Everyone Wants in on the Grocery Business.

The Canadian grocery business for the longest time has been served by Loblaw’s with 1800 stores across Canada. Smaller chains like Sobeys, Metro and regional chains have also fought for market share.

But the past 10 years the landscape has changed and retailers outside the grocery channel have expanded their offerings in order to increase their share of the consumer’s wallet.

Walgreen, Wal-Mart and Target have all remodeled stores to include a grocery section. Canadian Tire and Shoppers Drug Mart have done similar and even Dollarama has a selection of food products.

I have seen a big impact in the drug store giant Duane Reade in New York City. This has made a huge impact as they have stores everywhere in the city and now can offer the convenience of fresh, packaged and frozen foods. New Yorkers do not have the luxury of big box grocers on 5th avenue to buy their groceries in. DR does fill a void in the marketplace.

Longo’s has taken an aggressive approach to be positioned in the Toronto downtown core with a smaller format store in many areas in the middle of the condo projects. If they add a pharmacy section things could be a bit of game changer.

This has changed the shopping behaviour as consumers are now choosing to make their trips to retailers that offer a wider mix and selection choice. They are shopping at the non-traditional grocers more often and shopping at the traditional grocer less often. In Canada the experience is a bit different as there is less competition for the grocery spends. One consistent trend is the spend at the dollar store.

Loblaw’s has done a great job at offering non-traditional items in their stores to combat the Wal-Mart effect and at one time you could buy furniture and household items (typically they were of poor quality) and they seem to have reduced the floor space for these items. That floor space has been replaced with Joe Fresh clothing line. This has created a success of over $1B in sales at higher margins than a typical bag of milk. Now the Loblaw’s stores are drawing non-customers into their stores seeking the latest in fast low cost fashion. This is working very well for the Joe Fresh line. Shoppers Drug Mart has also taken advantage of this trend with their new format stores have a wall of freezers and an increased selection of food items.

One trend that is very noticeable is the increase in private label products which offer a similar quality product at a lower price point. The Loblaw’s iconic Presidents Choice label is one of Canada’s most trusted brands and has its own marketing flyer. Target does very well with its private labels and the vitamin and pharmacy section are a big volume section in their store.

Loblaw’s is a trend setter with the first store to offer a useful app in the kitchen for the iPad and Playbook called Recipe Box. They have over 900 recipes on file making the question “What’s for dinner” an easy one.

Today’s consumers have more choices in how and where to spend their money when trying to fill the refrigerator with food.

The relevancy to this on a technology perspective is the increase of IP technology. stores need more connectivity and bandwidth to accommodate the POS traffic, pharmacy traffic, digital signage and video security applications.