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Grocery Retailing - Canada - August 2018

"Virtually all Canadians (96%) hold some level of responsibility for grocery shopping. Canadians continue to lean towards traditional supermarkets for items associated with freshness, however, the expansion of supercentres combined with the convenience of one-stop shopping plus the promise of low prices is leading younger consumers to become less loyal. While interest in buying groceries online has increased over the past three years, the bulk of Canadians have yet to do so, meaning that baby steps will need to be taken to help ease consumers towards new grocery shopping habits."
- Carol Wong-Li, Senior Analyst, Lifestyles and Leisure

This report looks at the following areas:

  • Mass merchandisers are making in-roads in the category
  • Life stage impacts who and how consumers shop for groceries
  • Consumers need more information before they’ll shop (more) for groceries online

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Table of contents

  1. Overview

    • What you need to know
      • Definitions
      • Executive Summary

        • The issues
          • Mass merchandisers are making in-roads in the category
            • Figure 1: Store types shopped (net any grocery item), May 2018
          • Life stage impacts who and how consumers shop for groceries
            • Figure 2: Grocery shopping responsibility, by age, May 2018
          • Consumers need more information before they’ll shop (more) for groceries online
            • Figure 3: Shopping for groceries online, 2018 vs 2015, May 2018/October 2014
          • The opportunities
            • Old habits die hard: dividing up categories may help adoption of online grocery shopping
              • Figure 4: Concerned about the freshness of products purchased online, those who have not done so before but are interested vs overall, May 2018
            • Parents are keen for more ready-prepared offerings, so make it more like takeout
              • Figure 5: Grocery products bought (net any store), parents with under-18s at home vs overall, May 2018
            • Increase engagement during off-peak times by appealing to older consumers
              • Figure 6: Shops for groceries more than once per week, under-65s vs over-65s, May 2018
            • What it means
            • The Market – What You Need to Know

              • Tariffs will likely have an impact on consumer shopping behaviour
                • An aging population means different shopping habits
                  • Consumers feel more financially healthy opening up leeway for small splurges
                  • Market Factors

                    • Tariffs will likely have an impact on consumer shopping behaviour
                      • Consumers will likely see higher prices due to tariffs
                        • Grocery shopping is a high-engagement category
                          • Figure 7: Category engagement – all categories, January 2018
                        • Some Canadians are being more patriotic at the grocery store
                          • Figure 8: French’s Perfect Match, November 2016
                        • An aging population means changing grocery shopping habits
                          • Figure 9: Population aged 0-14 and over 65, 1995-2035*
                        • Improvement in perception of financial health suggests a little more room for small splurges
                          • Figure 10: Perception of financial health, January/February 2016-18
                      • Key Players – What You Need to Know

                        • Loyalty programs live up to their namesake and keep consumers loyal
                          • Mass merchandisers are making gains in grocery
                            • Retailer reactions to Amazon will benefit consumers
                            • What’s Working?

                              • Loyalty programs are keeping consumers loyal: spotlight on Loblaw
                                • Participation in loyalty programs run by LCL (Loblaw Companies Limited) is high
                                  • Members have more options and benefits with PC Optimum
                                    • Looking ahead, more benefits to come to those willing to pay a small fee
                                      • Figure 11: Acquisition email, President’s Choice, June 2018
                                  • What’s Struggling?

                                    • Mass merchandisers are making gains in grocery
                                      • Figure 12: Buying fresh grocery items by store-type, May 2018
                                      • Figure 13: Acquisition email, Walmart, July 2018
                                  • What’s Next?

                                    • Tech integrations are starting to have a presence
                                      • More self-checkout stations in future
                                        • More retailers are investing in Scan-and-Go technology
                                          • Amazon Go opens to the public
                                            • Tech integrations, more to it than just benefiting customers
                                              • Canadian retailers add convenience offerings to take on Amazon
                                                • Loblaw expands home delivery and PC Express pickup points
                                                  • Metro updates its online grocery service
                                                    • The presence of meal kits is increasing and retailers are paying attention
                                                    • The Consumer – What You Need to Know

                                                      • Virtually all Canadians shop for groceries
                                                        • The presence of mass merchandisers cannot be ignored
                                                          • Interest in buying groceries online increases, but barriers remain
                                                          • Grocery Shopper Profile

