Before he took to the field to tackle the Toronto Argos one night, Billy Parker wanted to make a pre-game smoothie. The Montreal Alouettes football player didn’t have to go far to find the ingredients.
Instead of searching for a grocery store, Parker ended up at a Shoppers Drug Mart just steps from his downtown Toronto hotel. “It’s perfect,” he says. “I saw it yesterday and was like, ‘Oh, you can get fresh fruit here, that’s great.'”
Canada’s largest drugstore chain is beefing up its offerings in the grocery wars by adding fresh food to many of its stores.
The competition for your grocery dollars is getting stiff. Big box discounters like Walmart continue to steal business from traditional grocers.
Shoppers, which is owned by Loblaw, isn’t about to take on the big supermarkets. Instead, it’s going after a growing segment where Walmart hasn’t much appeal — time-starved customers desiring only a few items and an effortless experience.
“It’s fantastic,” says Andrea Vandenvert, exiting a Toronto location with a bag of groceries. “Often if there’s not a grocery store nearby, it’s convenient to go to Shoppers and pick up like meat or yogurt, fresh bananas.”
Lipstick and cucumbers
At the newly remodelled Toronto Shoppers that CBC News visited, colourful produce lined the shelves close by cosmetics — everything from apples, bananas and plums to corn and cucumbers.
The brightly lit refrigerated section displayed fresh fish and meat selections like sausages and pork loins. Prepared foods ranged from sandwiches to sushi and dumplings.
Artisan-style French bread was displayed next to the cashier to tempt customers waiting in line.
The fresh additions began as a pilot project in a handful of Shoppers stores in 2014. The company recently remodelled several stores in downtown Toronto and now boasts 29 locations serving perishable goods — 19 in Toronto, eight in Regina and two in Hamilton.
Shoppers operates more than 1,300 drug stores across Canada.
Shoppers says it is “pleased with the results to date,” according to spokeswoman Tammy Smitham in an email. The company plans to remodel more stores and open 10 new Toronto locations this year that will include fresh food.
Many of the items don’t come cheap. For example, CBC News found oranges for $1.29 — each. Peppers were going for $1.99 each. In some discount grocery stores, you can find similar prices for those goods — by the pound.
But when asked about the prices, linebacker Parker responds that it isn’t an issue. “The convenience,” he stresses, “that’s all that matters.”
While the big grocers duke it out for the discount shopper, there may still be room to grow in the convenience category where price isn’t the biggest factor.
Traditional supermarkets continue to see a share of their profits eaten up by big box competitors Costco and Walmart.
“Every single quarter, those two continue to take hundreds of millions of dollars of food sales away from the traditional [grocers],” says Kevin Grier, an independent food-industry analyst based in Guelph, Ont.
Walmart Canada’s same-store sales have continually grown over the past eight quarters. “Their aim is to become the number 1 food retailer in the country, and based on the pace that they currently have, it is an achievable goal,” says Sylvain Charlebois, a professor at Dalhousie University specializing in food distribution and policy.
Meanwhile, traditional grocers are feeling the heat. In June, Empire Company, parent of the Sobeys supermarket chain, reported a massive fourth-quarter net loss of more than $900 million.
This week, Loblaw reported that its net profit dropped by nearly 15 per cent in the second quarter from a year earlier.
Going for convenience
Walmart and Costco may be able to woo customers with low prices. But their big box stores, often situated in suburban areas, aren’t a big lure for convenience shoppers
“When you visit a [Walmart] superstore, you can actually walk a kilometre. That’s a lot of work. That’s a lot of time,” says Charlebois.
There’s also money to be made from convenience shoppers. From May 2015 to 2016, supermarket sales grew by 1.1 per cent according to Statistics Canada. Convenience store sales more than doubled that figure, with sales up 2.4 per cent.
“More and more people are pressed for time,” notes Charlebois.
Stacking Shoppers with fresh food isn’t Loblaw’s only approach to cashing in on the convenience category. It’s also building mini-Loblaws grocery stores in urban locations across the country called CityMarket.
Loblaw recently opened new CityMarkets in Toronto, Edmonton, Calgary and Vancouver. Seven exist so far and the company plans to open one more in Toronto and B.C. by the end of the year.
Food-industry analyst Grier thinks Loblaw’s strategy with both CityMarket and Shoppers is smart as long as the company can pull it off. “Execution and scale, all of this stuff is going to be difficult for them.”
He also notes that targeting the convenience store shopper will do nothing to stop Walmart from its mission to become Canada’s dominant grocer.
He says the small-store approach will cannibalize sales from other conventional grocery stores, including larger Loblaws locations.
“It’s not going to hurt Walmart,” which will continue to lure shoppers willing to go the extra mile for a low price, Grier says.
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