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Grocery Store Perimeter - Canada - March 2016

"Rapidly rising food costs are impacting categories sold at the perimeter of the grocery store (fresh produce, dairy, fresh baked goods, fresh meat and seafood). Retailers must creatively find ways to reinforce ‘freshness’ and lessen consumer focus on price. Motivating consumers at specialty counters will mean reminding them of the capability to customize purchases and leveraging staff expertise. Ready, prepared food offerings also represent an area with good potential to deepen engagement with shoppers as perceptions of HMR (Home Meal Replacement) products are positive. Currently, however, this area may not be meeting its full potential."
- Carol Wong-Li, Senior Analyst, Lifestyles and Leisure

This report discusses the following key topics:

  • Grocery shoppers are feeling the pinch of current economics
  • Specialty counters are ‘fresher’ to only 43% of grocery shoppers
  • Low use of ready, prepared offerings or HMR

Grocery costs are rising, being driven by the rise in cost of fresh fruit and vegetables. The weak Canadian dollar is contributing to these costs as nearly all fruit and vegetables consumed in Canada are imported. Alongside record-high levels of household debt, Canadians are feeling the pinch of higher grocery bills. As such, grocery retailers will need to creatively find ways to grow appeal of their perimeter products while detracting the consumer’s focus away from the price. Enhancing the shopping experience by blurring the line between retail and leisure may be an effective way to encourage engagement. The key will be to promote alternatives to price promotions given that rising import costs leave little room for retailers in an already heavily discounted environment.

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Table of contents

  1. Overview

    • What you need to know
    • Executive Summary

      • The issues
        • Grocery shoppers are feeling the pinch of current economics
          • Specialty counters are ‘fresher’ to only 43% of grocery shoppers
            • Figure 1: Agreement with “Food items from specialty counters are fresher” (any agree), by age and gender, December 2015
          • Low use of ready, prepared offerings or HMR
            • Figure 2: Attitudes towards grocery perimeter shopping, HMR-related statements, December 2015
          • The opportunities
            • Make men count
              • Figure 3: Attitudes towards grocery perimeter shopping, HMR-related statements, by gender, age and presence of children, December 2015
            • Make it personal
              • Figure 4: Agreement with “I like being able to select exactly what I want (eg the cake I want, the size/cut of meat)” (any agree), by age, December 2015
            • Elevating the ‘special’ in specialty counters
              • Figure 5: Agreement with “The staff at specialty stores (eg meat markets, produce/farmers markets) are more knowledgeable about the products they sell” (any agree), December 2015
            • What it means
            • The Market – What You Need to Know

              • Canadian consumers are under economic pressure
                • Opportunities exist in the changing demographic
                • Market Factors

                  • Economic factors
                    • The weak Canadian dollar is impacting import costs
                      • Household debt levels are adding pressure to Canadian grocery shoppers
                        • What this means for grocery shoppers and retailers
                          • Figure 6: Consumer price index 12-month percent change, December 2015
                        • Demographic factors
                          • The population is ethnically diverse and aging
                            • Figure 7: Population aged 65 years and over in Canada, historical and projected (% of total), 1971-2061
                          • What this means for grocery shoppers and retailers
                          • Key Players – What You Need to Know

                            • As the population changes, so do grocery retailers
                              • Grocery shopping as an experience
                                • The push of ecommerce
                                • What’s Working?

                                    • Connecting with the ethnic consumer
                                      • Connecting with the South Asian segment: Sobeys’ brand FreshCo opens Chalo!
                                        • Connecting with the Asian and Middle Eastern segments: Loblaws’ T&T and Arz
                                          • Metro’s Adonis specializes in Middle Eastern foods
                                            • Thinking outside the box
                                              • Meet market at the meat counter: Singles nights at the grocery store
                                                • Partnerships with Nutella for a fresh crepe experience
                                                  • Perfect pairing: Food and fashion
                                                    • Metro adds flare to its marketing
                                                      • Loblaws’ President’s Choice creates a physical look (and taste) book
                                                      • What’s Next?

                                                          • Courting a wider range of consumers
                                                            • Safeway and Sobeys respond to the economy in Alberta
                                                              • Entrance of newcomer Seafood City
                                                                • Whole Foods targets Millennials with new chain 365
                                                                  • One-stop shopping options increase
                                                                    • Rise of the Walmart Supercentres
                                                                      • Longo’s launches “Beer Fridge”
                                                                        • Going online
                                                                          • Toronto gets online grocery option from Walmart
                                                                            • Metro launches pilot project in Quebec
                                                                            • The Consumer – What You Need to Know

                                                                              • Grocery shoppers are diverse
                                                                                • Fresh categories are most frequently purchased at the supermarket
                                                                                  • Specialty counters could use a boost in ‘freshness’
                                                                                    • Canadian attitudes towards HMR: Positive sentiments, low action
                                                                                    • Grocery Shopper Profile

                                                                                      • Grocery shoppers are primarily women, though men share in the task
                                                                                        • Figure 8: Responsibility for grocery shopping, December 2015
                                                                                      • Men are a key segment of grocery shoppers
                                                                                          • Figure 9: Strong is Beautiful, Pantene Dad-Do, January 2015
                                                                                        • Affluent households are sharing the task
                                                                                          • Majority of primary grocery shoppers are working full-time
                                                                                            • Dietary considerations affect a quarter of grocery shoppers
                                                                                              • Figure 10: Dietary considerations, December 2015
                                                                                          • Where Canadians are Shopping – Fresh Groceries

