Canadians do not seem to be embracing online grocery shopping. This became more evident after it was announced by the largest grocer in Canada, Loblaw’s that it intended to close a number of stores and begin offering home delivery in an attempt to increase this segment of the grocery retailers business. In addition to the Loblaw announcement, Walmart also is planning g on expanding its home delivery as well.
While it seems Canada retailers are behind in this trend, many in the United States have been offering home delivery for years, and that makes is a natural evolution as Canadian retailers jump on board. While it is a market that is increasing, its sales, in comparison to traditional grocery shopping is small and only represents $2 billion of an estimated $100 billion industry. This number is expected to climb to $4 million over the next few years.
Online grocery shopping in Canada is small when compared to grocery shopping in other countries. In the United States, that market share is expected to see 20% growth in the next 5-7 years, whereas in the United Kingdom expecting growth to only be 7%. The reality is the demand for online groceries in Canada is smaller, and much of that reason is Canadians tend to shop differently.
Canadians shop in a different way
Canadians tend not to shop online as much as those in the United States. Online sales only represent between 3% and 6.5% annually in Canada. When compared to the U.S, that number of 8.5%, and when one factors in the population difference, it is a substantial difference.
The reality is, most people prefer to go directly to their grocery stores to shop. Studies have shown that 70% prefer this over online shopping, and in Canada, that number increases to over 80%. There are multiple reasons behind this, with one being that most prefer to see the items they are buying, especially when it relates to meats and fresh produce. Scheduling delivery times is another issue that has proven to be a challenge for Canadians, especially in an increasingly busy world.
What is clear is that there are differences between the two markets. Historically, Canada has always been slower to embrace new trends, and shopping for groceries online is one of them. The market in Canada is dominated by three major players, and even Costco and Walmart have been unable to topple them, and it is not expected big box stores will anytime soon, if ever.
Big-box stores pose a threat
While big box stores have proven to be a threat to traditional shopping landscapes, in grocery shopping online, they have yet to succeed, but if companies like Amazon have a say in that, it is about to change. Amazon recently purchased Whole Foods, and there is little doubt where their intentions are in building that brand online. This may see other retailers become more aggressive in the online sector out of fear that Amazon will gain market share in a segment that is traditionally not online. This will increase the pressure on smaller retailers to ensure they remain relevant in an ever-changing climate.