October 20, 2014 11:52 am
Updated: October 21, 2014 10:59 am

Online grocery shopping ‘gathering momentum in Canada’

A customer pushes a shopping cart past a 'click and collect' point inside a Walmart store in the U.K. Retailers have begun trialing the same service in Canada.

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The country’s largest supermarket chain appears on the verge of introducing online grocery orders in at least one location in Ontario, a new report suggests, as online grocery shopping generally “gathers momentum in Canada.”

“Loblaw appears very close to launching its click-and-collect trial test in the Greater Toronto Area,” analysts at Desjardins Securities said in a new note to clients on Monday.

Loblaw “has the infrastructure in place onsite to imminently begin the service.”

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MORE: Loblaw gears up for online grocery orders

Loblaw has outfitted one of its main banner stores in Richmond Hill just north of Toronto with lanes equipped to deliver grocery orders to guests in their vehicles – so-called ‘click-and-collect’ style of shopping, since shoppers place their orders on the web then collect them at the store.

Desjardins analyst Keith Howlett said the website customers will order through isn’t live yet. But it appears only a matter of time as Loblaw looks to get out in front of the likes of Walmart and Amazon.ca, both of whom are aggressively targeting online grocery orders from Canadian shoppers this year.

“Online grocery shopping is gathering momentum in Canada,” Howlett said.

MORE: Walmart Canada turns focus to grinding down grocery prices

Indeed, Desjardins noted that in British Columbia, Save-On-Foods, owned by Overwaitea Group, established last month its own click-and-collect service at three locations in the Vancouver area, as well as delivery to “most suburban communities in the Vancouver area.”

Grocers ‘compelled’

Online grocery sales in general in Canada comprise a minuscule proportion of all grocery sales – just a fraction of 1 per cent, according to Strategy&, a consultancy owned by PriceWaterhouseCooper.

But the amount stands to grow by a factor of 10 over the next decade, Strategy& said earlier this year.

Howlett said he expects all grocers to pour more energy and resources into online e-commerce efforts in the coming months – because they have to.

“Grocers are compelled to defend their business against potential encroachment from online-only alternatives, particularly Amazon,” the retail stock expert said.

Last week, retail stock analysts at BMO Capital Markets said Amazon has increased its market lead in e-commerce sales in Canada with an opportunity to triple or even quadruple its sales over the next few years.

MORE: Amazon jumps out to lead in Canada’s online shopping wars

Walmart meanwhile is putting increasing focus on e-commerce efforts – particularly in grocery — to reverse a slowdown in total sales.

“Walmart Canada has an aggressive program (free delivery, regardless of order size) to promote online ordering and delivery,” Howlett said.

Existing grocery chains, however, hold some key positives working in their favour, according to the Desjardins analyst, including well-established relationships with customers and suppliers, as well as stores that are close by.

“Our view is that grocers have significant advantages,” Howlett said.

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