New Faces Compete for Canada’s Fresh Prepared-Food Sales

Canada’s retail foodservice market grew 3.3% in 2014, and further gains are on the horizon as more established retailers continue to revamp and expand fresh-food offerings to battle newer entrants that are advancing in the space.

But who are these newer entrants and what effect might they have?

Drugstores

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Before the merger of Loblaw’s with Shoppers Drug Mart, foodservice was rarely available at Canadian drugstores. However, this channel has been testing sales of fresh foods and could make a name for itself as a competitor for prepared-food occasions. Although drugstores may struggle to garner meal share in the near future, younger consumers view them as a viable option, particularly for snack occasions. Data from Technomic’s 2015 Canadian Retailer Meal Solutions Consumer Trend Report shows that for nearly a quarter of consumers (23%), drugstores are one of the three retailers from which they are most likely to purchase fresh snacks.

Convenience stores are consumers’ go-to retailers for quick, on-the-go occasions. But Shoppers’ new food program offers convenience for time-pressed consumers, so c- stores may find themselves dueling with drugstores for share of stomach and traffic.

High-End Retailers

High-end retailers, on the other hand, are better positioned to compete for meal occasions, and these concepts are set to proliferate. For example, Whole Foods announced plans in November to quadruple its current Canadian store count of 10 units, and Saks Fifth Avenue will open two stores in Toronto in spring 2016.

Source: blogs.ubc.c

Source: blogs.ubc.c

To steal share from restaurants, grocers such as these are working to create an elevated experience that promotes the concept as more than just a retail destination. In a sense, they’re turning into restaurants and touting themselves as a worthy foodservice destination using one of restaurants’ biggest competitive advantages: the experience. And their prepared-to-order platforms, select made-in-house items and chef-focused fare help these retailers convey food quality, an attribute highly important to 84% of consumers.

Urban Express Formats

Meanwhile, traditional supermarkets are continually upscaling prepared-foods programs to compete with the new faces of retail foodservice. Beyond revamping and expanding their foodservice offerings, supermarkets are competing with specialty retailers and c-stores alike by launching spinoff concepts built for fast, yet fresh, urban shopping. The focus on prepared-food or grab-and-go sections caters to the 61% of consumers who say they purchase retailer meal solutions because it is fast and easy—the leading occasion driver above other factors such as price and cravings.

sobeys

Source: www.sahacuisine.com

Sobey’s Urban Fresh and Urban Fare Express are examples of small, convenient grocery-store prototypes that are located in both commercial and residential urban neighbourhoods with heavy foot traffic. If these concepts prove successful, we may even see mass merchandisers follow suit with similar designs.

For the foreseeable future, traditional supermarkets will no doubt maintain their dominance in fresh prepared-foods sales; twice as many consumers purchase meal solutions from supermarkets as any other retailer. Still, with strong new entrants into retail foodservice, we expect the competition to get fiercer.

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Deanna Jordan

Deanna Jordan is Manager of Consumer Insights at Technomic Inc. in Chicago. She works on the firm’s Consumer Trend Reports, a series of annual studies that provides operators and suppliers with a comprehensive guide to the menu and consumer trends impacting various restaurant segments and menu categories in the U.S., Canada and U.K. She also contributes to the Consumer Food Trends newsletter, which explores the latest in foodservice and consumer trends.

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