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05/31/2021

What is the future of food shopping? (Report)

New study looks at how the pandemic will reshape the grocery sector for years to come
Empty shopping trolley on dark toned foggy background.
Shutterstock/zef art

Yes, the pandemic will come to an end, but consumer shifts that took shape over the last 15 months are likely here to stay.

The Agri-Food Analytics Lab at Dalhousie University, in partnership with Caddle, surveyed more than 10,000 Canadians on grocery shopping in May 2021. The aim was to better understand how the pandemic could impact the grocery experience over time. The survey covered everything from loyalty programs and local foods, to online shopping and store design. Here are the key findings:

1-The virtual/brick-and-mortar dilemma: The use of online delivery and curbside pickup surged during the pandemic, and the survey found that online purchases would continue to generate more sales for the grocery sector. However, brick-and-mortar stores are by far the favoured channel. Nearly 79% of consumers plan to buy in-store in the next six months; 23% plan to buy online and pick-up in store, and 18.5% plan to have online groceries delivered.

“The numbers are pretty encouraging for grocers developing their e-commerce capability,” says Sylvain Charlebois, director of the Agri-Food Analytics Lab at Dalhousie University. “I think people are starting to adopt the convenience of it. You can plan when you want and shop when you want and the cost to deliver is not as expensive as it used to be. People are willing to pay a little extra to get that convenience.”

2-Store disloyalty: One quarter of Canadians (25%) have changed where they grocery shop during COVID. The report states that is a significant number, likely due to consumers’ perceived risks when visiting a store. “It doesn’t necessarily mean they changed banners—they may have gone to another store operated by the same grocer,” says Charlebois. “But, it points to the fact that people were just careful, physically.”

3-‘Big three’ less influential: The influence of Canada’s three major food retailers: Sobeys, Loblaw and Metro, appears to be eroding, according to the study. Online players such as Amazon and non-traditional players such as dollar stores will likely continue to affect the sector over the next few years.

Here’s where Canadians plan to shop for groceries in the next six months: Major grocery store, e.g. Walmart or Costco (59.%); traditional grocery store, e.g. Sobeys, Loblaw and Metro (57.8%), discount grocery store (53.5%), drug store (24.4%), dollar store (16.5%); Amazon (9.8%); natural/organic store, (3.7%), convenience store (3.2%); and other (6.3%).

4-Independent retailers are popular: Canadians are also committed to supporting independent grocers, with 60.9 % of respondents saying they want to spend up to 19% of their food budget at independently owned and operated stores.

5-Loyalty programs are more critical: Loyalty programs will become even more critical in years to come, for both retailers and consumers. Nearly three-quarters of Canadians (73%) are likely to be influenced by loyalty programs when purchasing food products. “If you’re a grocer and you want to increase market share, it’s going to be hard to do without a very strong loyalty program,” says Charlebois. “That came out pretty clearly in the survey.”

6-The ‘local paradox’ lives on: Canadians say they want to see more local products in their stores, but that doesn’t mean they’ll buy them. While 75.2% wish large grocery store chains carried more local products, only 47.4% say they plan to purchase more local products in the next six months.

7-Discount is king: Bargains are a top purchase driver—a trend that will intensify over the next year or so. When asked which (from a list) is most likely to attract them to purchase a grocery store product in the next six months, 70.2% said promotions and deals. This was followed by in-store experts (7.7%); advertising (6.4%); word of mouth (5.2%) and direct marketing, e.g. email offers (3.1%).

8-Self-checkouts are making a comeback: It appears the pandemic has helped Canadians overcome self-checkout hesitancy. Nearly 40% of Canadians intend to use self-checkouts most of the time in the next six months and 55.2% plan to use cashiers most of the time. As self-checkout gains traction, Charlebois says some grocers might plan to go full self-checkout. “I’m not sure that’s the best strategy at this point—not to give an option because there’s still a lot of people who are avoiding them and think they’re ‘job killers,’” he says. “So, you have to be very careful with the stigma. But clearly, self-checkouts have become more popular and they’re going to be here to stay.”

9-Store design for physical distancing: Canadians are in favour of grocers redesigning their stores to accommodate physical distancing. A total of 54.7% of Canadians think grocers would offer a better experience with a redesigned store that allows for more physical distancing.