The Canadian market is influenced a lot by what happens south of the border and this is Thanksgiving week in the US. The Friday after the American Thanksgiving has become known as Black Friday. Retailers really are interesting. Consumers are in the mood to buy, so retailers determine the best strategy is to offer some real deep discounts to drive traffic and try to sell more. In a quick scan of major food retailers in Canada Sobeys and Metro are both including some Black Friday messaging in their flyer. Walmart does have a large Black Friday ad for general merchandise but they do not mention it in food.
Did you ever wonder where the term Black Friday comes from?
I thought I knew the answer but it turns out I only knew part of the answer. After doing some research on history.com I can fill you in.
The first time the term was used was in 1869, when two Wall St. financiers tried to buy up all of the gold reserves. Their plan was to drive the price up and get rich. Unfortunately, the result was a stock market crash which bankrupted many business people and farmers.
The second iteration of Black Friday originates in Philadelphia. Police in this city used the term to describe the Friday of American Thanksgiving when there were many holiday shoppers and fans attending the annual Army-Navy football game in the city. The combination of the two was enough to cause traffic jams and prevent any police from getting the day off.
Finally, the definition I was familiar with started in the 80’s. General merchandise retailers were running deep discount ads and stated it was the time in the year when their bottom line finally went from red to black. The busy holiday shopping on the long weekend would put them into a profitable situation.
In recent years we have seen the explosion of cyber Monday where the deep discounts have been offered online. With so much more being purchased online in 2020 it will be interesting to see which food retailers participate.
Online shopping for food has increased exponentially in 2020, as consumers were staying away from stores and, and really trying to options to stay home and shop. Online shopping has increased rapidly. Before the pandemic started, it was probably 2% to 3% and maybe a little higher in densely populated urban markets, but certainly lower in more rural markets. Now that number is somewhere between 12 and 15%.
Here is a summary of what Canadian food retailers are doing for online shopping options:
The majority of the offering in Canada is referred to as click and collect. The consumer clicks to complete their online order and then employees will pick the order in the store. Then the consumer drives up and collects their groceries at a predetermined slot within a one hour window. This model is being used by Loblaw, Walmart, Save On and Metro.
Sobeys recently launched Voila, with their new dedicated fulfilment center in Vaughan, Ontario, built to deliver e-commerce in the GTA. There are over a thousand robots in a space the size of 15 football fields. All of the orders are picked by robots and assembled before real people get in a truck and deliver them around the GTA to consumers who have ordered their product online.
Now we're starting to see a hybrid model introduced as well. This technology out of the U S called Take Off and Loblaw have entered into a partnership with them. They are putting one of these micro fulfillment centers into a store. They reduce the physical store size for consumers and they add a micro fulfillment warehouse. This allows them to take advantage of all their warehouse deliveries coming into that store. The micro fulfillment area is full of the high volume items and the orders are picked by robots similar to the Sobeys program. They also have access to the other 30,000 skews in the store. If a consumer orders something like 12 year old age balsamic vinegar, which you don't have as a high volume item, an employee can go in the store and pick that item and fulfill the order.
There are also third party companies who will shop for you. Instacart and Instabuggy are two companies operating in Canada, where you go on their website, you determine which retailer you want to shop with and you can complete your online order. They do the shopping and charge you a fee.
Some different options for e-commerce and food. Different retailers and businesses trying to satisfy this growing demand. To give some perspective, it is 12 to 15% in Canada, whereas in Asia it would probably be about 25 to 35% of food is purchased online. So still a lot of opportunity for growth in Canada and North America.
If you want to talk about the food industry you can send me an email at Peter@SKUFood.com or give me a call at (902) 489-2900.0.