It has to start with the consumer

As we continue to explore the different markets for your products we will focus on Atlantic Canada. This market has some unique characteristics, as they all do. If you are servicing the Atlantic market, you need to understand consumers and customers in four provinces: New Brunswick (NB), Nova Scotia (NS), Prince Edward Island (PEI) and Newfoundland Labrador (NL). This region is challenging in that the population is relatively small compared to other markets and the geography is bigger than many people perceive.  The complexity of servicing close to one in four shoppers in Newfoundland adds to the unique characteristics of the region. An island in the North Atlantic is a difficult place to distribute produce with short shelf life.

 

Population density is low in Atlantic Canada, with only 2.4 million people spread across four provinces. As you can see in the following table, Nova Scotia is the most populous province, with more than one-third of its residents living in Metro Halifax.

 

Statistics Canada-Population by province 2016

 

2016

% Atlantic Canada

Growth 2016-2018

% Canada

Nova Scotia

958,400

40.0%

3.8%

2.6%

New Brunswick

761,214

31.7%

1.9%

2.1%

Newfoundland Labrador

525,983

 

21.9%

1.2%

1.5%

Prince Edward Island

153,116

6.4%

1.9%

.4%

Total

2,398,713

100%

7.1%

6.6%

 

The population in Atlantic Canada is more homogeneous than other parts of the country. This would be the region in Canada with the highest percentage of the population having European roots. The majority are English-speaking however New Brunswick is approximately 40 per cent French-speaking and there are small populations of French-speaking households in Nova Scotia and Prince Edward Island.

 

The region does have a number of universities, which does introduce different cultures to the mix of consumers.

 

Consumer tastes are more traditional and there is less demand for fruits and vegetables popular in Quebec, Ontario or western Canada where we see the larger influence of immigration.

 

Customers influence the buying decision

 

Loblaw, Sobeys, Walmart and Costco dominate the retail market for food. Recently we have seen dollar stores growing in numbers and sales of food. Loblaw and Sobeys both have corporate and franchised stores in the region. Walmart and Costco operate the same corporate models they do in other regions.

 

Loblaw operate more than 50 Atlantic Superstores in NS, NB and PEI and close to 20 Dominion stores in NL. These stores are conventional stores with the added one-stop shopping features of pharmacy, limited housewares and Joe Fresh. Some of the larger stores offer larger general merchandise sections similar to a Real Canadian Superstore in Ontario.

 

The fresh produce in these stores would be comparable to the offering in conventional food stores across Canada. Many include fresh-cut fruit and salads produced in-store. Loblaw also operates Independent stores, which are designed to be a franchise format. These stores used to be called Save Easy, which is where I started my career in retail. The fresh produce offering is limited by the physical space and demand. If the Superstore carries 350 SKUs of fresh produce,  an Independent store would have approximately 250. Recently Loblaw has opened a small number of No Frills stores.

 

Their central team in Cambridge, Ontario, does the merchandising and procurement for Loblaw. Atlantic Superstore and Save Easy are in the market division and similar to Ontario, the discount group manages No Frills. If you want to sell into these stores these are the Loblaw employees you must work with. They do maintain a local merchandising group in Atlantic Canada, but the central group makes the category management decisions. Loblaw implements their Grown Close to Home program as they do in other regions. Fresh produce is delivered to stores in the Maritimes  (NS, NB & PEI) from a warehouse in Moncton, NB. NL stores receive their fresh produce from a warehouse in St. John’s, NL.

 

Sobeys’ roots are in Atlantic Canada so they have the ‘local’ position in the market and many consumers see them as a familiar shop and the store they grew up with. Sobeys have more than 80 Sobeys stores in the region with some stores being converted to Sobeys Extra. These are conventional stores with fresh-cut fruit and salads made at store level. Sobeys do a good job identifying local growers in their signage. The company also operates Foodland and Co op stores (NB), which are smaller and located in rural communities. These are franchised stores. Sobeys currently do not have any FreshCo stores in Atlantic Canada.

 

Sobeys used to operate regionally however recently they have changed to a centralized structure. The category management for vegetables has remained in Stellarton, NS while the same functions for fruit are performed in Ontario and hothouse products in Calgary. Sobeys stores do have more flexibility to buy some produce locally. Produce is distributed to stores in the Maritimes from a warehouse in Debert, NS and NL stores receive their products from a warehouse in Cornerbrook, NL.

 

Walmart has more than 20 Super Centers in the Maritimes that are supplied by some local growers and from its new facility in Cornwall, Ontario. They have room to expand their offering in the region, with a number of stores in NL that still do not have a full line of produce. The Walmart stores offer fewer SKUS than Superstore or Sobeys and they focus more on the basic, higher volume items. Recently we have seen more emphasis on local growers in the product mix, advertising and stores. Stores that have not been converted to Super Center offer a very limited line of produce. Their national merchandising team in Mississauga controls Walmart produce.

 

Costco has seven stores in the region and some produce is delivered direct to store but most is supplied from its Quebec distribution center. The footprint and offering in the department is similar to Costco’s in other regions with the large sizes and different configurations of product. It is interesting they are able to sell large volumes of their items to consumers in a market perceived to be more traditional and less likely to try something new. Costco’s national produce team makes the merchandising decisions.

 

The small population base makes it difficult for independents to be successful. Pete’s Frootique was the best known independent that really did excel at produce. A number of years ago Sobeys purchased Pete’s to use as a model for urban stores in larger markets.

 

Coleman’s and Powell’s are two smaller chains that operate only in NL. Recently Coleman’s opened some larger, much more modern stores. They sell a full array of produce and their local buying allows them be more flexible and to offer some SKUs that Dominion and Sobeys stores do not carry.

 

Your competition

 

Atlantic Canada is similar to other regions in that there is a core of local producers who have developed the market across different segments of the produce department. Two differences are that a limited food potential makes it necessary for some growers to expand their business by offering more SKUs as opposed to producing more of the same crops. The second difference, which is again driven by the lower food potential, is that many growers supply multiple retailers. The market simply is not big enough to allow a producer to generate the economies of scale when supplying only one retailer.

 

Growers in Atlantic Canada are working in a Maritime climate which does pose some additional challenges.

 

The Atlantic Market

 

Consumers in the region would tell you they want to support local. There has been talk about reducing the reliance on other regions for supply of food.

 

This region continues to evolve, as do all of the other regions. It used to be dominated by Loblaw and Sobeys with IGA and Co op being the smaller players. Loblaw purchased the assets of IGA in the region and Walmart and Costco have continued to expand through added real estate and offering value. In a region where population growth is limited and when one retailer grows sales, it is most often at the expense of the store across the street.

 

If you have any questions about selling your products in Atlantic Canada please give me a call at (902) 489-2900 or send me an email at peter@skufood.com

 

WHAT’S IN STORE?  

 

Have you had algae in your smoothie yet?

 

This was actually in the airport, not in a grocery store!  Recently Booster Juice introduced Blue Majik, which is a natural blue-algae protein. Consumers continue to change and products are changing to meet their demands. We know plant-based protein is more and more popular with products such as Jack Fruit selling more and more.

 

One question for me was how much protein do you get? The signage includes the price and the calories but not the grams of protein, which made me curious.

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Publish date: 
Friday, October 5, 2018

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