Then and now
Grocery retailing has certainly always been a dynamic industry, constantly evolving to meet the needs of consumers and win their loyalty. As a result, grocery stores have undergone vast changes since they first emerged in Canada.
While the stores themselves have changed, the guiding light for grocery retailers has been relatively consistent: grocers seeking to provide convenience to consumers in one form or another. Offering convenience is essential to the success of the grocery industry for several reasons. Many grocery items are perishable, making freshness a strong driver of consumer preference. Excluding housing and transportation, consumers spend more on food and non-alcoholic beverages than any other individual category of goods; almost 10% of total consumer expenditure in Canada goes toward groceries, according to Euromonitor International. And groceries are purchased frequently—according to Euromonitor International’s Lifestyles Survey, 42% of Canadians purchased groceries at least weekly in 2019.
In the contemporary grocery industry, the leading topics of discussion are almost all related to convenience: delivery, click-and-collect, cashier-less stores, the imminent threat of convenience stores in the grocery space, etc. Many of these “new” concepts, however, are not actually all that new.
Delivery, self-service shopping and a convenience-focused experience have all been in play since the early 1900s. In fact, customers of that era often purchased groceries from roaming peddlers and merchants without ever needing to leave their homes. Today, shoppers can order a wide variety of goods from national grocery chains through services such as Instacart, Inabuggy or through a chain’s own proprietary service. Many of these services offer quick and convenient delivery options, sometimes even within the hour.
Loblaw Groceterias introduced the self-service grocery model in Toronto back in 1919 to the resounding approval of consumers, who enjoyed the benefits of quality goods at low prices. J.W. Sobey began as a meat and vegetable delivery service in 1907 and eventually became a multibillion- dollar empire. Today, Sobeys is experimenting with “Smart Carts” through a partnership with U.S.-based Caper, which allows customers to access nutrition information, recipes and even payment options right from their shopping carts—a modern example of reducing friction in the shopping experience.
In the 1930s and 1940s, many grow- ing grocery chains in Canada began to consolidate their operations under one roof, offering full-service meat and produce sections and merging with other small independent grocers. These developments culminated in the creation of the modern supermarket. This new model of grocery retail offered a range of goods in one store, at lower prices than the competition. Skip forward a few generations and a similar theme is playing out today. Walmart, for example, did not begin to sell grocery items until 1988 (and did not operate in Canada until 1994), but is now the largest grocer in the world. The ability to offer a variety of consumer goods under one roof at discount prices propelled Walmart to prominence in the grocery world.
The takeaway here is not that history repeats itself (although that may be true), but rather that convenience has been and likely always will be a significant driver of evolution in the grocery industry. Today’s leading grocery brands now operate a variety of different convenience-oriented models, and it is clear that new features and services are based, in part, on long-held traditions of innovation in the industry.
The difference between the two eras is in the ability of technology to overcome difficulties associated with innovation. Data-driven insights, artificial intelligence and payment innovations are allowing companies to market to consumers more effectively, streamline operations and provide the convenient shopping experiences that have attracted customers for decades. While it is impossible to see into the future, past precedent and contemporary trends show the grocery industry will likely never settle on a one-size-fits- all shopping solution. Instead, embracing technological innovations that chip away at the remaining friction points will further evolve the industry.
Matt Godinksy is an analyst at Euromonitor International, an independent provider of strategic market research. Euromonitor.com