E-commerce changes retail picture; brings opportunities

Unexpected markets could open up for farmers if buying groceries online becomes the new normal for more consumers

Canada is now in week nine of the COVID-19 crisis, although it may seem as though that span has been longer — much longer.

In that time, grocery shopping has become a chore to be avoided, eating at home has become the norm and the entire social contract between the food industry and consumers is being redefined.

Sylvain Charlebois, professor in food distribution and policy at Dalhousie University in Halifax, talked about the “wild ride” of the last nine weeks during a May 19 online session of the Southern Alberta Council on Public Affairs.

He said the pandemic will result in higher costs for food in Canada, which until now has had the fifth cheapest food basket in the world, comprising about 11 percent of income.

“All of that is about to change, I think. Producing food is costing more, regardless of what you do,” he said.

Though he doesn’t anticipate food spending to rise to European levels of about 14 percent of total income, Charlebois does predict higher prices for at least the next few years.

Going to the grocery store shows some of the reasons for higher prices, given new sanitation requirements and protocols.

“Frankly it’s not overly pleasant anymore; it’s really a duty,” he said about grocery shopping.

“It’s quite unpleasant now, to be honest.”

Before the pandemic, surveys showed about 18 percent of Canadians tried to avoid grocery shopping. Now about 52 percent say they avoid it due to the lineups, directional aisles and in some cases having their temperature taken upon entering.

Charlebois said there are fewer grocery store promotions now and the food inflation rate is about four percent, which is higher than the general inflation rate in Canada.

The pandemic has forced Canada to step up levels of e-commerce.

In the last two months, he said, surveys indicate 64 percent of Canadians bought a food product online for the first time. When the COVID-19 crisis has passed, the same survey indicates 22 percent of Canadians intend to buy food online on a regular basis.

That could change the retail dynamic, said Charlebois.

“If e-commerce becomes an option for a lot of people out there, everything is possible. If you think you have access to the consumer, why do you need Loblaw? Why do you need Sobeys? Why do you need Metro or Walmart or Costco?

“As a farmer, as a restaurant, as a processor, you can sell directly to consumers and that’s exactly what’s been happening over the last few weeks. We’ve seen this entire food supply chain become more democratic.”

In fact, for the first time ever, consumers can buy Pepsi directly from PepsiCo through e-commerce, an option previously unavailable.

“Really things are opening up and because of that … all of a sudden everyone can think about a different business model.”

As for government funding provided to agriculture, Charlebois said the $252 million announced earlier this month, though underwhelming, was interesting in its targets. The $77 million of that total earmarked for food processing showed recognition that it is central to an agri-food strategy.

“Without processing, you don’t really have much of a value chain,” he said.

Charlebois suggested that many processors, including meat plants, were suffering even before the pandemic and had lost 12 jobs per day every day since 2012. That equates to about 35,000 jobs, yet those losses flew completely under the radar.

He also said consumers now have more questions about the ethics of food production after seeing milk dumped, vegetables wasted and animals euthanized when processing and distribution couldn’t cope with changed market dynamics.

“I can see how C-19 is serving strong case studies to the vegan movement on a silver platter,” he said.

“You can see the cracks in the supply chain and we need to address those cracks because it just makes farmers look bad. It makes the entire supply chain look bad.

“This is the one thing that needs to change. I hope that coming out of COVID, we’re going to learn about how we become better environmental stewards, like for real.”

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