This may come as a surprise for some Canadians, but our country doesn’t really have a true discount grocery chain. With higher food prices and a growing number of consumers seeking refuge from record-setting food inflation at the grocery store, real discount grocery stores would really come in handy. But the option is simply not there.
In recent years, rebates have grown scarce since No Frills and other value grocers such as Empire’s FreshCo and Metro’s Food Basics took a noticeable step back from their ongoing fight with Walmart. Quebec is even worse as shoppers can find Metro’s Super C or Maxi which is owned and operated by Loblaw. Sobeys doesn’t even operate a discount chain in Quebec. All banners and stores are connected to just a handful of grocers controlling the Canadian market.
Now Walmart is doing its own thing with price locks, and Loblaw just ended its 14-week price freeze which really failed to show beyond a reasonable doubt that consumers were indeed saving money. While consumers likely did save some money in January, after a few months of double-digit food inflation, it was not clear to many.
Rebates are just not as overly aggressive as what you would see in European-based discount stores. Every now and then some approaching threat will shake our industry’s giants and they try to fight for market share. As soon as clouds on the horizon disappear, some sort of truce overwhelms the market. This is what happened with Target’s arrival and quick withdrawal in 2015, and with Amazon Fresh a few years ago, when rumours were swirling that they would attempt to enter the Canadian market.
For years, we have seen reports suggesting that both Lidl and Aldi would enter the Canadian market. They both still have not done so. In fact, Lidl, a German international discount retailer chain, opened its first store in the United States in 2017 and is now operating almost 200 stores. Aldi, also from Germany now has over 2,300 stores in the United States. Both have similar business models, centering all of their efforts on discounts, plain and simple. With both, what you see is what you get, although Aldi does own Trader Joe’s in the U.S.
Unlike traditional grocery stores, both Lidl and Aldi operate on a restricted selection strategy, offering only a curated selection of private label products as well as a smaller range of national brands. Lidl may have more branded products, depending on location. This leads to lower overhead costs and allows stores to sell products at lower prices compared to competitors. Moreover, these discount grocers implement cost-saving measures such as a bring-your-own-bag policy, incredibly minimalistic store design, and an efficient checkout process. In fact, in Europe where Aldi and Lidl originate from, clerks typically sit down while working at these discount grocery stores since most of the bagging work is done by customers themselves. That way, rules are implicitly clear for patrons as you walk towards cashiers.
Strategies at Lidl and Aldi not only benefit the consumer with lower prices but also contribute to a more sustainable and efficient retail environment. Some no-frills stores, such as No Frills, do some of that but not nearly at the same level. Lidl and Aldi are also known for their emphasis on quality, offering products that meet strict quality standards while still being affordable.
In recent years, non-traditional grocers like Costco, Dollarama, Giant Tiger and Walmart have slowly shifted and tried to fill the discounting void we have in Canada. Costco though stands out. Only 15 years ago, Costco was a mediocre food retailer, at best. Today, they process many of their fresh products onsite while the quality and freshness rarely disappoint. Deals are impressive, but shoppers need both a car and space at home. And many Canadians are deprived of either.
The bottom line is this. Canada needs a disruptor, a new player which will redefine what competition looks like within the grocery industry. Loblaw just converted more than a dozen stores into discount Maxi stores in Quebec, simply because the company is seeing the writing on the proverbial wall. Grocers, coupled with the complacency of our regulars, have gotten comfortable, perhaps too comfortable.
One can only hope that either Aldi, Lidl or another non-Canadian discount grocer reads this column. Canadians are calling you.