Canadian Retailer - Spring 2017 - 47

Small shift, big changes

The grocery market in Canada is
huge-anywhere between $86-billion
and $140-billion annually, depending
on how the market's defined. Even if
only a small percentage of customers
shift from buying groceries in a store
to online, the loss might be enough to
kill grocers.
van Stolk says that in such a big
category, it's reasonable to think-
and to expect-ten per cent of customers will shift their purchasing
online. Those sales won't disappear,
they'll go somewhere-to whichever
e-commerce vendor is ready for
those sales. "A one in ten shift is not
crazy," he says. "We're in a fantasy
world if we think it won't happen."
To suspicious grocers, the ones certain that customers will always want
to squeeze melons before buying, van
Stolk is sharper: "Yeah, I'm smoking
crack with a big pot pipe. Why don't
we go down and look at Macy's?"
The story of grocery is playing out
like apparel. The apparel category
had big players, minimal growth, expensive real estate, and thin margins.
But there was prestige. They had the
brand and the locations.
And then Amazon came along. In
2006, the online giant moved into the
apparel category with the purchase of
shopbop for an undisclosed amount.
In 2016, Amazon generated $16.3-bil-

lion in apparel. The key lesson is that Amazon didn't
generate new apparel sales. A huge chunk of shoppers shifted from buying at Macy's stores to buying
online. And Amazon scooped up those sales.
Traditional apparel retailers didn't react fast
enough. Now they're playing catch-up. "Why didn't
they see this coming?" van Stolk asks.
The conditions of grocery
ought to worry grocers. Urban
See Peter van Stolk
Canadians have smaller livat STORE 2017
ing spaces than their parents.
Peter van Stolk will speak
about Food: The Last
Maintaining big box stores in
Frontier for E-Commerce
cities is expensive. Packaging,
at STORE-Canada's Retail
cooling, shipping and stocking
Conference. Register for
the conference at www.
stores is pricey. The retailer
storeconference.ca/register
with the best unit economics
to learn how traditional fears
will win. And who has the best
about fresh food fragility,
unit economics? Amazon.
delivery time and service
have held up e-commerce
Amazon has given themgrowth in this sector-
selves other advantages: they
and how to survive the
don't pay their shareholders
revolutionary change van
Stolk says is happening.
dividends. They don't play by
traditional rules. And, importantly, they've been moving
2017
into every retail vertical.
"Amazon said, screw this,
we're going to play everywhere," van Stolk says.
"That changes the game everywhere."
van Stolk says the advent of e-commerce in the
grocery category should empower retailers. The
physical store isn't dead, but it will change. Customers will never stop buying groceries, but they
will buy differently.
"Retail isn't dead. You just can't play by the
same rules," van Stolk says. "What if you play by
different rules?"
M AY 3 0 - 3 1 , T O R O N T O

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THE FOOD & GROCERY ISSUE

21/03/17 12:22 am

| CANADIAN RETAILER | 47

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Table of Contents for the Digital Edition of Canadian Retailer - Spring 2017