given moment.

“Data is becoming a distinct competitive advantage.”

Companies in this story: (TSX:L, TSX:MRU, TSX:EMP.A)

Aleksandra Sagan, The Canadian Press

Like us on Facebook and follow us on Twitter.

Just Posted

North Island MLA Michele Babchuk. Photo contributed
COMMENTARY: MLA Michele Babchuk talks the future of forestry

‘These forests are important to every single one of us, myself included’

Dr. Prean Armogam hands over a cheque for $10,000 to Hardy Bay Senior Citizens Society president Rosaline Glynn. The money will be going towards a new roof for the Port Hardy seniors centre. This is the second donation Dr. Armogam has made to the society, giving them $5,000 a little over a year ago. (Tyson Whitney - North Island Gazette)
Doctor donates $10k to Hardy Bay Senior Citizens Society for new roof

This was the second donation Armogam has given to the society

New COVID-19 cases on Vancouver Island by local health area for the week of May 30-June 5. (B.C. Centre for Disease Control image)
COVID-19 cases drop again almost everywhere on Vancouver Island

Nanaimo had four new cases last week, down from 22 the week before

Blueprints for the seniors housing project in Port Hardy. (North Island Seniors Housing Foundation photo)
BC Housing declines North Island Seniors Housing Foundation’s proposal to build units

BC Housing will be explaining why exactly the project was declined at a June 18 meeting

An aerial view of the marine oil-spill near Bligh Island in Nootka sound that the Canadian Coast Guard posted in a live social media feed in December. ( Canadian Coast Guard/Facebook)
Oil from vessel that sank in 1968 off Vancouver Island to be removed

DFO hires Florida firm to carefully remove oil from MV Schiedyk in Nootka Sound starting in mid-June

At an outdoor drive-in convocation ceremony, Mount Royal University bestows an honorary Doctor of Laws on Blackfoot Elder and residential school survivor Clarence Wolfleg in Calgary on Tuesday, June 8, 2021. THE CANADIAN PRESS/Jeff McIntosh
‘You didn’t get the best of me’: Residential school survivor gets honorary doctorate

Clarence Wolfleg receives honorary doctorate from Mount Royal University, the highest honour the school gives out

Two-year-old Ivy McLeod laughs while playing with Lucky the puppy outside their Chilliwack home on Thursday, June 10, 2021. (Jenna Hauck/ Chilliwack Progress)
VIDEO: B.C. family finds ‘perfect’ puppy with limb difference for 2-year-old Ivy

Ivy has special bond with Lucky the puppy who was also born with limb difference

A million-dollar ticket was sold to an individual in Vernon from the Lotto Max draw Friday, June 11, 2021. (Photo courtesy of BCLC)
Lottery ticket worth $1 million sold in Vernon

One lucky individual holds one of 20 tickets worth $1 million from Friday’s Lotto Max draw

“65 years, I’ve carried the stories in my mind and live it every day,” says Jack Kruger. (Athena Bonneau)
‘Maybe this time they will listen’: Survivor shares stories from B.C. residential school

Jack Kruger, living in Syilx territory, wasn’t surprised by news of 215 children’s remains found on the grounds of the former Kamloops Indian Residential School

A logging truck carries its load down the Elaho Valley near in Squamish, B.C. in this file photo. THE CANADIAN PRESS/Chuck Stoody
Squamish Nation calls for old-growth logging moratorium in its territory

The nation says 44% of old-growth forests in its 6,900-square kilometre territory are protected while the rest remain at risk

Flowers and cards are left at a makeshift memorial at a monument outside the former Kamloops Indian Residential School to honour the 215 children whose remains are believed to have been discovered buried near the city in Kamloops, B.C., on Monday, May 31, 2021. THE CANADIAN PRESS/Darryl Dyck
‘Pick a Sunday:’ Indigenous leaders ask Catholics to stay home, push for apology

Indigenous leaders are calling on Catholics to stand in solidarity with residential school survivors by not attending church services

“They will never be forgotten, every child matters,” says Sioux Valley Chief Jennifer Bone in a video statement June 1. (Screen grab)
104 ‘potential graves’ detected at site of former residential school in Manitoba

Sioux Valley Dakota Nation working to identify, repatriate students buried near former Brandon residential school

The Queen Victoria statue at the B.C. legislature was splattered with what looks like red paint on Friday. (Nicole Crescenzi/News Staff)
Queen Victoria statue at B.C. legislature vandalized Friday

Statue splattered with red paint by old growth forest proponents

Most Read