Last Updated: 9th December, 2020
With an impressive growth potential of the online retail sector in Canada, the real opportunity lies in online grocery sales. As per statistics, Canadians spend a whopping $6.4 billion per year on online groceries. Still, the online Canadian grocery industry lags behind the United States and the United Kingdom with a penetration rate of around 2% as compared to 3% & 7% in the US & UK respectively.
Primarily, the existing eCommerce grocery stores of the country are failing to understand consumer behavior as their focus is on why people say “yes” to online groceries and not on why they say “no”. Secondarily, they are not targeting the following major types of spenders separately:
For more clarity, let’s gain insights into the shopping patterns and behavior of Canadians that can help entrepreneurs to make an aggressive push into the online grocery industry.
Many US companies such as Walmart and Instacart have become very successful in the Canadian grocery industry.
There is no doubt that Canada has been seen as an alternative by US retailers who want to enter its market due to the common language and Canadian consumer’s familiarity with US brands (from advertising, TV, and cross-border shopping).
In order to achieve success, both US & Canadian entrepreneurs imitate the strategies designed and tested on the US consumers and execute them in the Canadian market.
But they need to understand that the US and Canadian customers are not the same. Two critical differences between them are:
Moving on, it’s important to understand the Canadian shopper’s behavior in detail for achieving maximum effectiveness and efficiency of the business.
Canadians make their online purchase by initiating thorough research about the product, analyzing its credibility through reviews, comparing the features/characteristics across different websites, as well as locating businesses based on proximity searches.
To draw the buying patterns of Canadian shoppers, it is important to list the problems they are known to face.
Some of the issues that Canadian shoppers face while purchasing Grocery Online are:
Issues that are known to spoil the post-purchase experience of Canadian shoppers are:
Consumer behaviors always shift in times of disaster. With fears about the spread of COVID-19, most Canadian consumers did panic buying and stocked up their houses with grocery items and other essentials.
For this reason, most grocery shops have empty shelves turning people to shop online more aggressively.
According to a recent report released by Dalhousie University, more than 9 percent of Canadians are now shopping for food online (including grocery) for the first time as an impact of coronavirus (Covid-19) on the grocery business.
Grocery delivery apps like Instacart and Inabuggy have seen an increase in demand. On 23, March 2020, Instacard released a statement: over the last few weeks, the company has seen its volume of orders grow by more than 150 per cent year over year.
Also, the crush of demand has overwhelmed grocers’ delivery and pickup networks, causing operational difficulties.
The structural changes in consumer shopping may reshape the overall grocery industry but, meanwhile, it also adds to the pressure small and mid-size grocers already face in Canada.
As of now, these smaller grocery businesses don’t have as much capital to shift online by developing the delivery infrastructure.
As most Canadians go online to discover the products that they want to buy, this critical stage is a huge opportunity for retailers to win their trust and simultaneously influence their purchases. Now the bigger challenge for Canadian marketers is understanding the way consumers think when they turn to the web and how to act in those moments.
By anticipating what customers need and providing full assistance at every step of their purchase journey with relevant information, retailers can make the best impact of their connection.
Informed Canadian shoppers are also benefiting from value-added experience and options at the time of online grocery shopping. They prefer loyalty programs and are becoming increasingly proficient at redeeming points online.
The digitization of payments continues to influence and evolve rapidly in the online Canadian grocery industry. Shoppers are opting for more convenient and digital methods of payments such as in-app purchases, online transfers, and contactless.
The most preferred method to pay online in Canada is through cards (especially debit cards) for a majority of online grocery transactions. Digital wallets such as Visa Checkout and PayPal are the second most-used payment methods.
Therefore, online grocery retailers should adopt payment technologies that make Canadian shopper’s experience smoother.
Providing an enhanced & personalized shopping experience is what sets online grocery retailers apart from traditional offline stores. But what does this actually mean for entrepreneurs and where they can start are the real questions.
Personalization:. Around 78 percent say that they are ready to share choices or preferences when a personalized shopping experience is provided.
