In the United States, food retailing tends to fragment along channel lines. In Canada, the main point of separation tends to be along the lines of discount or non-discount.
That's one of the conclusions that can be drawn from the analysis of Canadian supermarket retailing that begins on Page 44 of this week's SN. Let's take a closer look at what this means.
In Canada, the supermarket industry has remained fairly insulated from the influence of Wal-Mart Stores, notwithstanding the fact that the discounter entered the country more than a decade ago when it bought Woolco stores. In that period, Loblaw Cos. has moved to capture the price-driven side of the food market by means of its discount superstore used in many regions of the country. In all of Canada, Loblaw has captured a 31% market share.
Canada is also home to two U.S.-grown banners, A&P and Safeway. Those two operators are also largely distinguished by their pricing strategies. A&P also seeks a low-price image by means of its Food Basics banner. Safeway, operating in Western Canada, has resisted the low-price trend. Safeway has a 6.9% market share in the country, A&P a 7.3% market share. Most of the rest of the food market is owned by Sobeys and Metro. Wal-Mart has yet to introduce substantive food offerings, but seems poised to move by opening Grocery Shelf sections in discount stores. Last year, it began to roll out Sam's Clubs in Canada.
Meanwhile, in the U.S., the market once possessed by supermarkets is scattering to other channels of trade. In response to that, efforts have been made by traditional supermarkets to lower prices, but much of the action is aimed at new product lines and formats. To see more about the latter, take a look at the news feature referenced on Page 1 about "new lifestyle" supermarkets opened lately by Food Lion and Marsh.
Both of those stores employ a concept developed several years ago known as "solution selling." That idea is to design a store around meal groupings and other features that facilitate convenient shopping. When the solution-selling idea was broached, it attracted admiration but was deemed to be impractical. After all, stores have generally been designed to facilitate systems, such as refrigeration, or delivery methods, such as the direct-store-delivery aisle, so a sea change would be required.
Now it's happening. Stores described in this week's news feature are pioneers of customer-driven layouts. It all seems simple enough, but there has been quite a span of time between concept and implementation. Both of these stores also employ many techniques developed in Europe, and by Loblaw, designed to wring the most productivity out of the least amount of floor space.
Also in the space of a few pages in this week's SN you'll find other non-price approaches. One IGA supermarket operator is adding a hair salon, Page 55. Supervalu is making a major commitment to general merchandise by adding 200 stores, doubling the current total, Page 47. And numerous supermarket operators are adding dollar sections, Page 55.