CALGARY — Drugstores and hardware stores in Canada now sell food products, and that puts a new slant on how farm products are marketed.
At least it should, said food industry expert Peter Chapman, founder of GPS Business Solutions.
Loblaws’ purchase of Shoppers Drug Mart, which expanded grocery space in that chain, and Canadian Tire’s forays into selling staples such as sugar and coffee, are examples of the expanded options.
“Are you guys on the radar?” Chapman asked producers at the Nov. 23 Alberta Milk dairy conference.
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He worked at Loblaws for 19 years and was responsible for produce, bakery, deli, seafood and floral departments in Atlantic Canada.
“The first thing you need to understand is that retailers are all about getting shopping carts filled up,” he said.
“We really don’t care if it’s your products or somebody else’s products. I really don’t. What I’m concerned with is driving sales, driving traffic into my stores and driving gross product. So if I can do that with your products, perfect. We’ll get along great. If I can’t, I’m going to find somebody else to do it with.”
Chapman encouraged milk producers to think about new ways to get their products in front of consumers, taking advantage of new venues, online sales and quick-purchase convenience products.
That means thinking of retailers as customers because they will determine shelf space, location and promotion.
And although those customers and consumers are changing rapidly, they are also creatures of habit, Chapman said.
Quoting data from Catalina Marketing, he said the average grocery store has 35,000 products on its shelves, but the average household buys 260 products in a given year.
Marketing thus requires attention-grabbing tactics and consumer appeal.
The retail landscape has changed significantly since 1980, said Chapman. Back then, 10 percent was held by large stores, 70 percent by traditional stores and 20 percent by discount retailers.
Then Walmart came to Canada in the 1990s.
“That forever changed our food industry,” said Chapman.
The landscape changed again when Walmart introduced super stores to Canada in the 2000s.
The year 2014 was a watershed year, he added. That’s when Target decided to enter Canada, Sobeys bought Safeway and Loblaws bought Shoppers.
Target’s plans failed drastically and today 27 percent of the retail landscape is held by large stores, 38 percent by traditional stores and 35 percent by discount outlets such as Walmart.
“Volume is key. Walmart can do things so much differently than the other people can because of the volume they have. Walmart changed the way that retailers have to do their business,” he said. “They are relentless in their push to offer value to consumers, and they’re very good at it.”
This year has also seen a rise in food products sold by stores previously thought to be unlikely food sellers, such as Amazon, London Drugs and Canadian Tire.
Every product bought from these retailers means less bought at traditional food stores, Chapman said.
It also means that a different strategy is needed for each retailer in order to successfully market products.
He provided “insider” information on what retailers like about the dairy industry, including dependable supply and food safety.
“The reality is, we know that you people are doing things the way they should be done. You have the checks and balances in place,” Chapman said.
Retail also likes the incremental sales furnished by dairy products because when people come in to buy milk, they might also buy other things.
“Your products drive traffic. Cheese? A huge traffic driver. Ice cream? Awesome.”
There are also things retailers don’t like about the Canadian dairy industry, including the strength of its lobbying ability and the stability it has through supply management.
Chapman said retailers don’t fully understand supply management, so producers and the industry should do a better job explaining why it’s also an advantage for retailers.
