Grocery retailers try new bag of tricks to slow sales decline

Supermarket sales in Canada decreased by 2.9 per cent year over year between May 2017 and 2018, according to Statistics Canada, and traditional supermarkets are trying new tactics to attract business.

Toronto resident C.J. Hall shops at the Loblaws near him for convenience and the social aspect. But he also shops at specialty shops in Kensington Market for meats and other items and turns to online delivery services for his produce.

"I do some produce like vegetables and stuff like that [online] because it forces me to eat them when they show up at my door," said Hall.

Diverse shopping habits like Hall's are fueling changes in the industry and forcing companies to try new approaches to attract customers.

Walmart recently teamed with Instacart, an American same-day grocery delivery service, to offer food delivery in as little as one hour. The pilot project is already underway in Toronto and launches in Winnipeg on September 27.

T & T Supermarket, a Canadian supermarket chain that sells primarily Asian foods, recently opened a new store in Richmond, BC that features a savoury crepe station. It also has a seafood bar, where you select, cook and eat your food in-store. For T & T, eating a freshly made meal in-store is part of the overall experience.

In Kitchener, Zehrs opened a new location that offers a "neighbourhood format." It sells more local products that reflect the area and an old-fashioned butcher counter, where everything is prepared fresh before your eyes.

T & T Supermarket and Zehrs are both owned and operated by their parent company, Loblaw Companies Limited.

'Grocery stores are now becoming general merchandisers'

David Lewis is a professor of consumer behaviour who works at a behavioural economics consulting firm called BEworks. He says grocery stores are doing whatever it takes to stand out in the crowded grocery market.

"If you're throwing a dinner party and suddenly realize you didn't buy any food, then perhaps you need groceries in an hour. But, for most of us, that afternoon or that day would be enough, which tells me that [Walmart is] using this really as a point of differentiation," said Lewis.

He believes the shift for grocery stores started when businesses like Superstore began selling absolutely everything.

"They've had to fundamentally reinvent themselves to the point that grocery stores are now becoming general merchandisers," said Lewis. "The lines between, say, what Walmart was and what a grocery store was are now blurred, and both of them are very, very similar. You now buy pots and pans and shoes and groceries all in one store."

Specialty food store sales on the rise

Lewis foresees a shift away from big box stores, similar to what happened with department clothing stores.

"You'll see a migration away from these big, very expensive grocery stores, towards an efficient delivery mechanism on one side—where there is no store—and highly specialized providers like a butcher, a fishmonger, a bakery, on the other side," said Lewis. "That's what happened to Sears—the middle ground disappeared."

The stats seem to back this up. While Statistics Canada found supermarket sales were down year over year, specialty food stores saw a ten per cent increase in sales and convenience stores sales climbed nearly 7 per cent.

For customers like C.J. Hall, expertise and efficiency is the biggest draw.

"If you just specialize in doing something, you're probably a lot better at it than a place that's trying to do a lot of things," said Hall.