The grocery wars are about to heat up in Canada.
Discount titan Wal-Mart Canada Corp. will launch an "online grocery pickup" in the next few weeks in the Ottawa area, Simon Rodrigue, the retailer's senior vice-president of e-commerce, confirmed on Friday. The initiative, which expands Wal-Mart's burgeoning e-commerce offering to fresh food, is the start of the retailer's wider push into selling fresh fare online.
"Our intent is to continue building on our commitment to provide customers across Canada with convenient access to our grocery and general merchandise assortment and low prices," Mr. Rodrigue said.
Wal-Mart has been rapidly adding more food aisles to its bricks-and-mortar stores in giant supercentres, putting pressure on other grocers in a low-growth sector over all.
Now Wal-Mart's latest move to draw customers with a full grocery e-commerce offering will inevitably shake up the cutthroat $120-billion-plus segment as the discount titan expands its online business.
"As it gets rolled out to more markets, it will force the competition to react and offer the same thing because it's such a competitive market," said Peter Chapman, president of grocery consultancy GPS Business Solutions and a former executive at Loblaw Cos. Ltd.
Grocery e-commerce has lagged most other categories of online selling as retailers grapple with the costly logistics of picking, packing and shipping often bulky but low-margin products. The retailers also struggle to win shoppers' trust in picking unblemished fruit, vegetables, meats and fish.
At the same time, digital behemoth Amazon.com Inc. has been ramping up its grocery offerings in Canada and industry insiders suggest it will launch fresh foods in Canada at some point, as it has in other markets – raising the ante for all players. A spokeswoman at Amazon.ca declined to comment on Friday.
In Canada, major grocers have started to dip their toes in the digital-selling waters. Loblaw began testing last fall an e-commerce "click and collect" program at three of its stores in the Toronto area. It learned enough that it is ready to expand the test to 50 stores by the end of 2015, Bruce Burrows, chief information officer at Loblaw, said this week.
Sobeys has run e-commerce in Quebec for a while, while Longo's in Ontario offers GroceryGateway.com.
But e-commerce currently represents less than 1 per cent of Canada's more than $120-billion of annual grocery sales, according to global online market researcher Profitero. That compares with e-commerce making up roughly 5 per cent of all Canadian retail sales, said Keith Anderson, vice-president of strategy and insights at Profitero.
Even so, by the end of 2018, he expects grocery e-tailing to represent 3 per cent of total grocery sales, outpacing by three to four times the growth rate in bricks-and-mortar stores.
Retailers such as Wal-Mart and Loblaw that are moving early into the grocery e-commerce field "may have sustainable advantage," Mr. Anderson said.
Wal-Mart has the global heft of a worldwide company to find the economies of scale to do a full grocery e-commerce, he said. It also can borrow from its experience of selling food online at its British and U.S. divisions.
The Wal-Mart online grocery pickup will allow shoppers to order their groceries online from an offering that is smaller than the usual in-store offering – but at the same price as in the store, spokesman Alex Roberton said.
Customers will pick up their order at one of the participating stores; an employee will bring the groceries to the car or the customer will fetch them in the store. Wal-Mart will finalize how customers will pick up their order when it announces the service in the coming weeks, Mr. Rodrigue said.
"The majority of grocery items customers want on a weekly basis will be available for the grocery pickup service," Mr. Rodrigue added.