                                                            • Virtually all shop for groceries and most do so at least once a week
                                                              • Figure 14: Grocery shopping responsibility, May 2018
                                                              • Figure 15: Grocery shopping frequency, May 2018
                                                            • Moms more likely to be the primary grocery shopper, though fathers see themselves as contributors
                                                              • Figure 16: Sole responsibility for grocery shopping, mothers vs fathers, May 2018
                                                            • Not all trips are created equal: parents are making multiple trips to the grocery store
                                                              • Figure 17: Shops more than once per week, parents with under-18s vs non-parents, May 2018
                                                            • Click-and-collect for ready or semi-prepared options will appeal
                                                              • Older consumers more likely to share the responsibility and are high frequency shoppers
                                                                • Figure 18: Responsibility for grocery shopping, by age, May 2018
                                                                • Figure 19: Shops for groceries more than once per week, by age, May 2018
                                                              • Showcasing high-quality products during off-peak times may yield gains
                                                              • Store Types Shopped

                                                                • The grocery market is fragmented
                                                                  • Figure 20: Store types shopped (net any grocery item), May 2018
                                                                • Grocery stores still own their lane, though mass merchandisers have an ‘in’ via household products
                                                                  • Figure 21: Staple grocery items bought, by store type, May 2018
                                                                  • Figure 22: Household products and BPC items, by store type, May 2018
                                                                • Mass merchandisers are winning over the under-45s
                                                                  • Figure 23: Shopping at supermarkets vs mass merchandisers (net any grocery item), 18-44s vs over-45s, May 2018
                                                                • The draw is less through grocery staples, though convenience keeps them shopping
                                                                  • Figure 24: Difference between likelihood to purchase products from supermarkets vs mass merchandisers, May 2018
                                                                • Messages focused on fresh and convenience will help
                                                                  • Supermarkets own fresh, mass merchandisers own value – in their words
                                                                    • Positioning convenience as a value offering will help differentiate supermarkets
                                                                    • Buying Groceries Online: Attitudes and Barriers

                                                                      • Canadians are showing increased interest in buying groceries online
                                                                        • Figure 25: Shopping for groceries online, 2018 vs 2015, May 2018/October 2014
                                                                      • Parents are on board, but opportunity exists to encourage more activity
                                                                        • Figure 26: Have bought groceries online and would do so again, parents with under-18s at home vs overall, May 2018
                                                                      • Engagement can be deepened by incentivizing product re-ordering online
                                                                        • Retailers need to address concerns about freshness and costs
                                                                            • Figure 27: Barriers to order groceries online, those who have not done so before but are interested vs overall, May 2018
                                                                          • A little more information may make a big difference
                                                                            • Addressing concerns about freshness via social media
                                                                              • Let them know that ordering groceries online isn’t so different from shopping online for other categories
                                                                                • Breaking apart the ‘grocery’ categories may help adoption
                                                                                  • Shopping for groceries lacks the tactic experience – in their words
                                                                                    • Start by encouraging consumers to buy categories they are less engaged with
                                                                                      • Small perks may tip them into trying it
                                                                                        • Figure 28: Interest in seeing grocery stores offer customized promotions to their shopping habits, those who have not done so before but are interested vs overall, May 2018
                                                                                      • Emulating the ‘discovery’ process may also pique interests
                                                                                        • Food for thought: shopping in physical stores offers the joy of discovery
                                                                                          • The element of surprise/discovery may be lacking – In their words
                                                                                          • Opportunities for Grocery Stores

                                                                                              • Women aged 45-64s are in a time of transition and are looking for samples of new products
                                                                                                • Figure 29: Interest in seeing ‘more samples of products I would not typically buy’, women 45-64 vs overall, May 2018
                                                                                              • Featuring products with simple and high quality ingredients will resonate
                                                                                                • Figure 30: Rude Health Organic Ultimate Almond Drink (Netherlands, October 2017)
                                                                                              • Parents are keen for more ready-prepared offerings
                                                                                                • Figure 31: Grocery products bought (net any store), parents with under-18s at home vs overall, May 2018
                                                                                              • Consider increasing convenience surrounding ready-prepared offerings
                                                                                                • In-store cafes are a key area of interest for 18-24-year-old women
                                                                                                  • Figure 32: Interest in seeing more grocery stores include in-store cafés or restaurants, 18-24s vs overall, May 2018
                                                                                                • Showcasing speciality ready-made items to generate cravings amongst 18-24s
                                                                                                • Appendix – Data Sources and Abbreviations

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

                                                                                                          Grocery Retailing - Canada - August 2018

                                                                                                          US $4,395.00 (Excl.Tax)