As Canadian retail continues to experience a significant shift, driven by new technologies that steer the direction of physical and digital retailing, grocers are determined to alter the strategies needed to ensure its future presence and profits.
Investing into eCommerce is a leading part of this, as grocers continue to focus on improving access, assortment and the experience for its shoppers. However, a definitive challenge for the Canadian grocer is that it is shifting its investments into a channel that is currently diluting its profit margins. Although, referencing the foreseeable trends for the grocery sector, these investments are necessary. [1]
Big players like Walmart, Loblaws, and Save-On-Foods are following the money. Between 2014 and 2017, Walmart is forecasting eCommerce sales globally to increase by 40% on a compound annual growth basis, compared to growth of 2.5% to 3.5% within brick and mortar locations. [2]
Though there is a short-term blow on profits as investments are funnelled into constructing capability and developing the supply chain infrastructure for eCommerce, it is done with foresight of stronger returns. [3]
Instead of taking on a “one-size-fits-all” approach to eCommerce, suppliers are starting to introduce differentiated strategies with each major customer. Of the 40 eCommerce managers surveyed at leading international grocery suppliers by IGD, 10% said this was an established practice and 24% said they were part way there, with these individual strategies for online forming part of the annual joint business planning process with each retailer. Taking this approach allows suppliers to exploit various opportunities offered by multiple retailers, such as category strengths, online offers and events, and allows them to better target their online presence to various shopper demographics. [4]
Most Canadian grocers are attempting to cover the basics online. For example, Loblaw’s modernized take on online shopping, or “click-and-collect” service. From IGD’s survey, grocers are focused on an online strategy that forms part of a joint business plan with retailers. Many were also working towards understanding category dynamics and the online shopping journey. While the basics seem to appear in place, there are clear gaps in mobile that need to be filled. [5]
In Canada, eCommerce grocery is still very much a new topic. However, over the last year we’ve seen some serious grocery eCommerce initiatives, including home delivery, click-and-collect, and collection lockers.
This year Loblaws took on a great initiative. Its brand makeover, ‘Crave More’, reflects modern-day Canadian food values -- encouraging customers to “expect more from their food”. It also focuses on innovation, awareness in product sourcing, ingredients, and food tastes.
Loblaws isn’t the first grocer in the country to offer click-and-collect -- B.C-based Overwaitea Food Group launched the service at three of its Vancouver area Save-On-Foods this past year, as part of a broader foray into online grocery. This initiative is viewed as a more economical way for grocers to delve into online sales, as it doesn’t require retailers to spend money on the most expensive part of eCommerce -- delivering to people’s homes. [6]
Suppliers are beginning to focus primarily on the eCommerce channel and developing trading strategies. Test and try will be an important mantra to getting it right in this channel. While the numbers are small right now, investing in this channel is important as we’ll see it picking up speed and growing rapidly in the coming years. [7] For more on eCommerce solutions, contact us or see: The Technical Implementation of Geographical Location Software Sources: [1], [2], [3] - Canadian Grocer
[4], [5], [7] - Canadian Grocer
[6] - Marketing Mag
Graphic: The Queen’s Business Review