‘Grocery delivery wars’ expected to create boom in online food shopping

Ordering groceries online has become a ritual for Laura Lougheed.

Every Sunday, she curls up on the couch with her grocery list in one hand and her cellphone in the other and begins placing items in her virtual cart. She then picks a time slot for delivery.

And bam! Grocery shopping — done.

Lougheed said shopping online like this saves her time, gas and the hassle of packing up her two young kids and heading into the store.

“It was just getting too difficult with the kids running around and around the grocery store. It was just insane,” she said.

After years of lagging behind U.S. and U.K. retailers, Canadian grocers are now deep into what is being called “the grocery delivery wars,” each trying to offer customers the most convenient way to shop for food and leading to impressive growth in the industry year after year.

Grocery delivery wars

The mounting pressure to win over consumers has led stores to try to one-up each other by offering everything from special parking stalls for customers who order online and pick up in-store to same-day delivery.

In the U.S., Walmart is even offering to place the groceries right into your fridge.

“It’s all about convenience. People are desperate for time and grocery shopping requires a lot of time. So, if you’ve a grocer that allows you to save time, you’ll capitalize on that,” said Sylvain Charlebois, director for Agri-food Analytics Lab at Dalhousie University in Halifax.

In the U.S., about seven per cent of food is bought online. In the U.K., the average is nearly 10 per cent.

In Canada, it’s much less at 1.5 to 1.7 per cent, according to Charlebois, but it’s expected to grow anywhere between five to seven per cent in the next decade.

“Just to put things into perspective five to seven per cent is equal to about $15 billion worth of business. That’s a lot of money,” said Charlebois.

Which is why stores like Save On Foods have rewired their entire system to offer deliveries. They have outfitted 150 vans to make drop offs in four provinces, B.C., Alberta, Manitoba and Saskatchewan, and have trained staff to do the personal shopping and the deliveries.

“If you’re not doing it, it means somebody’s going to steal your customers that want that service,” said Wayne Currie, senior vice president of IT, supply chain and e-commerce for Save On Foods.

Its concept is different than Walmart Canada and Loblaws who contract out their food delivery to companies like Instacart.

Instacart allows customers to use its app to place their order and then hires a shopper in the area to pick up the items and deliver it to the customer within the designated time frame.

While each company is different, they all tend to charge delivery fees for the service. In the event the store is out of an item, sometimes substitutions are made on behalf of the customer, or in some cases, the customer is left without the item requested.

Fewer impulse purchases

But by going online, stores are missing out on impulse purchases. Customers are less likely to be tempted by the smell of fresh bread or by the chocolates propped up by the cashier.

“Online, you’re less likely to buy too much food,” said Charlebois, “Everything that’s close to the cashier is very, very profitable and so you can’t really generate any revenues when you have someone in front of a screen.”

While they might lose on some of those impromptu purchases, Currie said they’re gaining more data on the consumers and building on a relationship.

“As a customer becomes loyal shopping with us online, they also become loyal to the brand and shop with us in store,” said Currie.

CBC