Canada: Canadian grocers finally reaching the digital future
The way Canadians pay for groceries is poised to reshape bricks-and-mortar stores, according to research to be presented at this week’s Grocery Innovations Canada conference.
“There’s been this huge shift, as consumers are starting to put away cash and start using more digital products,” said Avinash Chidambaram, vice-president, product and platform development at Interac.
Chidambaram is one of the speakers at the conference, which takes place Oct. 17 to 18 at the Toronto Congress Centre. About 4,000 people from the industry are expected to attend.
Research shows that shoppers who are heavy users of contactless cards are also becoming heavy users of mobile devices for payment, according to Chidambaram.
“We had anticipated it would be a slow transition to contactless, but the rate at which this is transitioning is 163 per cent” annually, he said.
The move to digital payment is not only a convenience for shoppers, it streamlines the check-out process, which means grocers could replace some check-out lanes with shelves of merchandise, increasing their selling space.
The transition away from money will also provide grocers with financial savings, because processing dollar bills and coins is expensive.
“Cash is expensive,” said Chidambaram. “You have to get guys with armoured trucks to come and pick up big bundles of cash, and the bigger the bundle the more expensive it is, because it’s more risk. You have to deposit it into a financial institution, which costs money.
“If you change that all into a quick digital transaction, then all those headaches start to go away. And people don’t want to carry cash as much as they used to. In Canada, the penny disappeared and I don’t think anyone missed it and people are just using cash a lot less because it’s less convenient.”
Chidambaram said the Internet of Things is also changing how we shop, with buy buttons on household equipment. When the first fridge came out that made it possible for consumers to order food using the appliance, people thought it was funny, said Chidambaram. But he thinks there are consumers who would like to have eggs automatically delivered to their home if the fridge can indicate they’re running low.
“Those kinds of experiences are actually going to start coming to market,” he said.
Despite digital advances, online shopping for food and groceries remains a relatively nascent category in Canada, according to Suthamie Poologasingham of global retail advisors J.C. Williams Group, another presenter at the conference.
More than 90 per cent of Canadians with web access shop online, but only 15 per cent of them shop for food and groceries there, said Poologasingham. Overall, only four per cent of consumer spending on food and grocery takes place online, compared to 25 per cent of electronics.
But given the proportion of the average family budget that goes to food and the popularity of online shopping for groceries in the U.S. and the U.K., the opportunity for grocers in Canada is big, said Poologasingham.
“I do expect to see more consumers shopping online for groceries as they become more comfortable with the idea and as the experience improves for them,” she said.
A looming concern for grocers is rising energy costs, said Steven Horwood, vice-president of sales and operations at Neelands Refrigeration, who will also present at the conference.
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Supermarkets have some of the highest energy costs of any bricks-and-mortar retailer, Horwood said — as much as four times higher.
In addition to requiring a large footprint, grocery stores must pay closer attention to maintaining climate control in order to keep goods from spoiling. And the refrigerants used to keep food cool are being subjected to legislation to ensure that they become more sustainable.
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