Generation Next Thinking: Capitalizing on the immigration boom
If newcomers mean new customers, immigration will be a boon to Canadian grocers. Currently, around 500,000 newcomers settle in Canada every year, with the majority arriving from India, followed by China and Philippines. According to the latest census, immigrants number 8.3 million and make up 23% of Canada’s total population. By 2041, immigrants could represent up to 34% of the population. All this at a time when Canada’s natural population growth is declining.
Brian Ettkin, Numerator’s head of strategy, solutions and revenue management, Canada, says these demographic trends aren’t a surprise to anyone—they’ve been in the making for years—but what’s different now is there’s “a perfect storm” brewing for grocers.
To start, inflation and a challenging economic environment have hit consumers hard, says Ettkin. They’re pulling back on household spending, which is putting pressure on both retailers and manufacturers. “So, the pie is getting smaller because of demographics. Now the pie is getting smaller because consumers are stretched thin,” he says. The other piece is “the big inflow of immigrants coming over the last few years that have kind of saved the industry because more people [means] more mouths to feed and more houses to buy stuff for, and that’s offsetting the decline that we were seeing otherwise.”
READ: Statistics Canada says population growth rate in 2023 was highest since 1957
For Joel Gregoire, associate director, food and drink at Mintel, there’s another important number to consider: the age of newcomers. Many (64%) recent immigrants are in the core working age group of 25 to 54, according to Statistics Canada. “New Canadians skew younger … They’re much more likely to be of working age, which as a grocer, is who you want to be targeting,” he says. “The one thing I’d be looking at if I were a grocer is, I may not get the whole basket of a new Canadian but, how do I get a bigger share of that basket?”
While grocers have long courted multicultural consumers, “now is the time to tighten up those strategies,” Numerator’s Ettkin advises. “Rather than saying it’s an opportunity, it’s almost a necessity for any grocer that wants to continue growing in this market environment and in the next few years to come.”
Getting to know new Canadians
Like any aspect of retail, the first rule of reaching newcomers is “know your customer,” starting with who lives within proximity to your stores. “Trade areas are changing very quickly,” says Ettkin. “People arrive in Canada and then figure out where they’re going to settle in the country. Who an individual store thinks their customer is might be changing faster than they’re keeping up with. [Grocers] need to do a good job of being in the community and understanding how that’s changing to make sure that their assortment and the way they’re going to market is relevant to the changing demographics of the trade area they serve.”
When newcomers arrive in Canada, there’s plenty of opportunity to try out different retailers. According to research from Numerator, they are indeed shopping around. “Ethnic grocery stores still play an important role for key items … whether that be produce that’s specific to their home country cuisines or brands they’re familiar with that they can’t get elsewhere,” says Ettkin. “But, what we saw in our data is people are making that stop and going to other stores,” including mass, conventional, club and independent stores. “Club plays an important role, especially for those households that are larger and trying to stretch their dollar; they’re finding big value in that larger format,” he says.
When it comes to drivers of store choice, the primary factor influencing where new Canadians shop is everyday low prices (23% compared to 27% of consumers born in Canada). However, new Canadians are more likely to value product quality (12%) and convenience of location (17%) compared to consumers born in Canada (8% and 11%, respectively).
“We see convenience tied to the mobility question—the fact that fewer [newcomers] use cars for transportation and rely on transit,” says Ettkin. “But quality is also important … So, the produce needs to be fresh and it needs to be properly presented to gain that trust, while preserving the value on the price side.”
As newcomers seek value for their grocery dollars, research from Leger points to the opportunity for loyalty programs to be a lifeline. In Leger’s recent study, Cracking the Newcomer Code, 84% of newcomers said Canada was more expensive than they expected. “That is a pretty high number, so any value or [rewards] through a loyalty program is certainly going to be appreciated and used,” says Lisa Covens, senior vice-president, public affairs and communications at Leger.
On the product front, new Canadians value global brands more than Canada-born consumers. However, that advantage diminishes over time, according to Numerator. “In the early years of their time in Canada, they do look for those brands that resonate authenticity to them. But, what was interesting is that over time we see that changing,” says Ettkin. “We see that the longer people live in Canada, the more they’ve had the opportunity to try different things and be exposed to different brands, and there is a willingness to switch.”
A hyper-localized, tailored approach to everything
For larger retailers, one strategy to serve multicultural markets has been to invest in their own ethnic grocery banners. This year, Georgia Main Food Group launched an Asian banner, Meiga Supermarket, in Port Moody, B.C., with plans to expand the banner over the next three to five years. Sobeys’ South-Asian focused Chalo! FreshCo now has 13 locations in Canada; and Loblaw’s T&T Supermarket—Canada’s largest Asian grocer, is expanding in the United States.
“We also see a lot of T&T private-label products showcased in mainstream Loblaw stores, especially in Markham and Scarborough [in the Toronto area], where you have a substantial Far Eastern population,” notes Amar Singh, senior director of retail at Kantar. “It’s all about customizing the retail offering to reflect the local areas they play in, which goes back to hyper-localization,” whereby retailers tailor their offerings to very specific customers within a given geography.