                                                                                            • Perimeter categories are most commonly purchased at supermarkets
                                                                                              • Figure 11: Location shopped (any category), December 2015
                                                                                            • Millennial women and parents with children are more likely to shop at mass merchandisers
                                                                                              • More affluent consumers shopping at club stores for perimeter products
                                                                                                • Chinese Canadians skew higher for club stores and local, non-national chain grocery stores
                                                                                                  • Location, location, location – The convenience factor counts
                                                                                                    • Figure 12: Agreement with “I prefer to shop at one store for all my grocery needs” (any agree), by presence of children, December 2015
                                                                                                • Where Canadians are Shopping – Differences by Category

                                                                                                    • Fresh fruit and vegetables
                                                                                                      • Chinese Canadians are more inclined to buy these at local, non-chain grocery stores
                                                                                                        • Figure 13: Location and categories shopped: Fruits and vegetables, Chinese Canadians vs overall, December 2015
                                                                                                      • British Columbians shop locally
                                                                                                        • Fresh meats
                                                                                                          • Older grocery shoppers more inclined to buy fresh meats from supermarkets
                                                                                                            • Figure 14: Location and categories shopped: Fresh meats (ie beef, pork or poultry), December 2015
                                                                                                          • Fresh seafood and fish
                                                                                                            • Fewer grocery shoppers purchase products in this category
                                                                                                              • Figure 15: Purchased fresh seafood and fish (any location), overall population vs Chinese Canadian and by primary language spoken at home, December 2015
                                                                                                            • Diversifying the palate of Canadians
                                                                                                              • Figure 16: Loblaws advertisement, “Loblaws: Want to raise a food lover?”, 2016
                                                                                                              • Figure 17: Loblaws advertisement, “Provigo: Vous voulez que votre enfant soit un futur gastronome?”, 2016
                                                                                                          • Attitudes towards Shopping at the Perimeter – Fresh Groceries

                                                                                                            • It all starts with being ‘fresh’
                                                                                                              • Figure 18: Attitudes towards price and freshness, December 2015
                                                                                                            • Women less willing to pay for freshness
                                                                                                              • Figure 19: Disagreement with “Price is more important than freshness” (any disagree), by age and gender, December 2015
                                                                                                            • Chinese Canadians are more price-focused
                                                                                                              • Grocery specialty counters may need to boost ‘fresh’ message with key segments
                                                                                                                • Figure 20: Agreement with “Food items from specialty counters are fresher” (any agree), by age and gender, December 2015
                                                                                                              • Freshness strategies at Chinese grocery stores are working
                                                                                                                • How grocers can help determine ‘freshness’ – A qualitative look
                                                                                                                • Attitudes towards Shopping at the Perimeter – By Category

                                                                                                                    • Fresh fruit and vegetables
                                                                                                                      • Shoppers are concerned about chemicals and preservatives
                                                                                                                        • Figure 21: Attitudes towards fresh fruit and vegetables, December 2015
                                                                                                                      • Fresh meat
                                                                                                                        • Approach to red meat differs by age
                                                                                                                            • Figure 22: Agreement with statement ‘I am eating less red meat for health reasons’, by age and gender, December 2015
                                                                                                                          • Fresh seafood and fish
                                                                                                                            • Older consumers more likely to consider the nutritional value
                                                                                                                              • Figure 23: Attitudes towards fresh seafood and fish, by age, December 2015
                                                                                                                            • Engaging younger shoppers by targeting specific demographics
                                                                                                                            • Improving the Shopping Experience at Specialty Counters

                                                                                                                              • Customization and knowledgeable staff should help bolster engagement
                                                                                                                                • Figure 24: Attitudes towards grocery perimeter shopping, December 2015
                                                                                                                              • Personalization matters more to older consumers
                                                                                                                                • Increasing staff expertise will appeal to men
                                                                                                                                  • The value of staff expertise: In their words
                                                                                                                                    • Visual cues and physical proximity to common ingredients will also help encourage purchases
                                                                                                                                        • Figure 25: Attitudes towards grocery perimeter shopping, December 2015
                                                                                                                                      • Locating commonly grouped recipe ingredients should keep Millennial men and fathers more engaged
                                                                                                                                      • Attitudes towards Home Meal Replacement

                                                                                                                                        • Consumer perception of prepared foods from grocery stores is generally positive, but purchase is soft
                                                                                                                                          • Figure 26: Attitudes towards grocery perimeter shopping, HMR-related statements, December 2015
                                                                                                                                        • Millennial men, fathers with children are an ideal target for HMR
                                                                                                                                          • Figure 27: Attitudes towards grocery perimeter shopping, HMR-related statements, by gender, age and presence of children, December 2015
                                                                                                                                        • Promoting HMR: Moving consumers from tentative interest to action
                                                                                                                                          • Figure 28: Attitudes towards ready, prepared food, December 2015
                                                                                                                                        • Promoting HMR: Proving freshness and including nutritional information
                                                                                                                                          • Figure 29: HMR opportunity, by gender, December 2015
                                                                                                                                        • Proving freshness and including nutritional information: In their words
                                                                                                                                          • Promoting HMR: Getting consumers to think beyond the grocery store
                                                                                                                                          • Appendix – Data Sources and Abbreviations

                                                                                                                                            • Data sources
                                                                                                                                              • Consumer survey data
                                                                                                                                                • Consumer qualitative research
                                                                                                                                                  • Abbreviations and terms
                                                                                                                                                    • Abbreviations

                                                                                                                                                    Companies Covered

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                                                                                                                                                    Grocery Store Perimeter - Canada - March 2016

                                                                                                                                                    £3,199.84 (Excl.Tax)