Canada’s three big grocery chains still account for half of the country’s retail food sales but others are nipping at their heals, according to a new report.
Loblaws/The Real Canadian Superstore had a 23.6 percent share of the industry’s US$96.6 billion in sales in 2018, according to the U.S. Department of Agriculture’s Foreign Agricultural Service.
That was followed by Sobeys/Safeway at 16.9 percent and Metro/Jean Coutu at nine percent.
But the stranglehold the big three have on the Canadian marketplace is starting to loosen, said Sylvain Charlebois, a food distribution expert at Dalhousie University.
“There’s certainly a turning point going on right now in retail,” he said.
“Their influence is actually being diminished by the rise of non-traditionals like Costco, Walmart (and) there is Amazon also.”
Costco has a 6.6 percent share of Canada’s market, which was good for fourth spot and Walmart was close behind in fifth at 6.2 percent. Amazon didn’t crack the top-10 on the USDA’s list.
Canada imported 27 percent of the products sold in its retail food outlets. The U.S. was by far and away the biggest foreign supplier, accounting for 59 percent of the $26.4 billion in imports. That is because 90 percent of Canada’s 37 million people live within 160 kilometres of the U.S. border.
One trend identified in the USDA report was the strong demand for private label and promotionally priced products.
Charlebois said that tendency differs by region.
“Bargain shopping is definitely vibrant in Ontario. I would exclude Quebec and I certainly would exclude B.C. as well,” he said.
The USDA said another trend is towards natural, specialty and organic products, which have become centre-aisle products. Independent retailers are outperforming the big grocery chains on that front.
“Independents are doing a better job at serving ethnic communities as well,” said Charlebois.
He noted that Loblaws recently announced it was moving away from having ethnic food sections and would be integrating those products amongst other products.
But he noted that even though the independents are outperforming the chains they are still coming up short on ethnic food offerings.
Grocery chains are also facing stiff competition from convenience stores where there has been considerable consolidation. They are introducing different products and reducing prices.
Charlebois said Laval, Que.-based Couche-Tard is snapping up convenience stores and is doing a good job of converting foot traffic and gas purchases into food sales.
The last big trend identified by the USDA is online food shopping, which is in its infancy in Canada.
“That has been going on for about three years now since Amazon purchased Whole Foods.”
He noted that Canada has a long way to go to catch up to the U.S. where online shopping accounts for about seven percent of retail food sales versus two percent in Canada.