Potential growth is threatened by ultra-low price competitors and online retailers adding grocery shopping services
TORONTO—The disruptive forces that could result in half of Western Europe’s large grocers disappearing by 2025 are making their way to Canada, a retail conference heard June 1.
Discount outlets and online entrants such as Amazon pose a genuine threat to Canada’s grocery chains, said Fred Thomas-Dupuis of the consulting firm Oliver Wyman.
But food retailers have plenty of time to adapt and compete by driving down costs and prices, considering buying products together like their European counterparts have done and experimenting with online offerings, he said.
“Europe can be used as a crystal ball of sorts,” he said at the Retail Conference of Canada conference.
“These things take time, and the disruption isn’t that far out, and therefore, it’s important to start now.”
Grocery companies in Western Europe have expanded to the point where massive market saturation and consolidation means growth is only possible at stores that have been open for at least a year, said James Bacos, also of Oliver Wyman.
Those companies now have to shift their efforts on making their stores more attractive to consumers by offering better prices and promotions than their competitors, he said.
Still, potential growth is being thwarted by disruptive forces like ultra-low price competitors, such as Lidl, and online retailers, such as Amazon’s online grocery shopping service AmazonFresh, he added.
Those additional pressures will cut the number of large grocers in Western Europe in half over the next 10 years, said Bacos.