Vertical Industry Sector Overview of the Canadian Supermarket SectorintroductionEssay Preview: Vertical Industry Sector Overview of the Canadian Supermarket SectorintroductionReport this essayIntroductionThe focus of this paper is the supermarket sector in Canada. In this sector the development of a company strategy is of utmost importance as the goods are typically commodity goods. The goods sold in supermarkets usually are of little or no comparative advantage. We found that some interesting developments have occurred in this sector, as we will see in this paper. We will identify the leading companies, and determine how the inter-company strategies differ from one another. Before we do so, however, we will first have a look at the retail industry in Canada as a whole, and the supermarket sector.
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Vancouver-based and international-enterprise retailer L’Express Inc. has long been a leading supermarket player, with strong links with many countries around the world. In 2012, L’Express established a unit in the Vancouver market (one of the largest grocery retailers in the world) and recently established a successful Canadian branch on Canada’s National Capital Region.L’Express also expanded into other Canadian markets to promote retail and food production, including the Vancouver, B.C (B.C.) region as well as Nova Scotia and Ontario (Ontario, B.C.).L’Express received its fair share of international business from these markets, but also from some of the world’s largest exporters of grocery items, such as Amazon, in recent years. L’Express is an innovative, multi-national, and global global company, and has an active presence on international levels. L’Express has also become a leader in the food industry, contributing to many new technologies, innovative products and services including, but not limited to, refrigeration, packaged food, and food hygiene products and services.
This paper focuses on the Canadian market as a whole (the supermarket sector )and the supermarket industry as a whole (the grocery and produce sectors ). All of this will focus on one specific aspect of a corporation’s relationship with the United States, but will also cover the larger Canadian food market, especially under the New Canada. We may also add that for the more specific reasons for this paper — both in this essay and in the relevant sections above — the question of where the supermarket/foods market is headed for the foreseeable future needs to be answered through analysis of various sectors, key players, and other considerations. We will also focus on the fact that in terms of its international, regional and domestic growth, the Canadian supermarket sector is currently at a significant disadvantage compared to those of the other major agricultural and food related industries. This may include some sectors (such as health care, mining, and steel) which are being developed and which have been negatively impacted by the recent shifts in the Canadian food supply-and supply chain. For example, most food producers are considering moving to Canada rather than to the United States (or an overseas market) to satisfy production constraints elsewhere in the world. In the United States, consumers are becoming increasingly concerned with the growing pressure they face over food safety, and are also more concerned that many of the food safety regulations promulgated by the U.S. Department of Agriculture (USDA) and other foreign authorities, including the regulations enacted under President Obama, have become unnecessarily burdensome. The following are the main factors affecting Canada’s supermarkets, that the food companies might have a more favorable role in managing their food supply environment (via a process that may not only be difficult but also very costly for the grocer / food production sector).1. High prices. While it makes sense to focus on a single sector, this paper focuses only on the Canadian retail industry and that of retail in general. It is our goal to focus a lot on the Canadian supermarkets, as many of them may be considered too large and may be subject to fluctuations among some of the suppliers. We will also briefly look at some of the key characteristics of the British food system that have changed
The supermarket industry in Canada is growing at an impressive rate, and in some parts, with a strong capacity to produce more than 600,000 tonnes of meat daily. Despite the very low size of the supermarkets in the entire country, they retain a significant presence in many different local areas, where this industry has grown, particularly in Alberta and parts of B.C. This role has grown into quite a significant contributor to Canadian retailers’ business development. One such business development is the development of a new company strategy where the new company aims to develop products to further the overall development of the supermarket sector.
What follows is a brief summary of some of the key products of the industry, both in terms of value, product quality and a store of value. The focus is on the supermarket sector in Canada, where the most significant development of the retailer sector is happening in the retail sector. In other words, the most important developments in the retail sector of Canada are going to be the production of food and a number of other products.
Selling and Sourcing of food and other products in the supermarkets
In the supermarket sector, this aspect of food production is the key to the strength of the Canadian economy, and it is taking shape at a faster rate than any commodity, and the majority of producers working in the supermarket sector are still young and young women. These young female workers are growing and emerging in Canada, as one study from the Canadian Retailers Association concluded in 2002: “While [a Canadian] industry grew in size over the past decade compared to its size in other Western regions in Canada, Canadian consumers are still purchasing more products, and demand for them continues to grow. In this respect, the growing demand for food in the Canadian sector has contributed to an increase in the Canadian market share. The results of this expansion in Canada’s food market share point to the need for new and innovative brands and products, and a growing appetite for innovative, quality and high-product quality products to increase consumer success.” In the store of value sector, the majority of retailers in Canada choose to develop local companies through the sale of products to local customers. As for the supermarket sector, the process of producing, selling and supplying food in the retail sector of Canada differs slightly. In contrast, the most important business developments for both the supermarket sector and the Canadian retail establishment are still being carried out in the supermarket sector.
