Part 2: Customers- 2020 What you need to be thinking about… - SKUFood
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Part 2: Customers- 2020 What you need to be thinking about…

In the food & beverage industry you have two masters to satisfy; consumers who use your products and customers who buy them from you. Success will only come to you when you win with both. You need your customers to put your products on their shelves and you need consumers to put them in their shopping carts.

Last week we shared some insights into consumers in 2020. This week we will talk about customers.

We have separated these 2020 focus areas into three distinct reports for you:

1) Consumers,

2) Customers,

3) Industry

Alignment with your customers is key to your success. You do not have to do everything they tell you to do, but you do need to understand what they are doing and how you support their position in the market. You should have people in your business who are keeping an eye on your customers and really trying to figure out what they are up to and how it impacts your business.



Your customers (the retailers) are going to be working very hard in 2020 to keep differentiating their store formats. They need to have that loyal base of clientele who shop their store first. We know there is lots of cross shopping but if they can be the primary store they usually win. Winning is defined as getting the majority of the household shop and more focus on the items where they make more margin.

Your customers want consumers to see the physical store and the online experience as seamless. In other words they are trying to have consumers think of shopping Atlantic Superstore or Walmart, not in store or online. It is whichever format is more convenient for them at the time. This is one area Sobeys will be playing catch up. More on that in the online section…

Your job as a supplier is to understand the format and figure out where you can support your customer. As I write this I am sitting in the new Sobeys store in Timberlea, N.S. They have changed a number of things in this new format, which might impact suppliers. This would include merchandising fixtures, plan o grams in grocery and the space dedicated to certain categories or sections. If you supply Sobeys you should visit this store and look at your category.

Online shopping

More food and beverage will be purchased online in 2020 than any previous year in Canada. We know this continues to grow as more consumers have access and become comfortable and confident in the technology. On almost every website you will see examples of artificial intelligence where they develop a profile of you and start recommending items and reminding you of what you purchased last time. The offerings are evolving all the time so we have compiled a snap shot for you:

Sobeys are behind in the race to win online, as they have opted for the full meal deal with U.K. company Ocado. They will be opening an automated warehouse to serve Southern Ontario in 2020. Every other retailer on the list (with the exception of Amazon and Costco) pick the orders in store. Sobeys will be doing this at a stand alone facility. They are betting on the efficiencies allowing them to be better and cheaper, making them more attractive in the end. Watch and participate. Most small and specialty stores have online shopping as well, the list would be too long to include them all. Consumers also can use third party options such as Instacart who will shop at several stores to get what you need.

Discount formats

We have had discount formats (No Frills, Maxi, Food Basics, FreshCo etc.) in Canada for a long time. Recently we have experienced the growth of Dollar stores and Giant Tiger where more and more food is being purchased. The trend to smaller, limited assortment discount stores is likely to continue. The model is simple, they cost less to operate so the margins are lower and the prices are better.

A lot of this is being driven by what is happening in the U.S. Aldi have made significant investments to open 1,900 stores across close to 40 states. These are relatively small (15,000 sq ft) stores with only +/- 2,000 SKUS. A conventional Sobeys or Loblaw would be 4-5 times larger and have 10 times the SKUS. We also see Dollar General up to 15,000 stores in the U.S.! Remember, close to 1/3 of the Canadian market is serviced by U.S. retailers (Walmart, Costco and Whole Foods). They are making changes to compete with these formats and we will see the impact in Canada as well.


It is tougher for retailers to differentiate their offering all the time. Two areas of focus for them are private label and loyalty programs. Suppliers who participate in one or both of these are perceived to be slightly different. These are key components of their strategy so when you support the program you are supporting the retailer.

Private label is not right for everyone. I always suggest to suppliers you just need to think it through before you meet and have an answer. It is beneficial for some businesses to go this route to the shelf. For others it is better to control your destiny and build a brand. Just make sure you consider it and know your answer before they ask.

Loyalty in most retailers is an integral part of their promotion strategy. It is an opportunity to get a sign, usually reduce your investment and should be a chance to learn more about who is buying your products.

A third area where retailers are trying to differentiate is sustainability. Sobeys as announced they will not be using plastic shopping bags in 2020. It will be interesting to see how this works. Loblaw tried it before and pulled back after consumers were not embracing the idea. Perhaps the time is right. Food waste is part of this as well. Look for more initiatives where retailers will try to stand out from the crowd.


One of the biggest costs in any food business is inventory. Retailers will continue to put more and more emphasis on efficient use of inventory and having the right amount of product in stock at all times. Too much costs money and too little costs sales. Their systems are more sophisticated than ever and suppliers will be held accountable to be just as right as the retailer.

Talk to your customers about their plans and learn from what you see in store. Seasonal discount programs have been in place for many years but they are taking the same philosophy everywhere. There is a window for a product to sell. Make sure you understand how they define this and figure out how to keep them in the right amount of stock when it is needed.


Many of the topics we have covered are being driven by technology, labour challenges and ultimately servicing the consumer how they want to be serviced, where they want to be serviced for the lowest price per unit.

Loblaw are rolling out electronic shelf labels in many stores with relatively quick return on their investment. They are also testing robots in store to monitor in stock positions and even pick orders for online shopping. 

Sobeys are working to open their fully automated online shopping system and they introduced Smart Carts in Oakville, ON to test their return. Walmart continue to be the gold standard for lowest cost per case through the entire system and Costco category managers know what is selling when and where.

You do not have to understand how all of it works but you do need to know how it will impact you. Stay current and talk to your customers about their innovations. You never know you might learn something!

Our final 2020 report will cover more general industry topics such as trade and cannabis. Stay tuned for our industry report, which will be released within the next week. If you have any questions or would like to talk about any of these opportunities give me a call at 1 (902) 489-2900 or send me an email at and I will get back to you.