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The rise of the grocery industry's free agents

Convenience, desire for exclusive products sparks specialty delivery services

It's one of Vancouver's worst-kept secrets.

Since 2012, diehard fans of U.S. grocery chain Trader Joe's have been able to get their hands on Speculoos Cookie Butter and Triple Ginger Snaps at a tiny storefront in the city's Kitsilano neighbourhood.

The cheekily named Pirate Joe's, which first opened under the guise of a traditional Romanian bakery, has shelves and shelves of more than 1,000 Trader Joe's products and was the brainchild of owner and founder Mike Hallatt.

After being closed for four months, the store is set to reopen this week at a bigger location.

Hallatt says customers gravitate towards his business because of brand loyalty and a frustration with the choices and prices at his big-box grocery competitors.

"There are people who appreciate the selection that having Trader Joe's products in Vancouver gives them. Right now, with the consolidation of the grocery industry, you're just seeing the usual suspects more and more often,'' he said.

"The distributors are consolidating and you're just ending up with very few players. What happens is that innovation always, always, slacks off when you have consolidation like that because people are able to raise the prices and drop the selection.''

Like many foodies, Hallatt was well aware that Trader Joe's had a cult following, with Canadians flocking to the U.S. on shopping trips and numerous websites dedicated to their favourite products.

In 2012, Hallatt began taking weekly trips to the nearest Trader Joe's in Bellingham, Wash., about 90 kilometres away and stuffed his Honda Element with groceries.

The popularity of the store grew as word of mouth spread. Hallatt soon found himself making more frequent trips south of the border and even hiring local workers—mostly college students and retired grandmothers—to do his shopping.

Trader Joe's quickly learned about Pirate Joe's and hit back by launching legal action in the United States.

The U.S. Federal Court eventually sided with Hallatt, ruling that Trader Joe's could not prove that it was suffering economic hardship as a result of Pirate Joe's operations because the U.S. company doesn't have any locations in Canada. Trader Joe's has appealed.

Hallatt is banned at every Trader Joe's store in the U.S. but admits he still visits from time to time in disguise, sometimes donning glasses and a pinstriped suit.

Pirate Joe's now operates three vans and employs about half a dozen shoppers. It opened a warehouse in the U.S. to stockpile goods but that has since been shut down due to a declining Canadian dollar, Hallatt says.

He says customers who shop at Pirate Joe's can expect to pay a 30 per cent markup after the currency exchange. The most popular items it carries are frozen meals, coffee, wild rice and body care products like soaps and sunblock.

Pirate Joe's isn't the only small grocery delivery service in the country.

In November, a husband and wife team started to bring Costco orders to those living in downtown Toronto who don't have a store membership, want to avoid the shopping crowds or lack the time or access to a vehicle to get to the chain's suburban stores.

Since its launch, has had more than 1,200 orders—sometimes up to 25 deliveries per weekend. Each customer is charged a flat fee of $10 for a delivery.

The appeal of the service, says 29-year-old founder Vitaliy Savitsky, is that customers, especially those living downtown, want better value on their grocery bills.

"Think of us as being sort of being the friendly mom who helps her son get groceries,'' said Savitsky, who left his day job at an investment bank to run the startup.

"We are the same customer as everyone else.''

Ron Damiani, a spokesman for Costco Canada, says the retailer is a wholesaler and therefore doesn't take issue with reselling its products to people who may not have memberships.

"We've been selling as a wholesaler since the very beginning. If you're a convenience store, clothing store, then you're likely selling our product to people who may also not be members.''

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