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.

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Ottawa serial killer Camille Joseph Cleroux died of natural causes at Abbotsford’s Pacific Institution on Sunday.
Serial killer housed at Abbotsford’s Pacific Institution dies of natural causes

Camille Joseph Cleroux announced dead on Sunday, known as notorious Ottawa serial killer

Garry Blanchard of Hope won $77,000 correctly guessing the outcomes of all 13 games of NFL week 17. (Photo/BCLC)
Hope resident rakes in $77,000 in NFL Week 17 bet

Garry Blanchard won the record-breaking prize correctly guessing every outcome that week

This urn was found Jan. 4 at a Yale Road bus stop and has now been returned to its owner. (RCMP photo)
RCMP find custodian of urn that was left at Chilliwack bus stop

Police say the urn contained the remains of a family’s cat

Chilliwack ER doctor Marc Greidanus is featured in a video, published Jan. 18, 2021, where he demonstrates and describes effectiveness of various styles of masks. (Youtube)
VIDEO: Chilliwack ER doc runs through pros and cons of various masks

‘We’ve been asked to wear a mask and it’s not that hard,’ Greidanus says.

Keith Carlson, chair and director of the Peace and Reconciliation Centre at Univeristy of the Fraser Valley.
UFV hosts online session about interpersonal violence

Peace and Reconciliation Centre in Abbotsford holds discussion on Thursday, Jan. 21

Syringe is prepared with one of B.C.’s first vials of Pfizer vaccine to prevent COVID-19, Victoria, Dec. 22, 2020. (B.C. government)
B.C.’s COVID-19 caseload stays steady with 465 more Tuesday

No new outbreaks in health care facilities, 12 more deaths

New Westminster TV production designer, Rick Whitfield, has designed an office in a box for British Columbians in need of a private workspace. (BC Box Office photo)
PHOTOS: B.C. man designs ‘box office’ solution for those working from home

‘A professionally designed workspace on your property, away from the distractions of home’

(Pixabay photo)
VIDEO: Tip to Metro Vancouver transit police helps woman 4,000 km away in Ohio

Sgt. Clint Hampton says transit police were alerted to a YouTube video of the woman in mental distress

A woman types on her laptop in Miami in a Monday, Dec. 12, 2016, photo illustration. THE CANADIAN PRESS/AP/Wilfredo Lee
British Columbia government lax on cybersecurity practices, auditor reports

The audit did not highlight a specific threat, but it found breaches in cybersecurity are increasing globally

A child joins the Uke ‘n Play kickoff event at the Chilliwack Library on Oct. 1, 2016. (Jenna Hauck/ Chilliwack Progress file)
Events return, in virtual form, at Fraser Valley Regional Library

People can take part in ukulele jam, bullet journaling, reading groups and more

Cranbrook Food Bank coordinator Deanna Kemperman, Potluck Cafe Society executive director Naved Noorani and Sunshine Coast Community Services Society executive director Catherine Leach join B.C.’s new Municipal Affairs Minister Josie Osborne on a video call about B.C. gaming grants, Jan. 19, 2021. (B.C. government)
B.C. gaming grants reorganized for COVID-19 priorities

Minister highlights community kitchens, food banks

(Pixabay photo)
‘Cocaine bananas’ arrive at Kelowna grocery stores after mix up from Colombia: RCMP

Kelowna RCMP recently concluded an international drug investigation after finding cocaine in local grocers’ banana shipments in 2019

People wearing face masks to curb the spread of COVID-19 walk past a window display at a store in downtown Vancouver, on Sunday, December 13, 2020. The association representing businesses across Metro Vancouver says the costs of COVID-19 continue to mount for its members.THE CANADIAN PRESS/Darryl Dyck
Greater Vancouver business organization says members face uncertain outlook in 2021

Many Greater Vancouver businesses are barely treading water as they enter 2021

A handgun seized by Surrey RCMP. (Photo: Police handout)
Crime Stoppers received 500+ tips about Metro Vancouver guns, gang activity in 2020: report

Metro Vancouver organization ‘urging local residents to keep providing anonymous tips’

Most Read