The following picture illustrates this story of production and distribution of food as it pertains to food production and production in grocery stores.
The supermarket supermarket can often be identified as either a large supermarket that is in the food industry, or a small-sized supermarket. In the case of the supermarkets, these are considered the only sectors in Canada where a lot of the retail and production sectors are dominated by a small number of large retail and production organisations.
Product Quality
Many things in nature, such as milk, dairy and meat, require a great deal of processing to be produced and used in the store of value. In Canada, some of these processes are already done through the development of food manufacturers. In this context, it is sometimes useful to note a few of that food, particularly of lower quality. For instance, we found in the food products discussed
The supermarket industry in Canada is growing at an impressive rate, and in some parts, with a strong capacity to produce more than 600,000 tonnes of meat daily. Despite the very low size of the supermarkets in the entire country, they retain a significant presence in many different local areas, where this industry has grown, particularly in Alberta and parts of B.C. This role has grown into quite a significant contributor to Canadian retailers’ business development. One such business development is the development of a new company strategy where the new company aims to develop products to further the overall development of the supermarket sector.
What follows is a brief summary of some of the key products of the industry, both in terms of value, product quality and a store of value. The focus is on the supermarket sector in Canada, where the most significant development of the retailer sector is happening in the retail sector. In other words, the most important developments in the retail sector of Canada are going to be the production of food and a number of other products.
Selling and Sourcing of food and other products in the supermarkets
In the supermarket sector, this aspect of food production is the key to the strength of the Canadian economy, and it is taking shape at a faster rate than any commodity, and the majority of producers working in the supermarket sector are still young and young women. These young female workers are growing and emerging in Canada, as one study from the Canadian Retailers Association concluded in 2002: “While [a Canadian] industry grew in size over the past decade compared to its size in other Western regions in Canada, Canadian consumers are still purchasing more products, and demand for them continues to grow. In this respect, the growing demand for food in the Canadian sector has contributed to an increase in the Canadian market share. The results of this expansion in Canada’s food market share point to the need for new and innovative brands and products, and a growing appetite for innovative, quality and high-product quality products to increase consumer success.” In the store of value sector, the majority of retailers in Canada choose to develop local companies through the sale of products to local customers. As for the supermarket sector, the process of producing, selling and supplying food in the retail sector of Canada differs slightly. In contrast, the most important business developments for both the supermarket sector and the Canadian retail establishment are still being carried out in the supermarket sector.
The following picture illustrates this story of production and distribution of food as it pertains to food production and production in grocery stores.
The supermarket supermarket can often be identified as either a large supermarket that is in the food industry, or a small-sized supermarket. In the case of the supermarkets, these are considered the only sectors in Canada where a lot of the retail and production sectors are dominated by a small number of large retail and production organisations.
Product Quality
Many things in nature, such as milk, dairy and meat, require a great deal of processing to be produced and used in the store of value. In Canada, some of these processes are already done through the development of food manufacturers. In this context, it is sometimes useful to note a few of that food, particularly of lower quality. For instance, we found in the food products discussed
The supermarket industry in Canada is growing at an impressive rate, and in some parts, with a strong capacity to produce more than 600,000 tonnes of meat daily. Despite the very low size of the supermarkets in the entire country, they retain a significant presence in many different local areas, where this industry has grown, particularly in Alberta and parts of B.C. This role has grown into quite a significant contributor to Canadian retailers’ business development. One such business development is the development of a new company strategy where the new company aims to develop products to further the overall development of the supermarket sector.
What follows is a brief summary of some of the key products of the industry, both in terms of value, product quality and a store of value. The focus is on the supermarket sector in Canada, where the most significant development of the retailer sector is happening in the retail sector. In other words, the most important developments in the retail sector of Canada are going to be the production of food and a number of other products.
Selling and Sourcing of food and other products in the supermarkets
In the supermarket sector, this aspect of food production is the key to the strength of the Canadian economy, and it is taking shape at a faster rate than any commodity, and the majority of producers working in the supermarket sector are still young and young women. These young female workers are growing and emerging in Canada, as one study from the Canadian Retailers Association concluded in 2002: “While [a Canadian] industry grew in size over the past decade compared to its size in other Western regions in Canada, Canadian consumers are still purchasing more products, and demand for them continues to grow. In this respect, the growing demand for food in the Canadian sector has contributed to an increase in the Canadian market share. The results of this expansion in Canada’s food market share point to the need for new and innovative brands and products, and a growing appetite for innovative, quality and high-product quality products to increase consumer success.” In the store of value sector, the majority of retailers in Canada choose to develop local companies through the sale of products to local customers. As for the supermarket sector, the process of producing, selling and supplying food in the retail sector of Canada differs slightly. In contrast, the most important business developments for both the supermarket sector and the Canadian retail establishment are still being carried out in the supermarket sector.
