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Retail experts share their thoughts on welcoming a foreign grocer to the Canadian market

Is the country ready for an international challenger?
retail experts
Left to right: Kantar's Amar Singh; J.C. Williams Group's Lisa Hutcheson; Dalhousie University's Sylvain Charlebois; and DIG360's David Ian Gray.

In an interview with the Toronto Star last December, Industry Minister François-Philippe Champagne said he was in talks with grocery executives from around the world in hopes of attracting a foreign competitor to the Canadian market. 

Champagne said part of the government’s strategy to help tame grocery prices in Canada was to increase competition and challenge the big five chains – LoblawMetroEmpireCostco and Walmart – which dominate the market.

After decades of consolidation, an international challenger would be a “net benefit” to Canadian consumers, said Champagne. “I’ll be working with anyone who wants to consider it,” he said. “I’m not the shy guy, usually, I pick up the phone.”

We asked some of the industry’s leading retail experts to share their thoughts on which international players could potentially set up shop in Canada or if the market is even ready to welcome foreign competitors. Here’s what they said:

Amar Singh, senior director, Kantar: “Entering Canada’s highly competitive grocery market is a challenge for any international retailer, given the dominant players – Loblaw, Sobeys, Metro, Walmart, and Costco – control 60% of all retail sales and offer strong private labels, loyalty programs and convenient locations. Aldi, on the back of its success in the U.S., might consider breaking into Canada. However, considering local retailers’ well-defined discount banners, Aldi’s strategy in Canada may depart from the retailer’s typical aggressive store openings. Success would hinge on careful market analysis, focusing on multicultural assortments and exceptional shopping experiences to meet the expectations of value-seeking Canadian shoppers.”

Lisa Hutcheson, managing partner, J.C. Williams Group: “With over 3,700 stores, REWE, Germany’s prominent food retail company, could come to Canada. I’ve had the opportunity to visit several of their stores in Germany. REWE offers a diverse range of store formats, from local convenience to full-range supermarkets and superstores. REWE adapts to meet the unique needs of each neighbourhood. Creatively designed stores seamlessly integrate into urban landscapes, providing a distinctive shopping experience. As Germany’s pioneer in combining online shopping with delivery services, REWE’s proven success in offering a wide product range online could appeal to Canadian consumers. The convenience-focused approach, including efficient click-and-collect services, aligns with evolving shopping preferences, making REWE a potential asset in the Canadian grocery market.”

Sylvain Charlebois, professor of food distribution and policy, Dalhousie University: “Before considering the entry of any new grocers into the Canadian market, we must first undertake some essential preparations to make our market more appealing for potential investors. Without addressing key issues such as supply chain inequalities, complex fiscal policies and interprovincial trade barriers, it’s unlikely that outside grocers would have chosen to enter Canada on their own. Currently, the existing players in the market are well-established and have a deep understanding of the Canadian market dynamics. Therefore, until we address these challenges and create a more conducive environment, searching for alternative grocers is a futile exercise. In essence, Ottawa is effectively inviting external grocers to a banquet with no chefs in the kitchen.” 

David Ian Gray, founder, DIG360: “I don’t think any are in our near future. This is not the climate for it. And, the most interesting, Aldi and Lidl, have plenty to do to win the U.S. Trader Joe’s has hurdles in getting their private labels over the border. The oligopoly shoppers hope a foreign player would break up is one of the reasons a competitor would be reluctant to enter. Yet, the oligopoly is only one factor hampering consumer prices and choice. Price floors are also influenced by our higher costs of business (tariffs, employee protections, distances to cover, etc.). Rather than hoping for a new ‘whale,’ the government might look at breaking up not only the current concentrated retail power, but also the distribution of product to smaller independents. Not that I see this happening in the near term, but it might be more plausible.” 

This article first appeared in Canadian Grocer’s February 2024 issue.

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