Overall, as the consumers in Canada are tied to excellence in terms of service and experience, retailers providing frictionless transactions and omnichannel shopping will rapidly increase their market share.
According to Nielsen, free shipping is one of the driving factors that entice around 55 percent of Canadian respondents to purchase groceries online.
Secondly, the freshness of products and one-day delivery are other high-ranking factors that encourage Canadians to shop.
Also, Canadians prefer to shop from websites that showcase descriptive product photos, come with relevant details, and are easy to navigate.
As far as brand preferences are concerned, convenience and comfort are all that consumers need. A time-consuming checkout process in a physical store or an online shipment taking many days to arrive is not acceptable anymore.
With the increasing awareness about natural products, Canadian consumers are highly attracted to sustainable consumption which is paving the way for the massive purchase of local, ethical or organic grocery products in the region. As the majority of Canadians are looking for sustainable and organic produce, focusing on sustainability is not merely a social responsibility rather a necessity for online retailers.
While the organic and sustainably produced items are highly popular among the Gen Z (18–24 year-olds), 74% of them prefer locally produced, 70% look for organic, and 49% want sustainable packaging. Moreover, Canadian customers are ready to pay a higher price if the food/grocery items are sustainable. As per reports, around 33% of Canadian consumers are comfortable with spending a hefty amount over non-food items that are sustainably produced, followed by items that come with sustainable packaging (32%) or ecological offerings (32%).
With an aim to streamline their business processes, retailers are focussed on cutting costs and promoting efficiency, thus, becoming more sustainable. The ideal balance between social, economic, and ecological values is not only beneficial for the planet but the ROX (Return On Experience) too.
Costco is one of the major grocers in Canada and has recently launched an online grocery delivery option. The option is currently available in Alberta, Quebec, and Ontario. In 2017, Costco expanded its Instacart same-day delivery partnership and launched 2-day Costco Grocery shipping.
It is the largest Canadian food retailer that offers the widest variety of inventory to its customers through its PC Express click-and-collect and delivery service. The company has more than 700 pick-up locations, GO Train stations and Shoppers Drug Mart locations.
In 2017, like Costco, Loblaw partnered with Instacart to launch home delivery in 11 major Canadian grocery markets.
In Canada, Instacart has 5 retail partners, including Staples, Loblaw, Walmart Canada, M&M Food Market, and Pusateri’s. The best thing about Instacart’s grocery delivery is that most of the deliveries can be made in as little as 1-2 hours. A customer can also order up to a week in advance. Furthermore, the personal shopper messages customers and suggests alternatives if the ordered items are unavailable.
For more international grocery players and market trends, watch the video:
Metro is a very popular brand in the Canadian grocery industry and is a leading grocery delivery provider in the provinces of Ontario and Quebec. The company offers same-day pickup and delivery of many of its 950 food stores through several banners such as Metro, Metro Plus, Super C, and Food Basics.
The king of Canada supermarket, Walmart has strengthened its relationship with Instacart across the country. Through Instacart’s grocery delivery app, a customer can get groceries in an hour or even can schedule as many as 5 days in advance. The service is available in cities such as British Columbia, Ontario, Newfoundland, Labrador, etc.
Apart from Instacart, Walmart also offers grocery delivery when ordered from its grocery delivery website or mobile application.
There are many other tested grocery players in Canada such as Grocery Gateway, Fresh City Farms, Longo’s, Sobeys, etc.
Being one of the basic human essentials, the scope of businesses offering grocery services is increasing. As people are increasingly relying on online shopping nowadays, the idea of starting an online grocery business in Canada is highly profitable.
Entrepreneurs who want to give fierce competition to established businesses like Costco, Metro, Instacart, etc, need to consider the right trends & tactics of the Canadian Grocery Industry.
They need a website or marketplace that has a plethora of functionalities and readymade grocery mobile apps to cater to customer needs.
Growcer, an online grocery shopping software, is well equipped with all the necessary features that are required to start a grocery delivery service in Canada.
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