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.
Two possible entrants into the Canadian market are Aldi and Lidl, both based in Germany. There has been speculation over recent years that they would expand here.
“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.
I respectfully disagree with this article. Aldi and Lidl mostly sell private label goods for consistently low prices. This is very different than Canada’s grocery stores. Canada’s low end market is ripe for low end disruption; even more so than the United States. Using the principles of Harvard Business School professor Clay Christensen Aldi and Lidl can and will do to Canada what they have done successfully in the United States and Europe. Neither company needs to buy a Canadian retailer and wont. As prices rise most Canadians wish Aldi and Lidl would come to Canada sooner.
http://www.businessinsider.com/aldi-says-it-plans-to-open-150-new-stores-across-the-us-2022-2
Je désapprouve respectueusement (comme Michael Decor)
Aldi et Lidl sont deux entreprises dont le point fort est justement de vendre des produits de leur propre marque (peu de choix) mais à des prix plus que concurrentiels avec un rapport qualité-prix imbattable. Ce qui est justement l’extrême opposé du marché actuel au Canada où le principe est de vendre extrêmement cher les produits.
Je pense qu’il y a vraiment une place pour Lidl et Aldi puisque cette part de marché n’est justement pas du tout exploitée au Canada et je pense que la plupart des Canadiens (dont je fais partie) seraient ravie de voir ces deux nouveaux joueurs dans le décors. (peut être que, comme en Europe, ça permettrait un peu de réduire l’oligopole qui règne et donc de faire baisser les prix de façon globale)
I love Aldi and would love to see them here in Canada but if that means they need to purchase one of our existing retailers in order to open up here then I’ll take a hard pass. After losing our beloved Zellers to Target only to have them
pull out of Canada was devastating to our retail sector. We require competition here and I believe opening Aldis without purchasing one of the competitors would be a viable option. I will say it again, we need competition here! Loblaws owns numerous grocery chains, they control the majority of the prices here in Ontario. So much so that they have made a 40% profit the first quarter in 2022 compared to the first quarter in 2021. That’s not inflation, that’s greed.
I think there is a market for both of them in Canada. They would be right there in between Maxi, SuperC or No Frills and Metro in my opinion. Plus, I would love to see what would happen to the dairy prices in Canada if those 2 would come in. Prices for dairy products in Canada are outrageous for somebody who is used to prices for the same products in Europe.
True, the market is different than in the US, but I still think they would do well when entering the Canadian market, especially with all those price increases in the aftermath of Covid and the ongoing inflation. People are ripe for good products at reasonable prices, and Canada with it’s oligopolies all across the board could certainly need the competition
I think there is a space in the market for both Aldi and Lidl, especially at this time where all the grocery stores are kicking our balls with huge markups.
If they need to acquire an existing brand, Giant Tiger would be good choice