Sector Opportunity

This study is focused on the grocery sector in the Food Industry

The food distribution industry is Canada’s second largest commercial sector. The food sector represents about one-quarter of total retail trade in Canada, or almost $60billion per year. Food is sold through various categories of vendors: supermarkets, grocery stores, warehouse/discount stores, combination stores, convenience stores, department stores, and specialty food shops (e.g., butchers, bakeries). Most of the concern about retail market power is with supermarket chains. These account for approximately half of retail food sales in Canada.

Grocery stores, also known as supermarkets, are familiar to everyone. They sell an array of fresh and preserved foods, primarily for preparation and consumption at home. They also often sell prepared food, such as hot entrees or salads, for takeout meals.

By way of background, the Canadian retail grocery sector is intensely competitive, with consumers enjoying competitive prices and quality products. Most significantly, the retail channel is no longer occupied solely by traditional grocers. There has been an exponential growth in competition from mass merchandisers, drug chains and warehouse/club stores, among others. The definition of a “chain” used by Statistics Canada is an enterprise with more than four stores, which is assumed to confer on it certain advantages in wholesaling, warehousing, advertising, and the use of electronic technology, compared to independent retailers. The top five supermarket chains in Canada by sales are Loblaws, Sobeys, Canada Safeway, Metro, Overwaitea Food Group, A&P Shopper Drug Mart, Walmart Canada Corp. and Costco Canada Inc.

Canada’s Largest Supermarket Chains in 2000

Supermarket Chain Total Sales ($000)

Loblaw Companies 18,780,000

Sobeys...