Mainstream shoppers, too, have been looking for ethnic options. Uduslivaia notes that consumers will pick up ethnic foods in their primary supermarket if the price is low, but many prefer to travel to an ethnic store as a destination for such foods. “There’s this interesting trend that indicates consumers are looking for something a little more authentic, and this is where the ethnic retailers win,” she says.
Another trend in Canadian food retailing is the rise of urban, small-format stores. With 81 percent of Canada’s population living in urban areas, major chains are experimenting with smaller footprints near condominium developments in city centers.
A case in point is Walmart’s “Urban 90s” launched in January 2012. “Produce and grocery are at the front and center of the store,” explains Uduslivaia, “so they’re the first thing you see.” Further, she says, the format places a major emphasis on food and groceries. Other grocery chains in on the trend include Sobeys with its “Urban Fresh” concept.
Regional Differences
While the national chains dominate the grocery industry in Canada under various names, there are also regional chains of note. A few include Longo’s in the Toronto area, Federated Co-ops in Alberta, and Safeway and Overwaitea (known for a large Asian assortment) in Western Canada.
While the formats and layouts of national chains are similar across the country, products vary. “British Columbia is far more likely to be on the very front of fresh, natural, organic, and exotic produce,” says Scott. On the other hand, the Atlantic region is traditional, with wrapped produce still in demand. Toronto and Montreal are melting pots that have changed dramatically in terms of product mix; Toronto’s more established groups include Asian, Caribbean, and Middle Eastern.
The French-language province of Quebec has a distinct, European character. Its retail landscape is more fragmented, with more independent grocers than other regions. Significant amounts of produce are sold through fruit stands and farmers’ markets, although Loblaw, Sobeys’ IGA stores, and Metro account for more than 80 percent of the grocery market overall. Walmart has seven stores in Quebec, but expects to have more than three times that in as many years.
In general, the independent and regional supermarket segment in Canada is nowhere near as significant as in the United States. “That’s not to say we don’t have a vibrant independent sector,” says Lemaire. Local independents such as Farm Boy in Ottawa have a community-based focus, provide additional services, and carry more local products than the chains. “They influence and challenge the national retailers in regional markets.”
Still, independents can have a hard time competing. “It’s particularly difficult if they are near a Walmart Supercenter,” Uduslivaia clarifies. “They can’t always match the prices, but they have to by default.”
The Price Is Right
The biggest impact of Walmart and Costco on the Canadian marketplace has been in intensifying price pressure in an already competitive landscape. “There’s been a blurring between grocery, discount, supercenters, and hypermarkets (a combination department store/superstore) on pricing,” says Uduslivaia. “Supermarkets are being very aggressive. Their prices are even lower than the discounters in some cases.”