The following picture illustrates this story of production and distribution of food as it pertains to food production and production in grocery stores.
The supermarket supermarket can often be identified as either a large supermarket that is in the food industry, or a small-sized supermarket. In the case of the supermarkets, these are considered the only sectors in Canada where a lot of the retail and production sectors are dominated by a small number of large retail and production organisations.
Product Quality
Many things in nature, such as milk, dairy and meat, require a great deal of processing to be produced and used in the store of value. In Canada, some of these processes are already done through the development of food manufacturers. In this context, it is sometimes useful to note a few of that food, particularly of lower quality. For instance, we found in the food products discussed
Overview of Retail Industry in CanadaThe retail sector is responsible for providing the last process of the manufacturing/processing lifecycle. Firms participating in this sector distribute to consumers the finished goods produced by manufacturers. Industry Canada defines the sector as follows: “the retailing of merchandise in small quantities to the general public generally without transformation, and rendering services incidental to the sale of merchandise” .
In 2005, the industry as whole represented $367 billion in sales contributing to 5.7% of the total value of production in the Canadian economy.Over the past decade, the retail sector has grown at a faster rate than most other sectors in the economy. Between 2004 and 2005 the growth rate was 5.1% above average. Industry experts predict that the growth will continue at least until 2010 due to high levels of consumer confidence and low unemployment rates. There is a direct correlation between the state of the economy and the state of the retail sector. As the economy grows, so does the retail sector.
The retail sector is divided into several categories. The Supermarket sector is found in the Food and Consumer products category. Chart 1 shows the proportion of sales this category has within the retail sector.
Chart 1Supermarket Sector in CanadaThe Food and Beverages category is one of the largest industries in Canada with almost one quarter of the total commodity sales in 2004 .With over 24,000 retail outlets and with sales of over $71.8 billion, which have grown at a steady rate of between 4 and 5 percent over the last decade, this sector employs over 428,000 people.
Revenues (chains versus non-chains)In the retail food and beverages sector, the revenue from chains is almost the same as from non-chains.The vast majority of goods sold by the food and beverage sector (i.e. supermarkets) are commodity goods. As the commodity goods market is highly competitive, margins are relatively low. However, the profit margins differ widely between chain and non-chain stores. In the Canadian landscape the market leaders are nationally operating chains. Chart 2 describes the revenues and profit margins of chain stores versus non-chain stores. Clearly, while revenues between chain and non-chain stores are almost evenly divided, chain stores are able to create higher profit margins.
Chart 2 Comparisons of Revenues and Margins for Chain and Non-Chain StoresChannelsChart 3 depicts the distribution of the market share by channel. While supermarkets currently represent the largest channel, other channels are emerging into the market. Mass merchants and Club stores are steadily gaining market share representing a significant threat to the supermarket channel . Chart 4 demonstrates this trend in that within the food retail market, the leaders are not all members of the Supermarket channel.
In short, with the high competition and the blurring of clear lines among players within the industry, major grocery stores find themselves competing with big box retailers, such as Wal-mart, on food items, and vice versa.
The industry has been increasingly marked by an over-supply of retail square footage, consumers desire for a value driven shopping experience and the presence of low cost global retailers.
Chart 3 F & B Category by ChannelChart 4 Industry LeadersLeading CompaniesChart 4 clearly shows that, in 2005, the industry leaders are Loblaw Companies, Metro Inc and Sobeys Inc. In the next section we will take a closer look at each of these industry leaders, their key indicators, performance drivers and strategies. Table 1 summarizes the various company names operating under each of these parent companies.
Table 1 Leading Companies Operating BannersLoblawSobeysMetroCORPORATELY OWNEDCategoryBannerSupermarket– Atlantic Superstore Dominion– Extra Foods– Loblaws– Maxi– Maxi&Cie– Provigo– The Real Canadian Superstore– Zehrs outletsMarketsWholesale– Cash & Carry– Presto– The Real Canadian Wholesale clubFRANCHISES AND ASSOCIATED STORES– Atlantic SaveEasy– Fortinos– Lucky Dollar Foods– no frills– Shop Easy Foods– SuperValue– Valu-Mart– Independent GrocerCategoryBannerFull service– Sobeys– IGA extra