READ: How grocers can meet the needs of halal shoppers
That is a key strategy in Walmart Canada’s multicultural playbook. Through demographic and customer research, Walmart tailors its product assortment and services to the needs and wants of local communities as part of its Store of the Community program, says Sourabh Malik, vice-president merchandising, food. For example, in stores with an identified South Asian customer base (such as Brampton, Ont.; Edmonton and Surrey, B.C.), Walmart stores carry basmati rice, atta flour, traditional snacks, biscuits, tea, pickles, ghee and more. In stores with an identified Southeast Asian customer base (for example, Victoria, B.C.; Richmond, B.C.; and Markham, Ont.), Walmart carries various types of rice; instant noodles from Japan, Korea and China; traditional snacks, frozen dim sum and more.
“Listening to our customers and understanding their needs is critical, especially with the increasing diversity brought by immigration,” says Malik. “This diversity is reflected in our expanding global foods and other products to better serve the needs of all our customers, including many new Canadians.”
Malik adds that expanding Walmart’s global food offering also gives the retailer the opportunity to celebrate cultural festivals such as Diwali and Chinese New Year “in a bigger and better way.” That strategy includes food as well as general merchandise items, cookware to prepare traditional meals, décor, box chocolates, gift cards and more. Walmart also supports these events with marketing, which may include a holiday-related flyer, in-store signage, digital marketing, social media, media buys, influencer campaigns, food samplings or in-store events.
When done thoughtfully, celebrating cultural holidays and festivals can foster deeper connections with diverse customer bases. “[New immigrants] want brands and retailers to reflect their values and make them feel welcome and included,” says Kantar’s Singh. “It is also in the best interest of retailers and brands to entice these shoppers because they are the growth shoppers at the end of the day. And it also works the other way—the ethnic consumer finds more affinity with these retailers for the long term.”
Rolling out the welcome mat in store
Beyond having the right product and merchandising mix, creating an inclusive in-store environment is crucial to making newcomers feel welcome and to engender their loyalty. “If you come to a new country, it’s intimidating if you don’t speak the language, so how do retailers make a welcoming environment in their stores?” says Mintel’s Gregoire. “Depending on where your store is, you want to think about the environment you’re offering in terms of the food, but also the people who work there. Do they speak the languages of people of certain backgrounds? For example, at a No Frills in Markham, you want people of Chinese background working there because of the language and because their diets are probably closer to their consumer.”
Luc Dumont, senior vice-president of consumer insights at Leger, says a sense of belonging and feeling represented—key components of the in-store experience—is generally gaining importance in the Canadian marketplace. “We do feel that the increase in immigration has contributed to that pillar being important for people when they shop,” he says. “They want to feel like their shopping experience does, in some way, mirror their personality, their background and their values, by seeing people like them in the stores who work there and might know about the products in a different way than traditionally.”
In addition to hiring more people who reflect local markets, retailers can turn to a simple but underused tool: Google Translate. That’s the advice of Patrick Rodmell, partner and president at retail consultancy Rodmell & Company, who encourages retailers to promote Google Translate in their stores and to bake the tool into their apps and websites to have content translated to any language.
READ: How brands can better connect with multicultural consumers
“If you have somebody who doesn’t speak English coming to your store, they can point their camera at a package and get [the text] translated to any language,” Rodmell says. Even when they enter the store, customers can be encouraged to download the retailer’s app and have it translated to their own language. “It’s an amazing tool, it’s been around forever, but I’m amazed that more [retailers] haven’t capitalized on it as a tool to support newcomers,” says Rodmell.
Another idea is to make newcomers feel more at home by giving them store tours. “When a person in customer services recognizes a newcomer by language and it’s their first time here, take them on a tour,” advises Rodmell. “Investing in that relationship is so important … Give [staff] the power and autonomy to explore the store with someone.” While that’s not always practical, Rodmell says retailers can also create maps of the store in different languages to help customers find various departments and products.
How to really connect with newcomers
Whatever strategies retailers choose to implement to reach and resonate with newcomers, the most important element underlying it all is authenticity. “Authenticity goes a long way,” says Singh. For example, retailers shouldn’t celebrate a cultural festival for the sake of it and just put a few items on promotion. Customers want to know the retailer’s back story, says Singh. “Are there community initiatives that you participated in that would help celebrate the culture? Have you sponsored any local events?”
That authenticity should also extend to all marketing touchpoints, whether it’s TV, online media or social media, adds Singh. “It’s about telling that cohesive story and ensuring you’re present [through] an entire marketing campaign to celebrate the event, rather than putting out a flyer and having a couple sub-sections of the store … You should show that you really care and you’re part of the bigger fabric and the bigger story of inclusivity.”
READ: In times of uncertainty, food has the power to bring people together
Rodmell also encourages retailers to think of the bigger, more meaningful picture. “Imagine if your brand could become more like a newcomer ambassador,” he says. “So, get your head out of the lens of ‘how do I get this new immigrant to shop at my grocery store?’ What you want to say is, ‘how can I help this newcomer to Canada ingratiate and feel welcome in their new country?’” Rather than having newcomers rely on them for just groceries, retailers can help them in a broader way by offering services such as banking, insurance and transportation, says Rodmell. “There are all these ways you can ingratiate your brand with newcomers in a more profound way.”
Generation Next Thinking is an ongoing series that explores the cuttingedge topics that are impacting grocery retail today and in the future.
This article was first published in Canadian Grocer’s September/October issue.
