Quebec’s retail grocery environment is dominated by the same retail forces as those Ontario, but there are differences in approach, one analyst believes.
“The players are the same — Sobey’s, Loblaw, Metro and Walmart — how each of the players goes to market is a little bit different,” said Mike Mauti, managing partner and senior vice president of client services for Execulytics Consulting.
By region, industry statistics in 2016 showed the number of supermarkets in Quebec totaled 4,245, down slightly from Ontario’s 4,835 stores but well above British Columbia’s 1,653 stores and Alberta’s 1,567 stores.
Canadian-based retailers Loblaws, Sobeys and Metro are responsible for 58% of retail food sales in Canada, according to a recent report from the U.S. Department of Agriculture Foreign Agricultural Service.
The USDA said Loblaws is the largest grocery retailer in the country, with an estimated 26% percent share. The company’s 24 banners include large superstores, conventional supermarkets, discount units, convenience and club stores.
Loblaws has invested more than $700 million in store improvements on 200 of its existing retail units over the past three years.
Sobeys ranks second behind Loblaws with approximately 22% of retail food market sales, the USDA report said.
However, Sobeys offers more grocery stores than its leading competitor with 1,836 locations across the country, including convenience stores.
The chain was also the first retailer to introduce an urban-format store unit.
Metro represents over 10% of the retail market, operating 1,136 food and convenience stores. Conventional supermarkets, including Food Basics (Ontario) and Super C (Quebec) discount banners, make up most of Metro’s portfolio.
To compete with Loblaws and Sobeys in attracting multicultural shoppers, the USDA said Metro partnered with an independent Quebec retailer Marché Adonis to incorporate a banner offering Middle Eastern and Mediterranean-style foods. The company opened two stores, one each in the suburbs of Toronto and Montreal, consisting of 30,000 to 40,000 square feet of floor space.
Mauti said Toronto or Ontario retailers are more influenced by American or British retailers while Quebec has more European influences from stores in France, Spain or Italy.
Smaller store footprints, different assortment of products, European-inspired service and upscale pricing are more common in Quebec than Ontario, Mauti said.
Montreal retailers typical have more of a “market” feel than in other provinces, though the trend is picking up momentum in Ontario as well, he said.
“Montreal had that trend a lot earlier than Ontario did,” he said.
The Quebec market is very competitive, but Mauti said retailers typically have higher retail prices despite that competitiveness.
“The dynamic, of course, (is) Quebec is French-speaking first, so even though the labeling laws across Canada across are consistent, it is much more stringent in Quebec,” he said.
“Because of that, it is harder (for suppliers) to break into the Quebec market, so therefore the source of supply is not as abundant as it would be in Ontario.”
Quebec is plugging along with organic demand, but perhaps is slightly behind the U.S. demand curve because large organic experts like Whole Foods are less prevalent in Canada, Mauti said.
Discount retailers in Canada typically do not stock much organic produce, he said. Discount shoppers often shop at other grocery stores to provide all their needs, and those consumers who buy organic typically do so in conventional grocery stores.
Aldi has not yet come into the Canadian market, in part because of the strong discount banners of Canadian supermarkets, including Loblaw’s Maxi and the Metro discount banner Super C, Mauti said.
“We have for the last 35 years been very focused on growing the discount segment of the market, and over the years each of the major retailer offered their version of discount retail,” he said.
Mauti estimated that, excluding soft discounters or mass merchants like Walmart, Costco or superstores, hard discount formats account for about a third of the market.
“Aldi took a look at the Canadian market it wasn’t their next best opportunity because the competition was so (strong) in Canada,” he said, noting that Canada has the second highest penetration of hard discounters after Germany.
“Aldi (coming to Canada) just didn’t make sense at any point in time because of the strength discount segment,” he said.
Montreal’s wholesale market serves many independent multicultural retailers in Montreal, whose numbers are higher compared with Ontario.
“There is a lot of Italian, a lot of French, and a lot of Haitian (retailers),” Mauti said.