Canada’s Food Retail Industry Disrupted Amid Pandemic: Brookfield Institute

A new report from the Brookfield Institute for Innovation + Entrepreneurship (BII+E), at Ryerson University, identified four key trends in Canada’s food retail industry and their implications for grocery employers and essential workers in Ontario.

The report, Shake-up in Aisle 21: Disruption, Change and Opportunity in Ontario’s Grocery Sector, said the following trends are impacting the industry now and going forward – the accelerated rise of e-commerce; driving loyalty with data; growth of market power plus consolidation; and moving beyond hyper-efficient supply chains.

“The COVID-19 pandemic has prompted or accelerated change across the economy, and the food retail industry is transforming more rapidly than it has in a generation,” said Sean Mullin, Executive Director, The Brookfield Institute for Innovation + Entrepreneurship.

“Retailers are diving deeper into e-commerce, shoppers are shifting the way they shop, and jobs and working conditions of essential food retail workers are in the spotlight. While some aspects of these changes may be short-term, others will have lasting implications for the sector as well as for Canada’s consumers. 

“This report captures our effort to better understand these shifts and their effects, their potential impact on food retail work, and the challenges and opportunities that lie in change.”

The food retail industry is an essential part of the Canadian economy with the average Canadian household spend per year on food at $10,311 with 27 per cent of that in restaurants and 73 per cent in food and grocery retail.

“We’re a policy institute that is interested in really understanding some of the most critical issues facing Canada today. We want to understand bold ideas but we want to actually transform them into international real world solutions. Our mission talks about Canada navigating complex forces and the amazing possibilities of the innovation economy,” said Kimberly Bowman, Senior Projects Manager.

The report said the pandemic has driven significant change in Canada’s $95.5 billion food retail sector, accelerating tech adoption and prompting major shifts in customer behaviour. It has also put a spotlight on aspects of food retail that many shoppers may have previously taken for granted. Empty store shelves have prompted a newfound appreciation for the everyday heroes who have kept our local grocery stores stocked and operating, it said.

The report also examines the implications of these and other changes for Ontario’s grocery employers and workers. Shake-up in Aisle 21 is part of an ongoing Brookfield Institute project to identify job pathways for Canadian workers in industries being disrupted by new technologies. The Job Pathways in Food Retail project, in partnership with the United Food and Commercial Workers (UFCW), is funded by the Government of Ontario and JPMorgan Chase & Co.

Bowman said there is incredible power in skilled algorithms. There’s also huge potential in labour market information. But all this has to be taken from a human-centered perspective.

“You’ve got to think about the people and that includes both the employers who are looking for skilled workers and the workers who are looking for jobs where they can apply what they already know how to do well,” said Bowman.

“That’s what we put into practice in this project. If there’s going to be disruption in grocery in the automated cashiers coming in and there’s suddenly demands for cashiers, what do those tens or hundreds of thousands of people do? Where could they pivot to? How can we use (data) and labour market information and combine it with good on the ground research to understand who these workers are, what they’re interested in, what are some of the in-demand jobs they could transition to without a lot of additional training or school . . .  And how do we tap that list that comes out of the skilled algorithm?

“As a researcher, it became very apparent very quickly how many smart people work in retail and have built their careers working in an industry that is complex, sophisticated and ever-evolving. What we’re not trying to do in this report is suggest any of that is not true. You very quickly understand just how many changes people are juggling around supply, around omnichannel, around e-commerce. It’s breathtaking.

“Just to acknowledge how important and critical and sophisticated this sector is while at the same time asking people who have the opportunity to influence to sit back and think about where they could be deploying that strategic insight, those capabilities. We see a tremendous amount of investment in e-commerce and in the infrastructure for that which is entirely appropriate – certainly in food retail.”

The report said disruption in Ontario’s food retail landscape is resulting in investments and decisions that can shape the sector for decades. 

“Canadian food retailers employ hundreds of thousands of Canadians in communities across the country, in customer-facing jobs that are likely here to stay,” said the report. “As these retailers adapt to changes—including the growth of e-commerce, data-driven strategies, market consolidation, supply chain adaptation, shifts in consumer habits, and the pandemic— they are making decisions that can transform food retail, and jobs within the sector.”

It said the research suggests a number of areas where the sector could continue to evolve into the future:

• The food retail industry—by virtue of its scale and conditions—can be a powerhouse for innovation, said the report.  “While grocery may not be top-of-mind when Canadians think of the innovation economy, recent investments show that Canadian food retailers are rapidly innovating—alongside evolving consumer expectations and demand. At the same time, the industry faces calls for restraint to ensure its power does not result in an environment that constrains innovation or healthy competition, or that fails to deliver fairly for key stakeholders including suppliers and staff.”;
• The food retail industry employs hundreds of thousands of essential workers in Canada, yet many food retail jobs offer poor conditions— low pay, insufficient hours or precarious employment, and tend to see high turnover, said the report. “The COVID-19 pandemic has underscored the important role of food retail and food retail workers. There is a disconnect between the value of these roles, the risk associated with front-line work and the relatively low wages and job quality experienced by many workers. The industry is being challenged by many to find a better balance between profitability, price, and their responsibility to essential workers.”;
• The report said companies tend to be behind the times when it comes to managing the skills, talent, and expertise of people already on their payroll. “Already sophisticated digital businesses, large food retailers tend to lag on adopting digital internal talent tools. Some, however, are starting to modernize talent strategies and adopt technologies to better map and leverage talent they already have in their labour force.”;
• Customer service skills are critically important and highly sought after by employers, added the report. “In line with past research, these same skills remain poorly codified and not economically valued. Employers rate the ability to deliver an excellent customer experience as a desirable skill, but also one of the most difficult for them to identify, train, and recognize.”; and
• As the sector changes, some workers may face disruption, said the report. “Workers in this sector may consider transitions, either for new opportunities or as a result of job-related disruption. Customer service remains in high demand. Given challenges associated with pay and job quality, some of these workers may wish to investigate pathways into other occupations. Identifying job transition pathways requires an understanding of how jobs are changing, local employer demand, and worker preferences. We investigate these opportunities in our upcoming report.”

Report Illustration by Dorothy Leung