Description

“Grocery retailing is evolving; inflation is causing consumers to change behaviours, online channels offer new ways of shopping and competition is tightening.
Yet, the fundamentals of the industry are consistent. Value, quality, convenience and in-person shopping remain paramount. For as dynamic as this industry can be, consumers ultimately want consistency and predictability.”

– Scott Stewart, Associate Director, Lifestyles & Retail

This Report will look at the following areas:

  • How often Canadians shop for groceries and what channels they use.
  • What shoppers consider when choosing a grocery store.
  • How Canadians are most likely to respond to rising prices in grocery stores.
  • Grocery shopping behaviours at non-traditional grocery retailers.
  • How consumers think about different grocery categories, including the importance of local sourcing and name brands.
  • Analysis of what role local sourcing can play in grocery stores’ produce sections.

Table of Contents

  1. Overview

    • What you need to know
      • Key issues covered in this Report
        • Definitions
        • Executive Summary

            • Top takeaways
              • Market overview
                  • Figure 1: Category outlook: grocery retailing, 2022-27
                • Opportunities
                  • Online grocery is evolving into a more stable, complementary channel
                    • Grocery retailing is driven by the fundamentals
                      • Local sourcing is an opportunity to differentiate
                        • Challenges
                          • Consumers are prepared to adapt to inflation
                            • Competitive pressures create a tighter grocery retailing market
                            • The Market – By the Numbers

                              • Grocery sales have held steadily above pre-pandemic levels
                                • Figure 2: Retail trade sales: supermarkets and other grocery (except convenience) stores, January 2020-July 2022
                              • Major grocery retailers post gains over last year
                              • Market Factors

                                • Inflation is affecting food prices and some categories are accelerating
                                  • Figure 3: Consumer price index, August 2021 vs August 2022
                                • Interest rate concerns are growing, which could have an indirect effect on grocery
                                  • Figure 4: Top concerns over the next six months, 2022
                                • Supply challenges continue at the same time shoppers are stocking up
                                  • Figure 5: Business expectations of supply chain, 2022
                                • Understanding Canada’s ability to source food locally
                                  • Figure 6: Proportion of Canadian farms, by farm type, 2021
                                • Canadian crop categories are top heavy
                                  • Figure 7: Marketed production of fruits (tons), 2021
                                  • Figure 8: Marketed production of vegetables (tons), 2021
                              • Competitive Strategies

                                • Grocery delivery is becoming more widely available
                                  • Loblaws is now available on DoorDash
                                    • Sobeys Voilà uses Delivery Pass to reduce concerns about delivery fees
                                      • Local produce can be delivered directly to consumers
                                        • Figure 9: Mama Earth Organics Instagram post, 2022
                                      • Longo’s tackles sustainability and price-sensitivity with one move
                                        • Figure 10: Longo’s Instagram post, August 2022
                                      • Amazon has a brick-and-mortar presence in the US
                                        • Figure 11: Amazon Fresh Instagram post, 2022
                                      • Sobeys switches from Air Miles to Scene+
                                        • Loblaws freezes No Name prices into 2023
                                          • Figure 12: CBC News Twitter post, 2022
                                      • Grocery Retailing – Fast Facts

                                        • Grocery Shopping Channels and Frequency

                                          • In-store and online usage is stable since last year
                                            • Figure 13: Ways of shopping for groceries in the past month, 2021 vs 2022
                                          • COVID concerns are a minor factor for grocery shoppers
                                            • Figure 14: Shopped for groceries entirely in-store, by concern about exposure to COVID-19, 2022
                                          • Younger consumers are the most likely to shop online
                                            • Figure 15: Ways of shopping for groceries in the past month, by age, 2022
                                          • Online shopping behaviours in Ontario illustrate impacts of service availability
                                            • Figure 16: Ways of shopping for groceries in the past month, by region, 2022
                                          • South Asian Canadians are more likely to use online shopping than average
                                            • Consumers are expecting this consistency to continue
                                              • Grocery trips are more frequent than they were during the pandemic
                                                • Figure 17: Grocery shopping frequency, 2020-22
                                              • Shopping frequency is higher among certain consumer groups
                                                • Figure 18: Grocery shopping frequency, by age, parental status and financial situation, 2022
                                            • Top Factors when Choosing a Grocery Store

                                              • Grocery store decision factors align with broader consumer trends
                                                • Figure 19: Factors when choosing which grocery store to shop at in-person, 2022
                                              • Budget Pillar
                                                • Everyday low prices resonate with consumers who are struggling financially
                                                  • Figure 20: Factors when choosing which grocery store to shop at in-person: Budget, by financial situation, 2022
                                                • Younger women are the most likely to be influenced by deals and coupons
                                                  • Figure 21: Factors when choosing which grocery store to shop at in-person: good deals/coupons, by gender and age, 2022
                                                • Quality Pillar
                                                  • Older consumers are more responsive to quality
                                                    • Figure 22: Factors when choosing which grocery store to shop at in-person: Quality, by age, 2022
                                                  • In-store amenities have minimal impact
                                                    • Convenience Pillar
                                                      • Familiarity is key
                                                        • Curb-side pickup’s time has passed
                                                        • Grocery Shoppers’ Responses to Inflation

