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Each day TFO Canada publishes a sample of trade news on the Canadian import market along with any new, updated or changed regulations and legislations regarding international trade; countries in which TFO Canada offers services and on the export sectors which it promotes.

 

How grocery ecommerce is evolving in Canada

Tuesday, September 29, 2015 > 09:34:19
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(Retail Analysis)

As the Overwaitea Food Group expands its grocery ecommerce service to downtown Vancouver, we review how the channel is evolving in Canada.


Leading with store pickup and home delivery in Canada

The addition of Vancouver to the retailer’s ecommerce initiative is a major milestone for the Overwaitea Food Group, one of the leading operators in Western Canada. In addition to home delivery, the retailer has added store pick-up in the city, bringing the number of stores where the service is available to nine. The retailer has been one of the main proponents of grocery ecommerce in Canada since launching its first tests last year.

Retailers increasing investment in the channel

Over the last 12 months the channel has evolved quickly, with Loblaw and Walmart launching their own initiatives. Following a small initial test in the Toronto area focused on three Loblaw stores, this has now grown to nine stores, while four stores in Ottawa have also been added to the initiative. Walmart Canada chose that city as the location for its first grocery ecommerce test. Having successfully launched and operated a non-food focused service for a number of years, the retailer now also offers online grocery pickup in 11 Ottawa stores.

Services remain centred on major cities

Prior to these launches the channel was mainly dominated by smaller operators. Sobeys was the only major grocer to offer any form of grocery ecommerce, with a service operating at its IGA stores in Quebec and Thrifty Foods in Western Canada. Other leading ecommerce providers, such as Grocery Gateway in Toronto, operated by Longo’s, and Spud.ca, based in Vancouver have been developed with a focus on individual cities. Going forward we expect to see additional retailers enter the channel, both existing operators and technology focused companies which are looking to disrupt the sector.

Channel remains small but scope to grow quickly

While still very early days for the channel, the prospects are for significant growth over the next two to three years as retailers move from test to roll-out mode. Currently the channel represents 0.2% to 0.3% of the total grocery market, but it could more than triple in value over the next five years. The pace of growth will depend on how quickly the individual retailers expand their initiatives across the country, increasing the number of stores offering the service, and how quickly consumer acceptance grows.


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