Any potential expansion into Canada of giant international grocery chains would be met with many challenges.
“To make things happen for distribution really is not easy. It’s a very, very large country with no population density to support growth and to increase any market share in Canada is pretty difficult,” said Sylvain Charlebois, Professor, Director, Agri-Food Analytics Lab and Former Dean of the Faculty of Management, Dalhousie University.
“I know both of them very well. I actually used to buy from both when I was in Europe, in Austria. They’re both very good retailers. They’re very efficient in their ways. They mix things up. Prices are very affordable. They’re very good distributors,” said Charlebois.
“But they’re still not overly comfortable with the North American market. Both of them are very, very capable grocers in Europe for sure.” Charlebois said that most grocers that come into Canada would acquire an existing player in the market.
“I wouldn’t be surprised if either one would actually enter the Canadian market by acquiring a retailer of some sort. The thing about Canada really is you’ve got the non-traditionals that are really creeping up. Now Costco is number three in the market. You’ve got Loblaws, Sobeys, and number three now is Costco followed by Metro. Metro has lost another three spots and Walmart is doing very well too,” he said.
“I suspect that there’s no more space for a traditional grocer unless one is acquired. That’s the thing. And your guess of who could be acquired is as good as mine.
“Sobeys is not for sale. Sobeys is actually on the hunt to acquire more. It’s been doing that for the last few years acquiring Farm Boy and it just acquired Longo’s this year. But Metro’s not for sale either. So you never know.”
Any expansion of an international grocer such as Aldi or Lidl would “tighten” things up in the Canadian grocery industry, explained Charlebois.
“We’ve seen it in Canada that whenever there’s a new player coming into the market things tighten up a little bit. Amazon’s acquisition of Whole Foods actually did disturb the Canadian market a little bit in 2017. It was the virtual space that really became a menace for grocers.
“Right now it’s really funny. A lot of people are actually thinking about bricks and mortar but it’s not just that anymore. It’s virtual. So Amazon is another potential grocer that could enter into the Canadian market really when you think about it.”
Charlebois said this year is not going to be an easy one for grocers given the extra costs they’ve incurred due to COVID and due to the fact that there’s been a lot of pivoting towards ecommerce and building infrastructure around that.
“That’s going to be difficult for them to manage all at once as they’re trying to figure out who is going to be next entering into the market,” he said.