How Canadian retailers are innovating to win online

Date : 27 November 2018

We look at the prospects for the online grocery channel in Canada as major retailers step-up their investments.

Forecasting 21.0% CAGR through to 2023

Although the online grocery channel has seen an increased level of activity this year, it represents only a small proportion of the overall grocery market, estimated at 0.8%. This is forecast to grow to 1.8% by 2023, with a CAGR of 21.0% expected over the period.

Source: IGD Research

Loblaw: building sector leadership with store pickup

Loblaw has set the pace in the channel. Its store pickup program reaches 70% of Canadians, serviced out of over 520 stores and 28 spokes, including 19 Shoppers Drug Mart stores. Its home delivery partnership with Instacart extends to 60% of Canadians, with the service available in 18 markets. Following a successful pilot of its membership-based program, PC Insider, this year, a larger scale roll-out is planned in 2019. The retailer is also testing a pickup service through its No Frills and Maxi discount banners.

Walmart: partnering to win in urban locations

Walmart has also been pushing hard with its ecommerce programmes. In the latest quarter, sales increased over 20%, underpinned by the expansion of grocery pickup to 40 additional locations. The retailer has also formed new partnerships to help it reach customers in urban locations, where it has relatively fewer stores. In Toronto, it has partnered with Penguin Pickup to open co-branded pickup locations for online grocery orders in the downtown area.

In Vancouver, it has partnered with Spud.ca to use its Food-X food delivery platform to offer grocery home delivery in Metro Vancouver. Walmart Canada has also announced plans to offer home delivery through Instacart.

Sobeys: building capabilities with Ocado partnership

At Sobeys, works has begun on its first Customer Fulfillment Centre (CFC) which is being developed in partnership with UK-based Ocado. The retailer expects to launch its grocery ecommerce solution into the Ontario market in the spring of 2020. This partnership, which utilises Ocado’s automated robotic technology is expected to help the retailer deliver a compelling, lower-cost proposition at scale, enable it to reach new catchments and offer an extended range of products. This will build on its established ecommerce business in Quebec.

Metro: developing omnichannel meal solutions

Having focused initially on Quebec with both grocery pickup and delivery, the retailer is turning its attention to the Ontario market in 2019. In line with the broader brand proposition, the retailer has aimed to build a differentiated, customer-centric proposition, keeping fulfillment and delivery in-house. However, the retailer has extended its ecommerce presence by making a majority investment in Miss Fresh, a leading meal kits company. The retailer has also started to pilot hot food delivery in a programme with UberEats in Montreal.

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