                                                          • Consumers are prepared to adapt to inflation
                                                            • Figure 23: Most likely reactions to rising prices at grocery stores, 2022
                                                          • Making sacrifices but maintaining behaviours
                                                            • Consumers’ finances impact the level of sacrifices they will make
                                                              • Figure 24: Most likely reactions to rising prices at grocery stores: personal sacrifices, by financial situation, 2022
                                                            • Women are more likely to limit unnecessary purchases
                                                              • Figure 25: Most likely reactions to rising prices at grocery stores: personal sacrifices, by gender, 2022
                                                            • Younger consumers are the most open to changing their diets
                                                              • Figure 26: Most likely reactions to rising prices at grocery stores: change my eating/drinking habits, by age, 2022
                                                            • Finding ways to avoid making sacrifices
                                                              • Younger consumers should be a focal point for loyalty programs
                                                                • Figure 27: Most likely reactions to rising prices at grocery stores: take advantage of loyalty programs, by age, 2022
                                                              • Frequent shoppers are the most strategic, least loyal
                                                                  • Figure 28: Most likely reactions to rising prices at grocery stores: visit multiple stores, by shopping frequency, 2022
                                                                • Stocking up and cutting back are reflective of the different realities shoppers face
                                                                  • Figure 29: Most likely reactions to rising prices at grocery stores: buying more or less, by financial situation, 2022
                                                                • Retailers will be affected differently
                                                                • The Evolving Competitive Landscape of Grocery

                                                                  • Grocery retail now extends far beyond grocery stores
                                                                    • Figure 30: Purchased groceries from in the past six months, 2022
                                                                  • Brick-and-mortar mass merchandisers: Walmart and Costco
                                                                    • Walmart has universal appeal, while Costco skews to higher incomes
                                                                      • Figure 31: Purchased groceries from in the past six months: Walmart and Costco, by household income, 2022
                                                                    • Walmart and Costco skew to Asian Canadians
                                                                      • Figure 32: Purchased groceries from in the past six months: Walmart and Costco, Chinese and South Asian consumers vs overall, 2022
                                                                    • A unique competitive landscape in Quebec
                                                                      • Figure 33: Purchased groceries from Walmart in the past six months, by region, 2022
                                                                    • Amazon could redefine the idea of online grocery shopping
                                                                      • Figure 34: Purchased groceries from Amazon in the past six months, by age, 2022
                                                                    • Amazon is streamlining online grocery shopping
                                                                      • Pharmacies and dollar stores are the new convenience stores
                                                                        • Figure 35: Purchased groceries from in the past six months: pharmacies, dollar and convenience stores, by age, 2022
                                                                      • Dollar stores are more than just a grab-and-go option for struggling Canadians
                                                                        • Figure 36: Purchased groceries from dollar stores in the past six months, by financial situation, 2022
                                                                    • Food and Beverage Category Analysis

                                                                      • Shoppers’ value priorities will affect categories differently
                                                                        • Figure 37: Categories recently cut back on to save money, 2022
                                                                      • Fresh meat and seafood is worth paying a premium for
                                                                        • Figure 38: It is worth paying a premium for, 2022
                                                                      • Sourcing information is most important for fresh categories
                                                                        • Fresh produce is the best opportunity for local marketing to resonate
                                                                          • Figure 39: It is important to buy local, 2022
                                                                        • Older consumers are the most likely to seek out locally sourced produce
                                                                          • Figure 40: It is important to buy fresh produce local, by age, 2022
                                                                        • Meat, baked goods and dairy also benefit from local sourcing
                                                                          • Consumers are indifferent to localness in certain categories
                                                                            • Young consumers are the most likely to look for natural/organic groceries
                                                                              • Figure 41: I buy organic/natural as much as possible, 2022
                                                                              • Figure 42: I buy organic/natural fresh produce as much as possible, by age, 2022
                                                                            • National brands are most successful in non-perishable categories
                                                                              • Figure 43: I typically buy name brand, 2022
                                                                              • Figure 44: Maple Leaf Foods Instagram post, May 2021
                                                                          • Buying Local at Grocery Stores

                                                                            • Fresh produce is the leader of local sourcing in grocery retailing
                                                                              • Two thirds of consumers regularly buy imported produce
                                                                                • Figure 45: “I regularly buy produce that is imported from other North American countries” (% agree), overall vs make a point to buy local vs it is important to buy local fresh produce, 2022
                                                                              • Chinese Canadians are the most likely to regularly buy imported produce
                                                                                • Figure 46: “I regularly buy produce that is imported from other North American countries” (% agree), Asians vs overall, 2022
                                                                              • Nearly half of consumers go directly to the source
                                                                                • Amazon’s success could lead to fresh local market success
                                                                                  • Figure 47: “I regularly buy directly from local produce markets” (% agree), by past six-month grocery retailers vs overall, 2022
                                                                                • Local produce market shoppers are looking for a quality experience
                                                                                  • Figure 48: “I regularly buy directly from local produce markets” (% agree), by reasons for choosing a grocery store vs overall, 2022
                                                                              • Appendix – Data Sources and Abbreviations

                                                                                • Data sources
                                                                                  • Consumer survey data
                                                                                    • Consumer qualitative research
                                                                                      • Mintel Trend Drivers
                                                                                        • Abbreviations and terms
                                                                                          • Abbreviations
                                                                                            • Terms

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