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

Gerry Jensen had an interesting visitor last month in his backyard near Maple Ridge Park. It was a male pileated woodpecker. “I hear these guys fairly often, but haven’t actually seen one in 25 years or more. I was very surprised to see this one demolishing a suet block hanging in my Hazelnut tree. Their eyesight must be fantastic in order to find a small block like this more or less hidden in the branches.” (Special to The News)
SHARE: Fine-feathered friends feast in Maple Ridge backyard

Send us your photo showing how you view Maple Ridge or Pitt Meadows, and it could be featured soon

Police tape is shown in Toronto Tuesday, May 2, 2017. Statistics Canada says the country's crime rate ticked up again in 2018, for a fourth year in a row, though it was still lower than it was a decade ago. THE CANADIAN PRESS/Graeme Roy
CRIME STOPPERS: ‘Most wanted’ for the week of May 16

Crime Stoppers’ weekly list based on information provided by police investigators

Ron Tuck presents a Ridge Meadows Royals #33 to Larry Walker Sr., as the local minor ball association retired Larry Walker Jr.’s number. (Special to The News)
Ridge Meadows Baseball retires Larry Walker’s number

Association honours future hall of famer

Albion Community Centre in phase 2 of construction plan. (City of Maple Ridge)
Albion Community Centre closer to completion

Construction is expected to wrap up fall 2021

xx
Pedestrian struck in Pitt Meadows

Area near Airport way and Harris Road has been shut down by police

Daily confirmed COVID-19 cases reported to B.C. public health, seven-day rolling average in white, to May 12, 2021. (B.C. Centre for Disease Control)
B.C. preparing ‘Restart 2.0’ from COVID-19 as June approaches

Daily infections fall below 500 Friday, down to 387 in hospital

The warm weather means time for a camping trip, or at least an excursion into nature. How much do you know about camps and camping-related facts? (John Arendt - Summerland Review)
QUIZ: Are you ready to go camping?

How many camp and camping-related questions can you answer?

The Independent Investigations Office of BC (IIO) (File Photo)
Police watchdog investigating after man found dead in Surrey following a wellness check

IIO says officers ‘reportedly spoke to a man at the home before departing’

Crowds at English Bay were blasted with a large beam of light from an RCMP Air-1 helicopter on Friday, May 14. THE CANADIAN PRESS/Marc Grandmaison
Police enlist RCMP helicopter to disperse thousands crowded on Vancouver beach

On Friday night, police were witness to ‘several thousand people staying well into the evening’

Cannabis bought in British Columbia (Ashley Wadhwani/Black Press Media)
Is it time to start thinking about greener ways to package cannabis?

Packaging suppliers are still figuring eco-friendly and affordable packaging options that fit the mandates of Cannabis Regulations

People shop in Chinatown in Vancouver on Friday, February 5, 2021. THE CANADIAN PRESS/Jonathan Hayward
Vancouver community leaders call for action following 717% rise in anti-Asian hate crimes

‘The alarming rise of anti-Asian hate in Canada and south of the border shows Asians have not been fully accepted in North America,’ says Carol Lee

Sinikka Gay Elliott was reported missing on Salt Spring Island on Wednesday, May 12. (Courtesty Salt Spring RCMP)
Body of UBC professor found on Salt Spring Island, no foul play suspected

Sinikka Elliott taught sociology at the university

The first Black judge named to the BC Supreme Court, Selwyn Romilly, was handcuffed at 9:15 a.m. May 14 while walking along the seawall. (YouTube/Screen grab)
Police apologize after wrongly arresting B.C.’s first Black Supreme Court Justice

At 81 years old, the retired judge was handcuffed in public while out for a walk Friday morning

Surrey RCMP in the 4900-block of 148th Street, a short road just off of King George Boulevard, on May 15, 2021 after a male was allegedly assaulted with a “pipe-like” weapon that morning. (Photo: Shane MacKichan)
Surrey RCMP investigating after person reportedly injured with ‘pipe-like’ weapon

Police investigating incident in the 4900-block of 148th Street

Most Read